Stadium A Gamble For Private Sector Contractors?

On Wednesday University of Calgary economist Herb Emery was in Regina to give a presentation to the “government and business community” (in the Leader-Post’s words). One issue he touched on was the need for Saskatchewan to do its utmost to develop its existing workforce as opposed to simply recruiting workers from outside the country as a temporary stop-gap.

Emery also waded into the stadium debate somewhat, suggesting that the city and province had other infrastructure priorities that should be addressed first. He also questioned the wisdom of undertaking such a project during a construction boom.  Here’s an excerpt from the CBC report.

Emery also criticized undertaking large scale projects, such as a football stadiums and hospitals, during an economic boom. “It makes no sense, in a lot of ways, to try and build when the private sector is bidding up wages so high,” Emery said. “You’re going to have these huge cost overruns on every project.”

According to Paul Dechene’s interview with Deputy City Manager Brent Sjoberg that was posted the other day, the city is pursuing a P3 type funding model that would see the contractor assume responsibility for all cost overruns that weren’t the result of the city or other partners like the Riders meddling once the project is underway. Here’s how Sjoberg described that responsibility:

As long as we stick to the program that’s laid out throught the RFP process, then the risk is transferred to the contractor. And what the contractors have to do is design and build it within the budget. And historically, the challenge in almost any capital project ends up being who do you hold accountable when the designer is pointing to the builder and the builder is point to the designer, saying it’s their fault. In this case, they’re one and the same and so they carry that risk.

In a second interview Paul did with Mayor Fougere, the mayor said he couldn’t imagine a scenario where contractors wouldn’t be interested in submitting proposals to build the stadium. But in light of what Emery said about the potential for huge cost overruns for public projects carried out during “boom” times, I wonder if that’s necessarily so. And if no expressions of interest are received by the city, where would that leave the stadium project?

Author: Gregory Beatty

Greg Beatty is a crime-fighting shapeshifter who hatched from a mutagenic egg many decades ago. He likes sunny days, puppies and antique shoes. His favourite colour is not visible to your puny human eyes. He refuses to write a bio for this website and if that means Whitworth writes one for him, so be it.

3 thoughts on “Stadium A Gamble For Private Sector Contractors?”

  1. So how does this study apply to a “COMMUNITY OWNED” football franchise.
    There are no private owners and the football players are not millionaires/billionaires.
    And if the economy does slow down this year and in the next few years as forecasted, then this big project will help keep some momemtum and jobs going through.

  2. There is next to zero risk when a builder is in complete control.

    You give them $278 mil, and they say ok $28 mil for us & $250 into the actual building.
    They ain’t going to build for free or at a loss ..

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