Nate Habermeyer, APR: 0:00

Hello listeners. This is the risky planner podcast. Thanks for tuning in. Hi Albert. Hey Nate, it is actually a wild time, you know, right now. And Canada building, you know, war in Iran still going. Actually, the last podcast we recorded couldn't be more relevant still, even with the ceasefire, right for sure. Yeah, cost per projects, I don't know where we're going. It's it's going to be, well,

Albert Brier: 0:36

to the extent that, like, the last 20 years, or 30 years, or whatever, have been about globalization. And, you know, building integrated supply chains and stuff like the next 20 years might be about undoing that somewhat, you know, and it's, it could be true that countries like Canada that had previously been reliant on trade relationships with, you know, close neighbors need for strategic reasons and economic reasons, to become uncoupled from those near neighbors. And wouldn't that be interesting?

Nate Habermeyer, APR: 1:09

You know, what neighbors did you speak of? You know, I was gonna say China's already doing it big time.

Albert Brier: 1:16

Well, they're kind of like the electric superpower right now, right? Like the, you know, they're, they're the leaders in renewables. They're the leaders in electric cars. They're the leaders in battery storage, in terms of, like deploying those things, rare earth metal, the largest make the batteries, which, yep, so they've got a lot of the the basic mineral inputs already in house, the Not to mention, it's a managed economy there, so they only sell what they want to, which is increasingly looking like it will be not very much, if anything, you know, not to mention the fact that there's a big nuclear push around the world, everywhere except Germany, basically, where they denuclearized and are now overly reliant on fossil fuels. And wouldn't you know what, their energy prices have gone up pretty dramatically in the last few months. You don't weird? I know it's weird, but anyway, everybody else is building nuclear and China is building it at the rate of the whole other rest of the world combined. Germany is

Nate Habermeyer, APR: 2:07

interesting, though, you think that was a big mistake.

Albert Brier: 2:09

I do think it was a mistake. I think it was short sighted. You know, I don't know very much about their what their operation looked like, you know, like, I haven't done the deep dive on, on what those places, how much they cost, right? Like, were they? Were they maintenance nightmares? Like, were they? Were they money pits? You know, maybe this was a financial decision, but it feels like a like, well, you know, right now, the world's first permanent nuclear waste storage facility opened, like earlier this week, right? So we've been running nuclear reactors without a place to permanently, you know, store the waste for what, 70 years. Yeah, right. If you're, if you're Germany, and you're heavily reliant on a technology that has no end game, right? I can understand why that would be. I still think that's short sighted, because, like, you don't have nuclear storage. So build some, you know, like, overcome the nimbyism. Build some do do the do the hard work, and let's all kind of pull behind this as some kind of necessary evil. That's the way that I would tackle it if I were Germany. But I'm not that

Nate Habermeyer, APR: 3:11

reminds me of this meme where this girl is talking about people that don't have homes, and she's like, well, just build them. Okay, yeah, but Germany definitely has the resources. And it was kind of a knee jerk reaction, I think, right there was, that's what Japan and the tsunami. And, you know, what is that over a decade ago? Nuclear scary, you know, freak accident and, and, you know what? Nuclear scary? Yeah, it's clean, though, yeah, nuclear

Albert Brier: 3:41

scary, but it is clean. And, you know, a lot of the the other effects of building nuclear are very manageable. It really is just the disposition of the high level waste. Like, yeah, does it go forever?

Nate Habermeyer, APR: 3:53

Well, speaking of nuclear, like, we're going to talk about Ontario and Canada as a whole. I mean, just, just Ontario alone, I think the government has announced it's over 200 billion with a B for nuclear, yeah. Uh, builds, right, and then, yeah, that's just the province, right? And it's Yeah. If you look at Canada as a whole, it's hundreds and of billions of dollars that have been committed to all kinds of things, energy, mining, minerals, transportation, infrastructure, etc. So we're going to, we're going to dive into that, aren't we?

Albert Brier: 4:29

Yeah, I think Carney was, by the way, this is going to be a very Canada focused episode. So you know, if you, if you want to know what's going on in the capital projects world, in Canada, this is the show for you. But even so, I think it's pointing at a trend. You know, Mark Carney gave that really impressive middle powers speech Davos few months back. Yeah, so, you know, he's also at Davos talking about how we're going to be spending a trillion dollars on capital projects in Canada in the next few years. That's a big, big number, considering how hard it has been to build anything here for the past 10 or so. And you can tack, you know, tack that onto the Liberal government, or overreaching environmentalism, or, you know, nimbyism, or people just saying no without reason, like you can, you can say all those things if you want to. We're not going to get into any of that, we're going to talk about how we build

Nate Habermeyer, APR: 5:22

the future here. But there's a big problem with that number that we're going to address in this episode, right? And that's the costs. And when Carney says a trillion dollars, you basically, yeah, he means like two or 3 trillion, you know, we're gonna have to face the facts, right?

