Case 01
Pausing an extension with only three anchor commitments
In 2022, we were preparing a C$42 million extension intended to serve a new mixed-use precinct. The development case included seven expected anchor buildings. Three had reached a firm service commitment; the others remained dependent on property decisions and construction timing. The development team believed that starting the network would encourage the remaining customers to commit. Operations and finance were concerned that the company would carry the cost of capacity long before the associated demand arrived.
I asked for the investment case to be separated into committed, probable and exploratory connections. We examined the cash requirement if the four uncommitted buildings arrived later, in a smaller form or not at all. The exercise did not establish that the precinct would fail. It showed that the proposed construction sequence relied on demand for which the enterprise had no comparable commitment. I recommended an eighteen-month pause in major construction while preserving a limited set of site options and development work.
The board accepted the recommendation. The pause cost C$700,000 in site and option expenditure, and we lost the original construction timetable. I did not present the full C$42 million as a saving: it was expenditure deferred, not a completed project delivered more cheaply. The commercial team continued discussions with the prospective customers, using a clearer account of the conditions required before the next capital decision.
Some owners found the slower timetable frustrating because the extension had featured prominently in the growth discussion. I kept the distinction between interest and commitment in subsequent reports rather than quietly replacing the old date with another optimistic one. The project remained an opportunity under review. The result I can claim is a better-defined exposure and an avoided premature construction commitment, with the cost of preserving the option still visible. It is not proof that waiting will ultimately produce a more profitable development.
For another extension, I would establish the minimum customer commitment before commissioning the detailed schedule, reducing the pressure to treat engineering preparation as a reason to proceed.