Average Canadian infrastructure project runs 39% over budget and behind schedule by 12 months

Power and utilities companies need to control investment in megaprojects

CALGARY, April 3, 2017 /CNW/ - According to a new EY report, Spotlight on Canadian power and utility megaprojects, Canadian infrastructure megaprojects run 39% – or US$2.2 billion – over budget and behind schedule by 12 months on average.

"Canadian power and utilities companies need to act now to start to transform the way they control investment in megaprojects at the local and national levels," says Gerard McInnis, EY's Canadian Power & Utilities leader. "If Canada's going to meet future demand for electricity capacity, the sector will need to significantly invest in power plants, as well as transmission and distribution, for greater development of renewables. They can't do that with projects running over budget, and behind schedule."

EY's report notes that despite the cost overruns and delays, Canadian projects still perform better than those in the US, where the average project delay is a little over three years.

Failure to deliver megaprojects on time and on budget is explained, in part, by the complex and large scale nature of capital project technologies. The report found that globally hydropower and nuclear projects typically suffer the greatest cost overruns at US$4.6b and US$4b, respectively. Meanwhile, offshore wind and gas-powered generation projects saw significantly less delays and cost overruns.

"Canada, more than most countries, already has a diverse mix of energy generation," says McInnis. "But the mix of how electricity demand will be met, and the size of the investment required, means that defining and controlling capital projects is key if power and utilities in Canada are to create maximum value."

EY's report highlights three key challenges the Canadian power and utilities sector faces:

  • Talent constraints with an aging population and inability to attract talent due to international projects where there's lucrative pay.
  • Unique risk and regulatory environment with standards and codes differing across municipal, provincial and federal levels.
  • Complexity in project governance and managing multiple stakeholders, funding and regulatory compliance.

"Tackling these challenges isn't necessarily easy," says McInnis. "But those power and utilities organizations that implement innovate ways to address them, set themselves up to be the sector leaders of the future."

About EY
EY is a global leader in assurance, tax, transaction and advisory services. The insights and quality services we deliver help build trust and confidence in the capital markets and in economies the world over. We develop outstanding leaders who team to deliver on our promises to all of our stakeholders. In so doing, we play a critical role in building a better working world for our people, for our clients and for our communities.

For more information, please visit ey.com/ca. Follow us on Twitter @EYCanada.

EY refers to the global organization and may refer to one or more of the member firms of Ernst & Young Global Limited, each of which is a separate legal entity. Ernst & Young Global Limited, a UK company limited by guarantee, does not provide services to clients. For more information about our organization, please visit ey.com.

SOURCE EY (Ernst & Young)

For further information: Sasha Anopina, sasha.anopina@ca.ey.com, 416 943 2637; Julie Fournier, julie.fournier@ca.ey.com, 514 874 4308; Victoria McQueen, victoria.mcqueen@ca.ey.com, 604 648 3807

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