Albert Brier: 5:43

And those, those facts being that you don't, you don't build a capital project for the sticker price on day one, you build it for rather a lot better than that, like that there's, there's only a handful of industries that are capable of executing to their original budgets and schedules, right? And the ones that we're talking about, like nuclear, for example, are emphatically not among those industries, right? So, you know, good, good example. Like, we've got the Darlington unit for completion. We were a part of that, right? Like, we built the PMO that, you know, kicked off the Darlington refurbishment. They're still using our processes and our tool stack, you know, over 10 years later. So, like the tokenation company, PMO build was pretty durable and did a really nice job of controlling cost and schedule on the Darlington refurb, right, right? And you, you were correct. Me, if I'm wrong, you had, yeah, yeah, actually, we right.

Nate Habermeyer, APR: 6:35

We were in a meeting with some of them, with a, well, I won't name the minister, but, you know, it was with his staff, and we were having a conversation about, yeah, do, can I share his involvement with Ontario Power Generation and a bunch of other different projects that we've worked on? And the question came up, how does you know the minister know? How do you know that the sticker price that you're given in these meetings, in these briefings, is accurate, right? How do you know that the timeline that is being presented is accurate? And they didn't really have a good answer, right? They, you know, relying on experts, but there wasn't a data driven answer. They didn't have that, which isn't surprising. I mean, not everyone can be an expert in a capital project, but when you're talking about, you know, public you know, public works projects that are going to have lasting value over a course of generations, I think, you know, there's a there's a need, there's a there's an educational opportunity. But it was an interesting meeting. That's the right way to put it. Was an interesting

Albert Brier: 7:41

meeting, that's absolutely the right way to put it. Absolutely the right way to put it. We shouldn't be expecting government ministers and members of parliament or politicians anywhere in the world to be capital project execution experts. That's not their job, right? Like they are specialists in their field, theoretically, of making laws happen and executing them and enforcing them and changing them and making sure that the apparatus of government continues to be functional like far into the future, that includes nation building projects like this. But for those, you need some kind either you need internal expertise, which makes bureaucracy a big issue, and there are some areas of internal expertise within the Canadian government, but the answer as an American, the one that I always point to, is NASA, right? Like that is a government administration, and it is absolutely stocked with technocrats, right? There's people who are industry experts, who are engineering experts, who are scientists, who know the stuff, right? It's not a political I mean, it's a political football, but it is not itself, a

Nate Habermeyer, APR: 8:40

political there's the Space Force now, which is that that's a thing, you know, is that funny? Like, here it is two Americans, you know, now, Canadians talking about Canada. Like, it's kind of a funny I wanted to call that out

Albert Brier: 8:53

because it is, yeah, like, who better to talk about Canada than a couple of Americans?

Nate Habermeyer, APR: 9:01

NASA has lots of technocrats. They've they have innovated. They have tested and brought new technologies to market, yeah, and like,

Albert Brier: 9:11

Canada has things like that, but there's, there's a lot of stuff that doesn't have and like, one of the, one of the things that you know, kind of sticks out to me is that just because Darlington went well doesn't mean that every single nuclear build is going to go well, right? Not, not all projects are created equal, and they're certainly not all created equal. When you exit, you know sector like exit the nuclear sector, start talking about trains, right? Like high speed rail in North America is a gigantic disaster, right? So, and that's a big part of the nation building, you know, scheme that, you know, the Carney's been releasing through the MPO. There's a lot of nuclear, there's a lot of infrastructure, highways and trains. You know, we can't pin our our future successes on past. Ones you know, past performance not being necessarily a great indicator of future success, right? Plus, like, even if it were, a lot of those other industries don't look great. Like Alberta's one and only MPO project is a carbon capture and storage project. Carbon capture and storage across the globe, for the past 25 plus years, has been a story about failure, right? They they don't sequester the carbon they're supposed to. They go massively over on on budget. They have to be dismantled early. Like, that's it, you know, from Alberta until this new MOU, yeah, it's

Nate Habermeyer, APR: 10:35

an interesting the whole carbon capture carbon credits. Like, it's a wild industry. It's a bit of like smoke and mirrors in a lot of ways, right?

Albert Brier: 10:44

We're doing, we're doing this project to capture, sequester and eventually utilize, you know, carbon emissions. So that makes it green, right?

Nate Habermeyer, APR: 10:54

Yeah, when you, when you're like, company says, Oh, we're net, you know, carbon zero. I mean, it's or not net carbon zero, you know what I mean? Like, just net

Albert Brier: 11:02

Yeah, like, we're carbon emissions, or we're net zero, yeah, like, like, it means you bought a bunch of offsets, and that's still, that's still good, right? That's still good,

Nate Habermeyer, APR: 11:10

and it, but it should be accurate, like, it's and this is a marketing problem. This is not, you know, company problem. This is a marketing problem. Marketing probably came up with this. So I blame my people.

