$2B Vancouver light-rail project down to 2 bidders

Dive Brief:

SNC-Lavalin, under the name West 9th Partners, has taken itself out of consideration for the $2.1 billion extension of the Vancouver SkyTrain light-rail system, according to Engineering News-Record, leaving just the teams of Acciona Infrastructure Canada/Ghella Canada and Broadway Connect to compete for the project. The winning bidder will design, build and finance the extension under a public-private partnership agreement.
The Broadway Subway project will see the construction of a 3.5-mile extension, part of which is underground, and the addition of six new stations. Tunneling operations are expected to begin soon after the winner is announced, and the line is scheduled to open in 2025.
Project officials are scheduled to select a winning bidder by mid-2020.

Dive Insight:

The Acciona-Ghella team also includes IBI Professional Services (Canada) Inc.; Dialog BC Architecture Engineering Interior Design Planning Inc.; Mott MacDonald Canada Ltd.; Ingenieria Especializada de Obra Civil e Industrial, S.A.; Parsons Inc.' and Corporacion Acciona Infraestructuras, S.L.

The Broadway Connect team is made up of Dragados Canada, Inc.; Aecon Infrastructure Management Inc.; ACS Infrastructure Canada, Inc.; Aecon Concessions, a division of Aecon Construction Group Inc.; Dragados, S.A.; Aecon Group Inc.; Hatch Ltd.; WSP Canada Inc.; Dr. G. Sauer & Partners; VIA Architecture; Wood Environment & Infrastructure Solutions, a Division of Wood Canada Ltd.; and SENER.

On the heels of a CA$2.1 billion loss in the second quarter of 2019, SNC-Lavalin announced this week that it was pulling out of lump-sum turnkey construction contracts to focus on more high performing and growing areas of its business.

Exiting a major component of its business is an action similar to the one Skanska took last year. Company officials announced in November 2018 that it would no longer bid on EPC (engineering, procurement and construction) contracts for gas-fired power plants in the U.S. and that it would also stop bidding in this country on "mega design-build" P3 projects in which it holds an equity stake. Skanska President and CEO Anders Danielsson said the company would instead focus on projects in its "sweet spot." The company also took some sizeable write-downs on what are believed to be American projects.

If the SNC-Lavalin story plays out like Skanska's did, the company could be looking at brighter days ahead. As of mid-June, the value of Skanska's stock had increased by almost 20%, indicating that the company made the right move. Danielsson also has said that the days of major charge-offs are in the past and that its operating margins are expected to increase.