<DOCUMENT>
<TYPE>EX-99.54
<SEQUENCE>56
<FILENAME>t17577exv99w54.txt
<DESCRIPTION>EX-99.54
<TEXT>
<PAGE>

MANAGEMENT'S  DISCUSSION AND ANALYSIS

This discussion and analysis of Stantec's operations and financial position,
dated February 11, 2005, should be read in conjunction with the Company's 2004
consolidated financial statements and related notes, as well as the Message to
Shareholders and management discussions included in this annual report.
Additional information regarding the Company, including the Annual Information
Form, is available on SEDAR at www.sedar.com.

This report includes references to and uses terms that are not specifically
defined in the Canadian Institute of Chartered Accountants Handbook and do not
have any standardized meaning prescribed by Canadian generally accepted
accounting principles (GAAP). These non-GAAP measures may not be comparable to
similar measures presented by other companies. We refer to and use the terms
"net revenue" and "gross margin" throughout our analysis, and the definitions of
these terms are provided in the Results section.

OUR COMPANY'S CURRENT GOAL IS TO BECOME A TOP 10 GLOBAL DESIGN AND CONSULTING
SERVICES FIRM BY THE YEAR 2008.

                                     [PHOTO]

Page 22 2004 Stantec Annual Report

<PAGE>

WE ARE CONFIDENT THAT WE CAN REACH OUR GOAL BECAUSE WE HAVE AN ORGANIZATION OF
DEDICATED EMPLOYEES WHO GIVE US OUR COMPETITIVE ADVANTAGE.

CAUTION REGARDING
FORWARD-LOOKING STATEMENTS

Stantec's public communications often include written or verbal forward-looking
statements. Forward-looking statements are disclosures regarding possible
events, conditions, or results of operations that are based on assumptions about
future economic conditions and courses of action and include future-oriented
financial information.

Statements of this type are included in this report and may be included in
filings with Canadian securities regulators or in other communications.
Forward-looking statements may involve, but are not limited to, comments with
respect to our objectives for 2005 and beyond, our strategies or future actions,
our targets, our expectations for our financial condition or share price, and
the results of or outlook for our operations or for the Canadian and US
economies.

                                   [PICTURE]

By their nature, forward-looking statements require us to make assumptions and
are subject to inherent risks and uncertainties. There is a significant risk
that predictions and other forward-looking statements will not prove to be
accurate. We caution readers of this report to not place undue reliance on our
forward-looking statements since a number of factors could cause actual future
results, conditions, actions, or events to differ materially from the targets,
expectations, estimates, or intentions expressed in these statements.

In addition to the factors set out in the Risk section below, the following
factors, among others, could cause Stantec's actual results to differ

                                              Page 23 2004 Stantec Annual Report

<PAGE>

materially from those projected in our forward-looking statements:

      -     Global capital market activities

      -     Fluctuations in interest rates and currency values

      -     The effects of war or terrorist activities

      -     The effects of disease or illness on local, national, or
            international economies

      -     The effects of disruptions to public infrastructure, such as
            transportation or communications

      -     Disruptions in power or water supply

      -     Industry and worldwide economic and political conditions

      -     Regulatory and statutory developments

      -     The effects of competition in the geographic and business areas in
            which we operate

      -     The actions of management

      -     Technological changes.

We caution that the above list of factors is not exhaustive and that when
relying on forward looking statements to make decisions with respect to Stantec,
investors and others should carefully consider these factors, as well as other
uncertainties and potential events, along with the inherent uncertainty of
forward-looking statements. Stantec does not undertake to update any
forward-looking statement, whether written or verbal, that may be made from time
to time by the organization or on its behalf.

                                   [PICTURE]

VISION, CORE BUSINESS, AND STRATEGY

Founded in 1954, Stantec provides professional design and consulting services in
planning, engineering, architecture, interior design, landscape architecture,
surveying and project management for the infrastructure and facilities sector.
Through multidiscipline service delivery, we support clients through the entire
project life cycle--from the initial concept and financial feasibility phases to
project completion and beyond.

Page 24 2004 Stantec Annual Report


<PAGE>

Our Company's current goal, which we established in 1998, is to become a top 10
global design and consulting services firm with $1 billion in annual revenue by
the year 2008. To achieve this objective, we will continue to deliver
fee-for-service professional services in the infrastructure and facilities
market and to follow an orderly growth plan. We are confident that we can reach
our goal because we operate in a large market that currently generates more than
US$50 billion in sales every year and because we have an organization of
dedicated employees who give us our competitive advantage--the ability to
execute a proven operating strategy through a focused, sustainable business
model. Our three-dimensional model--which is based on diversifying our
operations in distinct geographic regions, specializing in distinct but
complementary practice areas, and providing services in all five phases of the
infrastructure and facilities project life cycle--allows us to manage risk while
continuing to increase our revenue and earnings.