Albert Brier: 11:23

Well, it's a compromise, right? Like, like, anything the government does, it has to be rooted in compromise, and that's part of the reason why, you know, even if we take that $1 trillion of investments, or the 200 billion for Ontario that you mentioned, like, take any of those numbers at face value, there is going to be pressure on the cost and the schedule. That's just know projects work.

Nate Habermeyer, APR: 11:41

Can you, Albert, can you what's the data? Why? Like when we said at the beginning, you know it's going to be, it's he's missing a trillion. Is missing 2 trillion from that? What's the data say?

Albert Brier: 11:52

Yeah. So we're going to cite our, our favorite researcher here. You know one professor, professor, Ben fleiberg. He has a database that he's been building for the past, I want to say 2530 years, but it covers projects more like over the past 100 years. And there's over 16,000 projects in his database. Of those projects, 91 and a half percent go over on budget or schedule or both. And it's not uncommon for projects to exceed either one of those things by 50% of their planned value or more.

Nate Habermeyer, APR: 12:26

Yeah, so nine out of 10 projects go over budget. Let that sink in, yeah.

Albert Brier: 12:31

And you've seen us quote that statistic on on LinkedIn and in marketing and stuff like, if you guys follow us, you know on LinkedIn, you've seen that number before. That's where it comes from. But it's not the only source of it anyway. It's pretty, pretty commonly understood, especially if you're in projects world, that you are going to see growth in your projects one way or another, right? And when we talk to clients, who are, you know, patting themselves on the back for an on time, on budget performance, nine times out of 10. The way they did that was by cutting scope, which amounts to the same thing, like, you did less of a project for the same money. Like, congratulations. Yeah, that's you still overran. You bring

Nate Habermeyer, APR: 13:08

up a good point. Like, I know that Darlington is held up as a success story, right? You're talking about reducing scope. Darlington rebuilt. You know, they've got their their reactors, like Darlington's held up as a success story. Like, is it or is it like, is there something else at play?

Albert Brier: 13:26

Well, it most definitely, is it most definitely is a success story. But there's lots of reasons to believe that it may not necessarily be a transferable success story.

Nate Habermeyer, APR: 13:36

Transfer when you say transferable success stories, that mean like, you know, taking the systems and the APR, and then moving that to another industry, like the,

Albert Brier: 13:45

yeah, it's like, you know, the army took hill a, so it's on to Hill B, right? Well, you know, hill a and Hill B have different paths up to the summit. They have different defenses on the way. Like, they've got different, you know, you've got a different group of people going to, this is the main one. That's a different group of people who's going to go take Hill B, right? So if hill a is being held by the people who took hill a and a different group of people is going to take Hill B, you tell me if they get to benefit from the experience of the

Nate Habermeyer, APR: 14:10

hill a people or not? I'm just going to wait on Hill C to see how it all shakes out.

Albert Brier: 14:19

Well, well, it's funny. You should say that, because we don't know how things are going to perform until we've had a few of these under our belts in different industries. Yeah, right, even within the same industry like that, same team isn't necessarily the one that's going to go work on Pickering, for example, and even if it did, the Pickering plant is different. It's a different scope of works twice as much, I think, right, isn't it? It's a bigger it's a bigger project. It has to replace a bunch of steam generators. Darlington didn't replace the steam generators as part of this, you know, tranche of work, you have a new PMO, like push, like to modernize, which is good thing, right? Like OPG and any, any large projects organizations, they should be modernizing, right? Getting their PMO up to speed. Every few years. And so they're doing that, which means that, like the successful PMO practices that that gave them success on Darlington, they're counting on seeing those get incrementally better over time, as they do Pickering, but they're going to be doing it with a new team, with a new scope, with new PMO, new tools, right? Like, it's not the same organization. Like I said, that's a bad thing. Like, you should expect organizations to improve, but expecting all the same stuff to translate from project to project, even when they seem substantially similar, just isn't necessarily safe.

Nate Habermeyer, APR: 15:30

How is the like the transfer of knowledge from this, you know, Team A to Team B, let's say Darlington to Pickering like, let's say it's a different team. What is like a company? Like, well, not a company. I mean, like, truly an enterprise, a massive operation. How are they transferring knowledge in between these different, I guess, their portfolios, but these different major projects? Is that happening? Well, it doesn't happen automatically.

