“Nostalgia Is Not a Strategy”
Mark Carney, Prime Minister of Canada — World Economic Forum, Davos, January 2026
Imagine the morning of March 1, 2026. A senior project manager at a Canadian engineering firm sits down at her desk. The first headline is the strike on Iran. Her mind goes to diesel. Then to structural steel. Then to that P3 still awaiting final pricing. And if she is sharp — to the question that almost nobody is asking yet: which projects are opening right now that were closed three months ago?
This article is written for that project manager — and for the engineering economist who knows that geopolitics finds its fastest path to the job site through the PPI for structural steel. The lens here is foresight: not a report on what has happened, but a map of what is opening up for Canada’s engineering and construction industry over the next 12 to 24 months.
1. From the Strait of Hormuz to the Job Site — How the Shock Travels
When the Strait of Hormuz — just 33 kilometres at its narrowest — was paralysed on March 1, 2026, the head of the IEA called it “the greatest global energy security challenge in history.” Twenty million barrels of crude and one-fifth of the world’s LNG moved through that strait daily. But for the construction industry, this shock does not arrive through a single channel. It arrives through five at once.
Source: WEF, “The Global Price Tag of War in the Middle East”, March 2026; Wikipedia, Economic Impact of the 2026 Iran War
Channel one is diesel — the fuel powering every excavator, crane, mixer and truck on every site. Channel two is steel and aluminium — energy-intensive to produce, repriced immediately when energy costs move. Channel three is shipping costs — imported mechanical and electrical equipment becomes more expensive at the dock. Channel four is interest rates — energy-driven inflation closes the window for rate cuts, keeping project financing costs elevated. Channel five — and almost nobody writes about this one — is the 30-to-60-day lag before suppliers pass through price increases. That lag is not a risk. It is a window.
Source: Cotney Consulting Group / CoatingsCoffeeShop, “How the Iran Conflict Could Impact Construction Costs”, March 17, 2026; RSM Supply Chain Special Report 2025
These five channels landed on a market already running hot. Trump-era tariffs had been pressuring steel and aluminium since early 2025. The AGC and ABC data from February 2026 — before the Iran war’s full effect — already showed this:
Source: AGC, “Soaring Fuel and Metals Costs”, March 18, 2026; ABC, Construction Input Price Analysis, March 27, 2026
| +39.1% | Year-over-year increase in the PPI for aluminium mill shapes — largest since 2022 supply chain disruptions |
| +20.9% | Year-over-year increase in the PPI for steel mill products — structural steel, rebar, plate |
| +15.1% | Increase in copper and brass mill shapes — the primary inputs for electrical and mechanical systems |
| +12.6% | Annualised rate of increase in all construction inputs — January and February 2026 combined |
Source: AGC / Bureau of Labor Statistics (BLS); ABC Chief Economist Anirban Basu, March 2026
◆ ABC’s chief economist was explicit: “These figures do not yet reflect the precipitous increase in oil prices caused by the conflict in Iran.” These numbers are a floor, not a ceiling. The firm that restructures its contract and procurement strategy now will be in a position its competitors are not.
2. Engineering and EPC Services — A Market Being Rewritten
“Canada has what the world wants. We are an energy superpower. We hold vast reserves of critical minerals. The old order is not coming back. We should not mourn it.” Mark Carney — World Economic Forum, Davos, January 2026
Three New Markets for EPC, EPCM and Consulting Engineers
The engineering consultant who spent the last decade pursuing Ontario transit and hospital P3s is now looking at three new markets — all born from the same geopolitical shift, none driven by a domestic political cycle.
Market One — LNG and Energy Infrastructure
LNG Canada Phase 1 shipped its first cargo to Asia in June 2025. TC Energy CEO François Poirier told CERAWeek Houston in March 2026: “There is sufficient demand to support both LNG Canada Phase 2 and the proposed Ksi Lisims LNG project.” Fortune reported that a final investment decision on Phase 2 — involving Shell, Mitsubishi, Korea Gas Corporation, Petronas and PetroChina — is expected by late 2026 or early 2027. Asia Pacific Foundation of Canada framed the structural logic precisely: “The Alberta-to-Zhoushan routing resolves, in one pipeline and one shipping lane, the Hormuz problem. No Iranian drone reaches Fort McMurray or Westridge terminal.”
