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This article was published 18/1/2009 (4326 days ago), so information in it may no longer be current.
Winnipeg Construction Association head Ron Hambley said construction firms might have trouble getting banks to loan them money long-term, which could limit the number of bidders on projects like the Disraeli, the Chief Peguis Trail extension or a batch of police stations the city is planning to rebuild in the coming years. Fewer bidders could drive up the cost.
"There will still be two or three teams, but it might not be a cast of thousands," said Hambley.
So far, three consortiums -- partnerships between financing firms and construction and maintenance companies -- have been shortlisted to bid on the $140-million Disraeli bridge project. The winner will build, pay for and maintain the new vehicle and pedestrian bridge for a period of 25 to 35 years for a fee before handing it back to the city.
One consortium is a partnership between PCL, the firm that built Manitoba Hydro's new downtown office building, and the Plenary Group, a global financing firm.
Plenary vice-president Brian Clark said interest rates are certainly higher than they were a year ago, but they are still relatively low. It's also getting harder to get banks to issue long-term loans for big projects.
But he said that applies more to private construction and to multibillion-dollar projects. The Disraeli rebuild -- and presumably the police stations and Peguis Trail -- are a much more attractive size. They're big enough to be worth the expense of putting together a bid, but not so big that banks get nervous.
Banks, especially Spanish and other European banks, are still willing to lend, said Clark.
Hambley said the credit crunch won't likely affect projects built the traditional way -- where the city issues a tender and pays the entire bill when the project is complete. Builders only need short-term lines of credit for those projects so they can buy materials and pay subcontractors. Getting short-term financing hasn't been a big problem yet, said Hambley.
That's important since Ottawa and the provinces are considering speeding up infrastructure spending to stave off the recession.
The city is watching the world financial situation very closely to ensure P3s remain advantageous for the city, said chief financial officer Mike Ruta.
He said he doesn't foresee any immediate credit crunch. But he does expect Ottawa to engage in measures that would free up more lending capital.