Albert Brier: 15:57

It doesn't I mean, it's definitely happening because, like, the Darlington program captured somewhere around 8000 lessons learned while they were executing. Okay? One of those has to be about the impacts of covid, because that's a very, very long program, right? So the longer your program is, the more likely you're going to experience one of these. You know, Roger, forgive me for saying this, but black swan events like these, you know, low probability, high impact, right? You know one of the like you may remember, BC, Hydros Lessons Learned report on on Site C, which they published late last year. They specifically documented that the Site C Build Failed to budget for those low probability, high impact risks. OPG re budgeted for them, which, again, is to their credit, but like, Site C just had to, I mean, I'm not familiar enough with with how they manage those kinds of issues. But the point is that for long, long programs of work, you need to count on at least some of those hitting which means you need higher P values, right, like higher confidence intervals to plan at, so that you have the the influence of those of those low, high risks in your model, right? Yeah, covid was

Nate Habermeyer, APR: 17:07

truly, I mean, it was a black swan, right? Like you we people were predicting. Maybe Obama said something about, oh, there's going to be a, you know, a virus that's airborne someday, like there was, you know, an idea that would happen, but it felt like a black swan. I mean, this scale Obama has said

Albert Brier: 17:24

many, many times, yeah. I mean, the fact that it was a pandemic is, is unfortunate, like the two politicians who probably did the most to sound the alarm about something like covid, before covid, at least, you know, again, from my American perspective, were Barack Obama and Arnold Schwarzenegger, who Schwartz had been like, really, yeah, you should read about the idea. I didn't know he had, okay, he had a mobile pandemic Response Team. Wow. Like, yeah. So the exact kind of thing that California probably really wishes it had had when covid broke, dismantled by the right, by the previous government. But, but, you know, Schwarzenegger was like, if this happens, we need to be ready. And you know what, I often agree with Arnold Schwarzenegger.

Nate Habermeyer, APR: 18:03

I mean, he was right, yeah, he's right about a lot of things. The Predator movie, right the whole time. He was right.

Albert Brier: 18:09

He was he was right about getting to the chopper and like,

Nate Habermeyer, APR: 18:12

covering himself with mud. Remember that

Albert Brier: 18:15

he was right about, yes, he was right about covering himself in mud, that crazy log trap with the spikes in it, right about right about that.

Nate Habermeyer, APR: 18:21

So let's go back to the nuclear thing. When you know government, you know the politician, their their teams, the ministers, you know they get these predictions on what it's going to cost, the timeline it's going to happen, the risks that are involved. There's going to be a conversation, right? Like they're going to have a conversation with these owner operators, these energy well, they

Albert Brier: 18:42

are, but it's going to be, it's going to be hard for them to avoid the temptation of saying like, well, Darlington was great, so just go do that again, right? Like, none of the new projects in Canada's nuclear portfolio substantially resemble the Darlington refurbishment, except other similar you know, can do reactor overhauls, and even then, like we just talked about how Pickering kind of diverges from Darlington, but one of the other projects that's on our on OPG, specifically, but Canada's nuclear kind of like to do list is the picker, sorry, the the Darlington SMR, right. So the the Darlington SMR is going to be the first grid scale SMR, if it finishes on time, which it won't Okay, but, but if it does, it'll be the first.

Nate Habermeyer, APR: 19:25

I mean, it could, no it could, it could it Nate.

Albert Brier: 19:29

It's a first of a kind

Nate Habermeyer, APR: 19:31

nuclear bill. It hasn't. There is no baseline, which means, like, you can just build it quick. No, I'm just, I'm Yes, I know your blood is boiling because I'm saying these things, it is true. It is a first of its kind in what the g7 g20 like. It's a first of its kind of anywhere.

Albert Brier: 19:48

It's a first of its kind anywhere.

Nate Habermeyer, APR: 19:49

It's going to be the baseline for, I guess, more other projects are going to be built. So yeah, there's a lot that can go wrong.

Albert Brier: 19:57

Just ask the Apple Newton if being first. To the interactive tablet party is good for business, you know, like the so obviously that's different from building an SMR, but in many ways, it kind of isn't like they're having to solve all of the technology problems for everyone that comes after them, right, right? So it's a small pilot plant for that exact reason. That's why pilot projects exist. But it's still grid scale. You know? It has a lot in common with the NPD, the nuclear power demonstrator, which was the first operational can do reactor at grid scale, and it was just a little guy, right? It would have qualified as an SMR in today's terms. And I've been to that site, and it's a very small site, and it was just meant as a demonstrator, and it ran for over 20 years, you know. Okay, so, like, that's kind of the, I think what they're hoping for from this SMR build is like, yeah, it's a demonstrator, but it's gonna run for a long time. Like, we want it to be grid attached and doing its job for as long as it can do. You know, pun intended, I was gonna

Nate Habermeyer, APR: 20:56

say that was really good. All very good. That was pretty good.

Albert Brier: 20:59

Yeah, yeah. Well, you know, hang on, I'll take a bow, okay? But anyway, point is that that's, that's the goal, right? So they're going to be solving all these problems, from engineering to procurement to grid connection to operations and maintenance before everybody else does. So they have no benefit of lessons learned.