Source: BOE Report, March 23, 2026; Fortune, March 15, 2026; Asia Pacific Foundation of Canada, March 2026
For an EPC or EPCM firm, each LNG phase means: process engineering for gas conditioning and liquefaction, cryogenic storage and containment system design, marine terminal structural work, procurement management in a volatile materials market, and construction management in coastal British Columbia with Indigenous engagement requirements. This is a capability set that is genuinely scarce in the market — and scarcity justifies premium pricing.
Market Two — Critical Minerals Infrastructure
Canada’s Critical Defence Strategy (February 2026) confirmed that Canada holds all 12 of NATO’s defence-critical minerals and currently produces 10 of them — including aluminium, cobalt, gallium, germanium, tungsten and uranium. NATO Association of Canada reported that EU demand for rare earth metals is forecast to increase sixfold by 2030. InvestorNews wrote in March 2026: “A 500% surge in tungsten and a scramble for cobalt inventories are early signals of a system under stress. Critical minerals are no longer inputs — they are instruments of power.”
Source: Canada’s Critical Defence Strategy, February 2026; InvestorNews, Critical Minerals Report, March 22, 2026; NATO Association of Canada, “From Mines to Mandates”, February 2026
Behind those signals is a multi-billion-dollar construction market. Every new mine means: access roads through difficult terrain, mineral processing facilities requiring metallurgical process engineering, industrial water and effluent systems, power infrastructure in remote locations, and workforce accommodation and support facilities. The feasibility-to-commissioning cycle is five to eight years. An engineering firm that enters the consulting phase of these projects today has five to eight years of recurring work built in.
Market Three — Northern Defence and Arctic Infrastructure
McCarthy Tétrault noted in February 2026 that some provinces now describe the primary driver of their infrastructure policy as “national survival.” The Defence Investment Agency (DIA) was established with C$6.6 billion over five years. Defence projects in remote northern locations generate meaningful spillover in local roads, wastewater systems, power grids and communications. Here, specialised expertise in permafrost engineering, ice-load structural design and cold-climate construction logistics is a genuine competitive differentiator — not a marketing claim.
Source: McCarthy Tétrault, “Building the Future in a Ruptured World: 7 Key Takeaways on Canada’s 2026 Infrastructure Priorities”, February 4, 2026
Exporting Engineering Services — A Market Just Opening
One of the least-discussed opportunities in this shift is the export market for engineering services. Canada’s energy minister described the country’s near-98% export dependence on the U.S. market as “a strategic blunder.” In 2025, Canada signed a new trade agreement with Indonesia, relaunched trade negotiations with India, and opened investment protection negotiations with the UAE. In March 2026, Prime Minister Carney met with Norwegian Prime Minister Jonas Gahr Støre and German Chancellor Friedrich Merz in Oslo, agreeing on cooperation in energy, critical minerals, Arctic security and space technologies.
Source: Policy Magazine, “Energy as the Anchor of the Bilateral Reset”, February 2026; Fasken, “Looking Ahead to 2026: A New Era of International Trade”, January 2026; PM.gc.ca, March 15, 2026
Asia Pacific Foundation of Canada put the structural case plainly: “The alignment of interest between Canada’s diversification imperative and Asia’s energy security imperative has never been stronger.” Council on Foreign Relations reinforced why this demand is durable: unlike Europe’s response to the Ukraine war, where immediate LNG diversification options existed, Asian economies have fewer alternatives — meaning Canada’s export window for engineering services is longer-lived than any previous crisis created.
Source: Asia Pacific Foundation of Canada, March 2026; Council on Foreign Relations / World Politics Review, March 26, 2026
For a Canadian engineering or EPC firm with LNG, refinery or mining infrastructure experience, this alignment means an invitation to the negotiating table in Japan, South Korea, India and Indonesia. Montreal Economic Institute stated it directly: “Canada’s reliability and stability as an energy producer make it a partner of choice for our allies in Europe and Asia.” That reputation, built at the government level, is an indirect asset for the private sector. Canadian engineering firms arrive at those tables carrying the brand.
Source: Montreal Economic Institute (MEI), March 3, 2026
◆ In engineering economics terms, exporting services means restructuring the revenue base: from 80%+ domestic dependence to a portfolio where 20 to 30 percent is Asia-Pacific or European projects. That diversification reduces cyclical risk and enables premium pricing — because “Canadian EPC firm with LNG experience” commands a higher rate in Asian markets than local competitors. Firms that invest in representation offices, international certifications and buyer relationships now will occupy positions that late movers cannot quickly enter.
