Canadian Manufacturing

Canadian energy projects over budget and behind schedule, EY reports

Canadian energy infrastructure megaprojects run US$2.2 billion over budget and behind schedule by 12 months on average, according to a new EY study



CALGARY—Canadian energy infrastructure megaprojects run 39 per cent—or US$2.2 billion—over budget and behind schedule by 12 months on average.

This is according to a new Ernst & Young (EY) report, Spotlight on Canadian power and utility megaprojects.

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 $4.6 billion and $4 billion, 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. 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,” said Gerard McInnis, EY’s Canadian Power & Utilities leader.

EY’s report notes that despite the cost overruns and delays, Canadian projects still perform better than those in the U.S., where the average project delay is three years.

The report also highlights three challenges the Canadian power and utilities sector faces:

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

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

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