Nate Habermeyer, APR: 21:17

Yeah, I feel like there is so much in terms of a best practice that you can lift from Darlington like that was 8000 lesson learned. I feel like you could, and maybe this is just my I just, I'm not knowledgeable, but there's a way that you could, you know, procurement, the supply chain is going to be the same, right? Like you're going and getting,

Albert Brier: 21:43

oh, no, the supply chain is not the same. No, supply chain is not same. Like, big chunks of it may be the same because they're both power stations, okay, right? But you know, to my earlier point, the the Darlington refurb, you know, the one that was scoped, that we're talking about the performance on, didn't include the steam generators, right? So you better bet there's going to be steam generator and by the way, they're going to be different from the ones that are going in at that are going in at Pickering the new SMR. They're going to have two totally different

Nate Habermeyer, APR: 22:07

sets, like, virtually the first of their kind, right? Like, in terms of, yeah, okay, okay,

Albert Brier: 22:12

across the board, because the like, the off takes from the actual reactor are going to function differently, like every single nuclear reactor in Canada right now is a can do, right? The the new SMR has more in common with an espwr than it does with a can do, yeah, you guys can just Google that. But the point is that it's a boiling water reactor that uses enriched uranium, yeah, right, yeah, that's not what it can do. No, okay, so, like, all of even just like the operational expertise about what it takes to maintain a nuclear reactor in Canada, like, we have none of it for ESP, WRS, it's all for can do? Yeah, right. So, you know, it's, it's going to be an interesting, an interesting thing to watch unfold. The worst case scenario is that they get afraid of, like, a, you know, a validation estimate that happens a year from now, and then cancel the project. That would be the worst possible thing, because somebody does need to take these first steps, bite the bullet, do the hard work, spend the extra money and just get the thing done. Well, somebody does have that.

Nate Habermeyer, APR: 23:10

Yeah, that would be bad. However. You know, the Canadian government just secured a majority government secured like it was a process, but I was reading that like Kearney doesn't actually need to call an election until 2030 right? So I'm hoping that means that a lot of projects will just stay. Because a lot of times when you see like changes in governance and policy, like politics, there's a lot of changes, right? New Leaders come in, they have to put their stamp on projects, and everything gets reset. So we saw that in Toronto. We've seen it across Canada, whether it's transit projects, energy projects, and that

Albert Brier: 23:53

could be the kiss of death for these things too, because it's really, really easy for the new guys to come in and say, Look what a terrible job the old guys did. Look at all these cost overruns, like, and then, you know, there's a branching path from there, like, we're gonna cancel the project, which is like, Okay, so we're starting from scratch again, right? Or the other branching path is we're gonna do better than the last guys, which, like, No, you won't, but at least you're considering, you know, moving forward, right? So, and you kind of just have to let that be background noise, yeah. But it also kind of isn't background noise, because it materially impacts how the projects get funded and who's running them. Taxpayer dollars. Temptation is always, yeah, yeah. Well, it is taxpayer dollars always. But, like, you know, a lot of the ways to most responsibly spend those dollars run counter to what the the first instincts of a politician might be when they come into office, right? Like, Oh, the last guys were, you know, tracking a 250% cost over and they're way behind schedule. Like, we should get rid of those guys, it's like, so you should get rid of the only people on the planet who have experience with this project. That's what you're saying. Like, you want to fire all the people who know anything at all about what you're doing. Like, that's what you're saying. You want to, you know,

Nate Habermeyer, APR: 24:57

you bring up a good point, right? Like, what? What are decision makers missing? You know, in my mind, I'm thinking like, I'm listening to you. It's like, what are they what are they missing, right? Like they going back to the original comment, we're not expecting, you know, ministers, staff, politicians, the Prime Minister, like, we're not expecting them to have the kind of expertise on capital projects to interpret, you know, schedule and budget, etc. What would you say these politicians are missing with regard to these projects?

Albert Brier: 25:31

I mean, there is, there is a lot that you could, you know, stack on that heap there. But okay, top

Unknown: 25:38

three. What's the top three?

Albert Brier: 25:40

Top three? Yeah, well, I've already covered one, which is that a lot of these are going to be either first of their kind, or first in a while, or first in the geography, right? Like, if we do build a high speed rail network, you know, in Canada, it'll be the first time anyone has done that in what, 50 years, right? Which means that it's all new teams, it's all new engineering inputs, it's all new everything, right? New supply chain. The whole thing's new, right? You know, pointing at existing trains saying, well, we built it before it's like, yeah, you built it with technology from the 70s. Congratulations. Like, it's not the 70s anymore. Like we need to do different things, right? So first time is a big one. Another one is that all projects run over, especially if they're first of a kind or in nuclear which, you know, we just talked about the SMR as, like the golden nexus of both of those things, like that project is going to run over and take longer. Nate, mark my words. Okay, you heard it here

Nate Habermeyer, APR: 26:33

first, folks. I really

Albert Brier: 26:35

hope this isn't the first place you've heard that. But if it is, you know, surprise, surprise.