3. The Public Investment Wave — P3 in the Age of National Survival
Building Canada Act and the Shift in Project Priority
McCarthy Tétrault wrote in February 2026: “A tipping point may have been reached whereunder the domestic and geopolitical risks associated with inaction and project delays now outweigh the risks of project acceleration.” The Major Projects Office (MPO), established in August 2025 under the Building Canada Act, is the institutional mechanism for that acceleration. Norton Rose Fulbright noted that the federal government explicitly stated it will use government contracting “as a core tool to counter the economic impacts of global trade disruptions and tariffs.” For P3 market participants, this translates to a materially higher volume of RFPs in the 2026-to-2028 window than baseline forecasts anticipated.
Source: McCarthy Tétrault, February 4, 2026; Norton Rose Fulbright, “Budget 2025: Government Contracting and Buy Canadian”, 2026
Two funds from Budget 2025 feed the market directly. The Trade Diversification Corridors Fund — C$5 billion over seven years — covers ports, airports, rail, road and digital trade infrastructure across priority regions. The Arctic Infrastructure Fund — C$1 billion over four years — targets northern transportation assets with dual civilian-military applications: airports, seaports, highways and all-season roads. The technical profile of northern work, where permafrost engineering and cold-climate construction dominate scope, creates barriers to entry that protect margins for firms with the right capability.
Source: Norton Rose Fulbright, Budget 2025
Progressive P3 — A Model Designed for Engineering Realities
The Globe and Mail’s January 2025 investigation identified the core failure mode of large P3 transit projects: contractors were forced to lock in pricing before design was sufficiently advanced. In a market where aluminium has risen 39% and steel 21%, that structure creates intolerable risk. Professor Matti Siemiatycki of the Infrastructure Institute at the University of Toronto called it “hitting a wall.” Eglinton Crosstown was the exhibit: more than two years late and over C$500 million in cost overruns.
Source: The Globe and Mail, “Canadian Transit Projects, Mired in Delays and Cost Overruns, Force a Rethink”, January 2025; Prof. Matti Siemiatycki, Infrastructure Institute, University of Toronto
The operational response is Progressive P3 — a model the CCPPP detailed in its most recent practice guide. The engineer and contractor engage in early design phases before final pricing is fixed, to identify “market-viable solutions” before commitments are locked. Ontario piloted this with the Ontario Line, breaking the project into manageable pieces and using negotiated models for the most complex components. McCarthy Tétrault recommended that market participants “engage with government, First Nations communities and other key stakeholders early and often throughout the project lifecycle.”
Source: CCPPP P3 Guide for Municipalities, 2024; The Globe and Mail, January 2025; McCarthy Tétrault, February 2026
◆ For a consulting engineer, “early engagement” has a precise operational meaning: invest in feasibility and concept design for projects that have not yet reached RFP stage. When a tender opens, the firm enters as a “known specialist” rather than a new bidder. In qualitative evaluation criteria — which typically carry 30 to 40 percent of the scoring weight in complex P3s — that distinction is often decisive.
Buy Canadian — Supply Chain Position as Competitive Advantage
Torys LLP confirmed in December 2025 that the Buy Canadian Policy requires large construction and defence contracts to source steel, aluminium and wood products from Canadian manufacturers. The policy threshold drops from C$25 million to C$5 million by end of 2026. Canadian suppliers receive a 10% reduction to their financial proposals for evaluation purposes. A firm that has already built a domesticated steel and aluminium supply chain — before Buy Canadian reaches the C$5 million threshold — will carry a measurable procurement cost advantage into federal tenders throughout 2026 and 2027.
Source: Torys LLP, “Federal Government Implements the Buy Canadian Policy”, December 2025
4. Material Cost Risk — Tools, Not Excuses
The primary execution risk in 2026 is straightforward: a P3 contract priced on 2024 assumptions is now facing aluminium 39% higher and steel 21% higher. ABC Carolinas reported that many member firms had at least one commercial or industrial project in the past year that, after receiving updated steel, aluminium or switchgear quotes, exceeded original budgets by 10 to 15 percent — triggering delays or renegotiation. In a market where competitors freeze or reprice aggressively, the firm with structured risk management tools takes market share.
