April editorial: Who wants to be part of this club?

Bill Wilson is Editor-in-Chief of Railway Track & Structures media.

I want the locker with my name sketched on a plate at the top.

Now, I have a traveling one polluted with sweaty clothes and snack wrappers … but at least it’s labeled Wilson.

Ask my 20-something self what my ultimate later-in-life fantasy would be and it probably involved unlimited access to an 18-hole golf course and a locker room with my name in it … somewhere. That is what I imagined would take up a good portion of my finances when I was in my 50s. Instead, the locker is now in the form of a personalized backpack jammed with volleyballs, basketballs, uniforms, water bottles, and dead wrappers that travels all over the country. Club sports pale in comparison to country clubs with a 19th hole. All three of my kids are entrenched in the elite leagues, and the budget has two major lines: known costs and unexpected costs.

Just recently my daughter’s group of 13-year-olds wanted to switch it up on their volleyball team. Along with the standard black shorts, they wanted blue ones to go with their other two jerseys. One of the parents had finally had enough. She has two daughters pulling the money chute constantly due to travel sports. The pile of money was rubbing against the ceiling. My wife and I thought it was not right to keep one of the girls in black, so volunteered to take on the extra, extra cost and bought the last remaining one-color pants holder and second colored pair.

Every contractor involved in construction projects are very well versed in my extremely amateur two-line budget. There are known costs and unexpected ones. Light-rail builder SNC-Lavelin has engaged in a new way of winning bids. Since 2019, the goal of the company has been to end the process of bidding on fixed-price construction work and is focusing more on turnkey contracts. With those contracts, construction firms agree to a set price for a project and do not pass along any cost overruns.

The results of this endeavor have me wondering when the company finances are going to hit the basement floor. In early March SNC-Lavelin announced a $231 million pretax loss on its projects unit due to cost reforecasts on three light-rail contracts in Canada. In a worse-case scenario, SNC-Lavelin is projecting additional losses of as much as $300 million on the Reseau Express Metropolitan project in Montreal, Ottawa’s Trillium Line, and the Eglinton Crosstown project in Toronto.

The builder, however, is blaming COVID-19, inflation, and supply chain issues for the loss. According to SNC, absenteeism due to the pandemic over the last few months has been as high as 50% on some jobs, and inflation has tacked on another 10% on costs.

I have no doubt those factors have been tripping up just about every contractor in existence, but I can’t help but question the business approach of SNC-Lavelin. In one way it does force the contractor to control costs, which is noble, but there are those unexpected costs that act like an avalanche … nobody sees it coming and the impact can leave one buried in trouble. They can throw all the money and technology at an avalanche, but nobody will be able to predict the timing and the destruction of it.

Thanks, but I’ll take the model that includes the extra pair of shorts and maybe an unplanned trip to St. Louis.

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