Nate Habermeyer, APR: 26:39

I think our listeners are quite educated when it comes to these capital projects.

Albert Brier: 26:45

So politicians are not right and like, that's the that's the point. So like, they need to be aware that, like, you know, earlier, we kind of quipped that when Carney says 1 trillion, he means two or maybe three. That is a mindset that I would love to instill in your average politician. Of like, I have back pocket contingency when I say a number out loud, right? Yeah, like, if I go to Davos and I say a trillion dollars, it's because I actually am thinking too, right? And, you know, for a lot of reasons that I don't fully understand as a projects person, you know, they politically must say the lower number. I don't know, like, we have to do that internally as projects

Nate Habermeyer, APR: 27:21

people, but it's kind of a hot potato for them to come out and say that number and then, not, you know, and to say 1 trillion, and then go to, like, Wouldn't it be better to go to and then actually come in at one like, I feel like it would, but maybe that's not Isaac,

Albert Brier: 27:35

so I think so. But like, I also think that a good model for how we should be doing all of our everything is Star Trek, how? Where it's, it's, it's a bunch of credulous technocrats living in a future where everybody is pulling in the same direction they believe everything everybody else is saying all the time. Like, you know, we are all trusting of each other and trying to pull in the same direction. You know, the the idea that you can, like, lie and cheat and steal to get one over on your fellow man. It was kind of sort of there in original trek, somewhat. It disappeared from next generation, ds nine Voyager, and then came back in in some of the new trek stuff. But like, generally speaking, the Star Trek future is one in which where humans are just trying to work together to solve difficult problems, right? But humans are not trying to work together to solve difficult problems. Here, in actual reality,

Nate Habermeyer, APR: 28:27

I was gonna say you lost me at hello, but I heard the first part and the last part about humans work together.

Albert Brier: 28:33

Well, I hope you enjoyed my little diatribe about you

Nate Habermeyer, APR: 28:36

and the Pope actually agree, right? We need to, like, work together and be like, anyways, it's, you know, stuff.

Albert Brier: 28:43

But I love, like, I read a pundit who calls him Pope Chicago, Bob. I do love Pope Chicago, Bob. He's, he's, he's a real force for good in the world. Or he's shaping up to be one. But, you know, the pope Can, can say he wants us all to work together, all he wants to that isn't going to magically make it so, you know, make it so there's a little Star Trek reference for you, case you're anyway,

Nate Habermeyer, APR: 29:05

blank face here. Okay, my eyes just was really glassy.

Albert Brier: 29:12

Okay, that was for you, okay. But anyway, anyway, the point is that if you say 2 trillion, right, it's a little bit like the water will continue flowing into the bucket until it fills the $2 trillion line. Right? If you say a trillion, then the bucket is at least principally smaller. So you kind of start thinking about the project as a smaller, more confined thing you try to track. Because, like, the point isn't to manage a $2 trillion set of projects, or portfolio of project is to manage a $1 trillion portfolio of projects that will through natural, you know, factors grow to be 2 trillion. Yeah, right. So thinking that you have the bigger bucket will tempt you to fill it, and then your problem just doubles, right? That's one issue. The other is that I don't necessarily trust that you. We can't like, if Mark Carney is going to say a number out loud, we as a as a country like Canada, has no project controls framework right at all. There is nothing at the federal level that says, here's how you should estimate projects, here's how you schedule projects. Here are basic guidelines for quality like, there's nothing like that at the federal level. There's no established control framework. This is my thing three,

Nate Habermeyer, APR: 30:22

by the way. Okay, okay, good, good.

Albert Brier: 30:24

Like, you know, to manage a large portfolio, you know, that could crest 500 billion and or even a trillion dollars in total spend. Yeah, right, you need some unified rules about what like, because, like, we have rules about how you build the government for work, yeah? How you get awarded work by the government, and what say in your contracts and things like that. But it's not at the project controls level, right? Yeah, you know, there is no equivalent of the PMO for Canada like in the US, there effectively is one. It's called the General Services Administration, the GSA, right? The GSA has oversight authority over all Canadian or, excuse me, us, Project Trump would like does have like, by the way, I'm sure, yeah, I'm sure he would. But putting that to one side is not the GSA has a project management system. Not sure is, but Canada has a man I keep doing I know us has a project management system through the GSA. They have capital, programming and estimation requirements through the Office of Management and Budget, anything that's spending public money there, there is a framework to apply to. The same is not true in Canada, right? So we're kind of, to some to some degree, we're trying to chart new courses without a map.