Source: ABC Carolinas, “Construction Material Tariff Costs 2026”, March 2026
RSM proposed the Material Price Escalation Fund as the appropriate structure for the Canadian market: a contractual mechanism that releases funds to the contractor when documented material cost increases exceed a defined threshold, and returns funds to the owner when prices stabilise or decline. ABC Carolinas recommended that Escalation Clauses be tied to objective third-party indices — BLS PPI for steel, aluminium and copper — with “tariff event” and “energy event” triggers explicitly defined. Baker Donelson advised contractors to lock in long-lead critical items — electrical materials, HVAC equipment, structural steel — immediately, while the 30-to-60-day window before supplier price adjustments remains open.
Source: RSM / Mondaq Canada, “Navigating Tariffs and Supply Chain Challenges in Construction”, June 2025; ABC Carolinas, March 2026; Baker Donelson, “The 2026 Iran War and Its Global Impact on Construction Supply Chains”
◆ Material risk management is a tool, not an excuse. A contractor who brings an Escalation Clause structure to the table is not only protecting its own margin — it is offering the public-sector owner protection against uncontrollable cost volatility. In Value for Money assessments, that alignment of interest matters. Infrastructure Ontario’s own P3 framework is explicit: risk should be allocated to the party best able to manage it. When the risk source is geopolitical war, neither party controls it — and the contract should say so.
5. Foresight Roadmap — Five Parallel Actions
“When you are competing on the global stage, customers are not going to wait”
François Poirier, CEO of TC Energy — CERAWeek Houston, March 2026
Fortune reported that companies that lock in long-term contracts now “will have structural insurance against the next Hormuz-related supply shock — insurance that will look extraordinarily cheap in hindsight.” Chatham House noted that even if the conflict is short-lived, a permanent shift in the “strategic mindset” of Asian energy buyers has occurred. Oxford Economics estimates the federal fiscal impulse in 2026 at over 2% of GDP — the largest since 1980, outside the pandemic period.
Source: Fortune, March 15, 2026; Chatham House, “How Will the Iran War Affect the Global Economy?”, March 2026; Oxford Economics, Canada Key Themes 2026, January 2026
For a Canadian engineering or EPC firm, the foresight roadmap is built from five parallel actions, each with a distinct time horizon.
Action One — Position in LNG and Energy Markets (12-month horizon)
This means Phase 2 and Ksi Lisims in Canada, and LNG terminal construction projects in Japan, South Korea and India where Canada is the preferred supplier. The entry point is feasibility study engagement now — before RFPs are issued.
Action Two — Enter Critical Minerals Infrastructure Early (18-month horizon)
Mines supported by the G7 Critical Minerals Production Alliance (launched October 2025) are moving from planning into development. The firm in the feasibility and FEED phase of these projects today has five to eight years of recurring work embedded in its pipeline.
Action Three — Build Progressive P3 and Material Risk Expertise (6-month horizon)
This capability is scarce in the current market. A firm that can submit a P3 proposal with a BLS-indexed Escalation Clause and simultaneously engage in early-phase design collaboration with government owners is in a position that traditional competitors have not yet reached.
Action Four — Build the Export Services Infrastructure for Asia (24-month horizon)
A representation office in Singapore, Tokyo or Seoul; relevant ISO and international certifications; presence at Asia-Pacific energy industry events. The investment is now. The revenue is in three to five years — from a market that has just become structurally motivated to buy Canadian engineering expertise.
Action Five — Domesticate the Steel and Aluminium Supply Chain (6-month horizon)
For competitive advantage in Buy Canadian tenders as the threshold drops to C$5 million by end of 2026. Long-term agreements with domestic producers lock in pricing and create a procurement cost advantage in federal evaluations that is difficult for competitors to replicate quickly.
Source: McCarthy Tétrault, February 2026; Natural Resources Canada, October 2025; Torys LLP, December 2025; Asia Pacific Foundation of Canada, March 2026
Carney’s phrase in Davos — “nostalgia is not a strategy” — has a precise meaning for the engineering industry. A firm that brings a 2015 contract model and a 2019 supply chain to the 2026 market will not just fail to grow — it may sustain losses. But the window this crisis has opened, for firms that are ready, represents the kind of structural market opportunity that appears perhaps once in a decade.
