Insights & News

Shovel Ready – The Steps To Break Ground on an Infrastructure Project

May 10, 2023

The term “shovel ready” indicates an infrastructure project is ready to start construction. But what does it take to get to that state?

The short answer is: a lot! Technical advisors and Development Board members from the First Nations Infrastructure Institute (FNII) can elaborate on that.

“What we think about when we think shovel ready is having a fully developed business case,” says Jason Calla, a technical advisor with FNII. “The business case is really a one-stop shop to describe a project. It allows people to understand what the project’s all about and to understand the rationale and the process you’re going to use.”

Those people could include potential contractors who will build the project, lenders who might finance it, and – in the case of First Nations communities – members who need to be engaged with.

Business cases for infrastructure projects are made up a few different parts. First comes the strategic case – the “why” of the project and how it meets the Nation or organization’s goals.

“The more that the project responds to community priorities, the better the project is going to be,” says Jason.

Next is the technical case. This is a review of the current situation and the various options to address it. It includes a high-level cost and revenue analysis of the project options.

“There’s quite a bit of work and thinking about how to frame that feasibility study,” says Jason. “What are the issues you’re looking at in the feasibility? There can be technology options, there could be location options. And so that technical case is going to come up with some cost estimates and it’s going to help really set the stage for what the plan is going to be when the project actually gets built.”

The commercial case describes the procurement objective and process. “That’s how the request-for-proposal will work and how you will get bids for the project,” says Jason. “If you’re not going to do the project completely on your own, how are you going to select the firm that you’re going to work with and what are the criteria by which you might select the people who bid on your project?”

The financial case takes the preferred option identified in the technical case and outlines all the costs: capital (construction); operation, maintenance, and lifecycle (e.g., when a roof might need to be replaced). The financial case also identifies funding sources and revenue opportunities. Funding could come from the Government of Canada or from the Nation’s own sources.

Nations are increasingly taking ownership of funding options. Allan Claxton, the head of FNII’s Development Board, describes meeting with Health Canada years ago to ask for funding to build a health centre for the Tsawout Nation, where he was Chief at the time. The condition for funding was that the centre include a gymnasium.

“So, we immediately shook hands with them. Then we left the meeting and I was thinking to myself, how the heck am I going to pay for this? That’s a $10 million project,” says Allan.

The first answer was taking over property taxes that the local municipality had been collecting from businesses operating on the Nation’s lands (without providing services, Allan notes).

“And then years later we got into the GST. We developed our own tax law and opted out of the GST and into our own sales tax law. So, we collect $1.4 million [annually] in that.”

Development Board member Keith Matthew says his Simpcw Nation’s development corporation is making about $30 million a year that will support infrastructure projects.

“We’re trying to build a band office, health center and school, and if we have a guaranteed revenue source through the FNFA [First Nations Finance Authority] and our own development corporation, we can easily do that,” he says.

The final component of an infrastructure business plan is the management case, which sets out the steps for managing the project – from the skills needed on the team to engagement with the First Nations and other stakeholders, right through to a detailed project plan with milestones. 

Working through all these segments can take a lot of time FNII Technical Advisor Dana Francis says.

“Once you’ve gone through the feasibility plan and you’ve come out with a high-level pricing for your project and you have some preliminary drawings that stirs up excitement – that carries you into your next step, which is the commercial side of things.” Dana says. “From there, you want to start the hard work, which is the engineering and the architectural work that refines your costs and all your technical specifications so that you could eventually get to a tender-ready document. So, you work through all these aspects and you go through many, many versions of getting that package where everybody’s happy about it.”

Many people aren’t happy with the length of time it takes for First Nations infrastructure project to get going in the current system (aka “before FNII”). Keith Matthews describes how it took his Nation 30 years to pave the dirt roads on the reserve.

“It’s been a generational thing for us,” he says. “If we had FNII in place that could have helped us do it effectively and efficiently. I’m pretty sure we could have had those discussions down to a lot less time!”

For Allan Claxton, the status quo process of developing First Nations infrastructure is too slow, too costly and the projects are too often of poor quality.

“We need to step forward and take jurisdiction of the needs of our communities through our own local governments,” he says. “That’s what [FNII] wants to support as a team. We don’t just represent people in our regions, we represent the people in every First Nation in Canada.”

FNII brings together experienced advisors and best practices to provide free support to First Nations governments or other organizations. It can provide as much or as little support as a group needs in order to ensure the success of an infrastructure project.

In the case of the business plan, it means ensuring everything is in place to guarantee “the best chance to be shovel-ready,” says Jason. “That is, the best chance to have companies, lenders, and funders want to work with us. We think having this work done gives our project the best chance for success.”

Contact FNII to discuss how it might help with your infrastructure project. For more information about getting shovel-ready, FNII offers two recorded webinars on the subject. It’s part of a series of webinars that can be found in the Resources section of the FNII website.