Nate Habermeyer, APR: 31:35

I feel like that is so related to that the programs you know, around mining, you know, because right now there's, there's a bunch of projects that are accelerating here in Canada, just for natural resources, because we're, you know, lithium, rare earth, gold, like, there's a ton of stuff going on, nickel, and there's, like, This constant battle about, like, the mine itself is, is a program. But then there's this, like, larger infrastructure. I mean, mines are really just infrastructure, right? Because you you're building around them. There's energy, there's roads, there's there's rail, there, there's lot waste, like, lots and lots of things that go into a mining program. But then there's this, like, constant bickering over who built what it seems like,

Albert Brier: 32:26

Yeah, well, I hope that the last part isn't true. The first part definitely is you've got a lot of stuff to build if you're going to set up a new mine. But you know, two things like, one, mining is a pretty mature industry in Canada. We do a lot of mineral extraction, you know, of all types. Like, you know, even if you have them here in Alberta, you're over in Ontario, like, you're doing a lot of downhole mineral extract, traditional like, deep bore mining, you know, blowing stuff up and taking the things out, right? Like, that's happening a lot in Ontario, you know, the whole ring of fire project, like portfolio bundle, I should say, in the in the MPO is about building a road network around that to service progress, yeah, all that stuff, right? So, like, Kevin, having that as its own separate project is strategically, I think, really smart, because it kind of takes some of that away, right? Because, like, you know, mining company A isn't going to want to build mining company B's infrastructure. Right? Not knowing what, what haul trucks are going to run over it, how much damage is going to do? Like, who's going to maintain it? Who's going to upkeep it? Like, is it going to be sized for everybody? Like, you build the infrastructure as its own program. That's a pretty common thing to do when you have a large group of projects need to all get executed at the same time, is you treat the infrastructure component as its own separate project, right? So that, I think, is encouraging, and, like I said, like, it's not, we don't have expertise in that. Like, Canada builds a lot of roads and they build a lot of mines, so like, that should be the part that should be the slammest of dunks for us. Like, there's not

Nate Habermeyer, APR: 33:59

really something that decision makers are missing with regard to the infrastructure of mines, because it is so mature, right? Like when we talk about energy, it's first of its kind. Mines are a little bit of a different ball game, right? We've been there, done that over and over again. Like, in fact, I know for a fact that, you know, 60 to 70% of the mining's investment globally flows through just Toronto, right? Because of the number of mines here, mining companies here, Pac the prospect student, developers, Associate of Canada, mineral exploration, that it's there's a lot happening in Canada. So it's not the same, right, like politicians know there's not that, not a lot that they miss about.

Albert Brier: 34:40

No, well, the politicians might, though, because, like, they're going to be looking at the mine itself as the whole picture. So you were spot on when you were saying, there's all this other stuff that needs to happen, and the Ring of Fire is a good example of, like, being aware of that, at least to some degree. But the whole point, and this ties back to what I was saying earlier, is that the government, or at least. Least the the MPO, or at least the projects themselves, need some kind of controls, framework established for both, for scope, development, estimate, development, schedule, development, you know, setting contingencies, figuring out how to expend them, like, who gets, who gets what and when and how, like, all that stuff needs to be put together before they're finished defining the projects. Yeah, before shovels hit the ground, for sure, does the certainly before them. But I'm talking about even before major procurement, right before, right now, right? Yes. So the

Nate Habermeyer, APR: 35:30

MPO, the major projects office for everyone who doesn't know that acronym, and folks that are outside of Canada, is in Calgary, set up by the Kearney government, right? And so they're fast tracking projects. Do they have, like you mentioned, controls? They don't have a framework

Albert Brier: 35:49

for this, not yet. No, they're supposed to be establishing one. My fuzzy on the details, but it's sometime between now and I want to say July, but I'd need to do a little bit of additional reading on that. But the point is that no, I mean, the short answer is no, there is no established control framework at the moment.

Nate Habermeyer, APR: 36:08

Albert, the enthusiasm for these projects is real, politicians, ministers, private, they are all over this. They're all about nation building, whether it's at the federal or provincial level, the will is real, right? They're definitely getting behind that. But the statistics that you mentioned before, there's a gap right between the cost so the price tag and what is actually a cost and what is baked in, etc, considering that Carney just clinched a majority government. And, you know, we saw a bunch of aisle is it aisle crossing? I think it's floor crossing.

Albert Brier: 36:47

I would say aisle. Aisle is American, yep.

Nate Habermeyer, APR: 36:49

So in Canada, it's called crossing the floor.

Albert Brier: 36:52

I wrote aisle into our I know,

Nate Habermeyer, APR: 36:54

because I know why, but there are plenty of floor crossing conservatives, right? And there was a commitment to the centrism and broad, I think, solid support for

Albert Brier: 37:07

his agenda, right? And yeah, there

Nate Habermeyer, APR: 37:08

is Yeah. So the question, what do MPs? If you had to give one piece of advice, what do MPs, especially those with big government funded projects on the horizon, what do they need to know about how capital projects and programs actually work in real life.