Source: PM Mark Carney, World Economic Forum, Davos, January 2026; BNN Bloomberg, March 24, 2026
References
— Government and Policy Sources —
1. PM Mark Carney — World Economic Forum, Davos, January 2026
2. PM.gc.ca — “PM Carney Deepens Cooperation with Nordic Countries in Defence, Arctic Security, and Critical Minerals”, March 15, 2026
3. Norton Rose Fulbright — “Budget 2025: Government Contracting and Buy Canadian”, 2026
4. Torys LLP — “Federal Government Implements the Buy Canadian Policy”, December 2025
5. Natural Resources Canada — G7 Critical Minerals Production Alliance, October 2025
6. Canada.ca — Critical Minerals Strategy Progress Update, February 2026
7. Canada’s Critical Defence Strategy, February 2026
8. CanadaBuys / PSPC — P3 Framework, January 2026
— Industry, Legal and Executive Sources —
9. McCarthy Tétrault — “Building the Future in a Ruptured World: 7 Key Takeaways on Canada’s 2026 Infrastructure Priorities”, February 4, 2026
10. McCarthy Tétrault — “Fast-Tracking Nation-Building: Canada’s Major Projects Office”, August 2025
11. CCPPP (Canadian Council for Public-Private Partnerships) — P3 Guide for Municipalities, 2024
12. Infrastructure Ontario — P3 Model FAQ
13. AGC (Associated General Contractors of America) — “Soaring Fuel and Metals Costs”, March 18, 2026
14. ABC (Associated Builders and Contractors) — Construction Input Price Analysis, March 27, 2026
15. ABC Carolinas — “Construction Material Tariff Costs 2026”, March 2026
16. Baker Donelson — “The 2026 Iran War and Its Global Impact on Construction Supply Chains”
17. TC Energy CEO François Poirier — CERAWeek Houston, March 2026 (via BNN Bloomberg; BOE Report)
18. Montreal Economic Institute (MEI) — “The Situation in the Middle East Solidifies Canada’s Advantage as a Reliable Supplier”, March 3, 2026
19. QBE Insurance Group — Construction Risk Analysis 2026
20. Fasken — “Looking Ahead to 2026: A New Era of International Trade”, January 2026
— Academic and Research Sources —
21. Asia Pacific Foundation of Canada — “Canada as a Solution to Asia’s Structural Energy Security Crisis”, March 2026
22. The China Institute, University of Alberta — “TCI QuickTake: Canada as East Asia’s Future Energy Shock Absorber”, March 2026
23. Chatham House — “How Will the Iran War Affect the Global Economy?”, March 2026
24. CSIS — “What Does the Iran War Mean for Global Energy Markets?”, March 2026
25. Prof. Matti Siemiatycki, Infrastructure Institute, University of Toronto — via The Globe and Mail, January 2025
26. NATO Association of Canada — “From Mines to Mandates: Critical Minerals as the Key to Meeting NATO Contributions”, February 2026
27. RSM / Mondaq Canada — “Navigating Tariffs and Supply Chain Challenges in Construction”, June 2025
28. Oxford Economics — Canada Key Themes 2026, January 2026
29. Eurasia Group — Top Risks 2026: Implications for Canada
30. Council on Foreign Relations / World Politics Review — “The Iran War Is Reshaping Asia’s Energy Security Strategies”, March 26, 2026
— Trade Publications and Specialist Media —
31. The Globe and Mail — “Canadian Transit Projects, Mired in Delays and Cost Overruns, Force a Rethink”, January 2025
32. Fortune — “The Closed Strait of Hormuz Is Testing Asia’s Energy Security. The Answer Lies Across the Pacific — in Canada”, March 15, 2026
33. WEF — “The Global Price Tag of War in the Middle East”, March 2026
34. InvestorNews — Critical Minerals Report, March 22, 2026
35. CIM Magazine — “Critical Minerals Key Highlight in Canada’s First Defence Strategy”, February 2026
36. Canada’s National Observer — “Canada Pledges Oil to Calm Markets, but Lacks Stockpile”, March 12, 2026
37. Construction Dive — “Construction Prices Spiked at Staggering Rate to Begin 2026”, March 2026
38. Cotney Consulting Group / CoatingsCoffeeShop — “How the Iran Conflict Could Impact Construction Costs”, March 17, 2026
39. Policy Magazine — “Energy as the Anchor of the Bilateral Reset”, February 2026
40. BOE Report — “Iran War Makes Second Phase of LNG Canada More Likely, TC Energy CEO Says”, March 23, 2026
41. OilPrice.com — “Middle East War Could Push West Canada’s LNG Projects Forward”, March 2026
42. Wikipedia — “Economic Impact of the 2026 Iran War” (ongoing)