Albert Brier: 37:26

I'm going to run, I'm going to run through that, you know, rapid fire, because a lot of it is, is, is stuff that you know, we've already discussed earlier in the show. So I mean, number one with a bullet, is your two choices aren't deliver the project for the number you said or don't your two your two choices are, deliver the project for more and know about it in advance, or deliver the project for more and be surprised by it during construction. Right? So projects run over. They just do. They run over on cost, typically also on schedule. We shouldn't be counting on a $500 billion portfolio costing $500 billion or a trillion dollar portfolio costing a trillion dollars because it won't right. The research is absolutely unambiguous on this. We are going to spend more so, you know, that brings me to point to, we've got to get that controls framework established Right. Like a lot of what made Darlington work was having a, you know, a solid team that had done this kind of work before, operating in a mature controls framework, which we were a part of building, right? So we're not coming at this, as you know, we're not Johnny come lately to the major project controls game, like we've been there. We've done that. We understand what it takes to do this, and the time to do it is now, before the scope is fully defined. You know, before you're you're married to a number, right? Like the time to do it is now, because as soon as you establish good risk practice, you're going to realize that your numbers and your schedule both grew dramatically. So in a way, that's an opportunity, because when the schedule grows, it pushes cost out. We have a whole episode about this, so you can run more things at the same time, right? So if they're not thinking about that, then productivity goes into the toilet, right? If they are thinking about that, productivity stays flat, and the projects just take longer. And that's fine, right? So things like that need to be integrated into those early planning discussions, like right now. So, you know, you know, a good, good. Two good examples of projects were three. I guess, where these things are are are really pressing considerations like right this very second are the Pickering refurbishment, the SMR project and the new Alberta pipeline. Right? Because you may remember the the MOU between the Alberta government and Ottawa, which was kind of like an unprecedented thing, which means that every single element is totally untenable. Totally untested, right? What that tells me is that if Alberta is going to get that pipeline built through BC, through First Nations land, they better get to work right now figuring out how they're going to manage all of that. And like I know that they're hard at work on it, but I. There's going to be elements of it that don't get considered, and I'm worried that the project management elements are among those. So anyway, those are, those are big concerns for me as an Albertan, but also just generally as a Canadian like we need to make sure those controls exist. So, you know, and the idea that the the numbers will just naturally grow over time, it's a bit of a fallacy, like they do, and I've been saying something like that this whole time, but it's not like, you can't tell what it's likely to cost. You can't, right? We have a lot of historical data, and this is another thing, like, use the data at your fingertips. You're not going to do it better than last guys. Guys like, Okay, I hope you will. You should try. But the evidence is, is pretty overwhelming that project, project performance has not improved dramatically over the past 90 years. We're still doubling, tripling, you know, fat tailed projects like nuclear, yeah, right, that we're still doing that. So we need to plan on that, you know, being the case, we can do a little better. Perhaps we can't do dramatically better. Like, we can't do 300% better, right? Like, we need to plan on incremental improvements that happen a little bit at a time, and we need to start planning for those improvements right stinking now. So you know, you asked earlier about knowledge transfer, historical data, documented lessons learned, even the people from those teams, those people, are all gold mines of information about what could go wrong on a big capital development. And I was kind of poo pooing the idea that all of that knowledge is transferable, and not all of it is, right, but some of it is, and some of the general concepts certainly are. So those people, you know, when, when the new guys come in and they're like, ah, they ran over by 200% fire everybody, it's like, well, that's pretty destructive instinct. So I guess that's my thing. Like, number one, count on it cost you more and taking longer, okay? Number two, build a controls framework to allow for that to happen, you know, and still have the project be under control, right? Number three, start nailing the scopes of some of these really serious like nation building projects, especially the first of their kind. Ones are the ones that have extreme schedule pressure. And number four, don't, don't just fire everybody. Okay, keep some of the people so that you can keep their knowledge too. And there

Nate Habermeyer, APR: 42:14

you have it. All right, thanks. That's great. That was good discussion. Thanks.

Albert Brier: 42:18

Albert, thank you. Nate, appreciate

Nate Habermeyer, APR: 42:20

it. All right, see you all later.

Albert Brier: 42:23

Hey everybody. It's Albert here. Thanks for tuning in to the risky planner podcast. We hope today's conversation was informative, and above all else, inspires you to excellence in what you do. If you like today's episode, don't forget to rate, subscribe and leave a review. It helps us reach more listeners just like you. I'd also like to thank Thompson, Igbo. Igbo for letting us use his excellent music on our show. If you like what you hear, check him out@igbomusic.com that's E, G, B, O music.com talk to you later. You.