GEOGRAPHIC DIVERSIFICATION

Currently, our geographic reach principally includes five economic regions in
Canada and the US as well as a project presence in the Caribbean and other
selected international locations. Our strategy for geographic diversification
has two components. The first is to grow our existing regional operations by
expanding our services particularly in areas where we have not yet reached a
mature market presence. We target to achieve a market penetration of $10 million
in revenue per 1 million population in these regions. Secondly, our strategy
includes expansion outside our existing regions principally in the US and
Canada. We expect to continue to expand geographically primarily by acquiring
firms that meet our integration criteria and to a lesser extent by growing
organically.

TO ACHIEVE OUR OBJECTIVE, WE WILL CONTINUE TO DELIVER FEE-FOR-SERVICE
PROFESSIONAL SERVICES AND TO FOLLOW AN ORDERLY GROWTH PLAN.

PRACTICE AREA SPECIALIZATION

Specialization and diversification of services are achieved by providing
services in 17 distinct practice areas that can generally be grouped into five
key market segments--Buildings, Environment, Industrial, Transportation, and
Urban

                                   [PICTURE]

                                              Page 25 2004 Stantec Annual Report

<PAGE>

Land. Focusing on this combination of project services helps differentiate us
from our competitors, allowing us to enhance our presence in new geographic
regions and markets and to establish and maintain client relationships. Our
strategy for strengthening this dimension of our business model is to increase
the depth of our expertise in our current practice areas and to selectively add
complementary practice areas to our operations.

LIFE CYCLE SOLUTIONS

The third element of our business model is the provision of professional
services in all five phases of the project life cycle--planning, design,
construction, maintenance, and decommissioning. This inclusive approach allows
us to deliver services during periods of strong new capital project activity
(i.e., design and construction) as well as periods of lower new capital project
expenditures (i.e., maintenance and rehabilitation). Beginning with the planning
and design stages, we provide conceptual and detailed design services,

conduct feasibility studies, and prepare plans and specifications. During the
construction phase, we generally act as the owners'representative, providing
project management, surveying, and resident engineering services. We focus
principally on fee-for-service type work and generally do not act as the
contractor or take on construction risk. Following project completion, during
the maintenance stage, we provide ongoing professional services for maintenance
and rehabilitation in areas such as facilities and infrastructure management,
facilities operations, and performance engineering. Finally, in the
decommissioning phase, we provide solutions and recommendations for taking
facilities out of active service.

Through our "One Team. Infinite Solutions." approach to our business, we are
able to undertake infrastructure and facilities projects of any size for both
public and private sector clients. Currently, the majority of assignments we
pursue are small to midsize projects with a capital value of

                                   [PICTURE]

Page 26 2004 Stantec Annual Report

<PAGE>

[PICTURE]                                                              [PICTURE]

less than $100 million and potential project fees for Stantec of less than $10
million. These types of projects represent the largest share of the
infrastructure and facilities market. Focusing on this project mix continues to
ensure that we do not rely on a few large, single projects for our revenue and
that no single client or project accounts for more than 5% of our overall
business.

KEY PERFORMANCE DRIVERS

At Stantec our performance depends on our ability to attract and retain
qualified people; make the most of market opportunities; finance our growth;
find, acquire, and integrate firms and/or new employees into our operations; and
achieve top-three market penetration in the geographic areas we serve. Based on
our success with these drivers, we believe that we are well positioned to
continue to be a major provider of professional design and consulting services
in our principal geographic regions.

PEOPLE

The most important driver of our Company's performance is our people. Our people
are our most valuable resource because they create the project solutions we
deliver to clients. To reach our goal of becoming a top 10 global design firm,
we are growing our workforce through a combination of internal hiring and
acquisitions. We measure our success in this area by total staff numbers. In
2004 our staff increased to approximately 4,350 from 3,700 in 2003. Currently,
our workforce is made up of about 2,150 professionals, 1,550 technical staff,
and 650 support personnel. We expect our employee numbers to continue to
increase in 2005 and beyond as we pursue our growth plan.

To attract and retain qualified staff, our Company offers opportunities to be
part of a multidiscipline team working on challenging projects with some of the
best people in our industry. We are continually strengthening our
people-oriented culture, and in 2004 we completed a number of activities,
including revising our career development and performance review process to
enhance our focus on career development and modifying and realigning our
benefits programs to provide more personal choice and emphasize wellness and
preventative care. These programs will be implemented in the first quarter of
2005. In addition, improved and enhanced staff training programs are slated for
introduction in the second quarter.

                                              Page 27 2004 Stantec Annual Report

<PAGE>

                                   [PICTURE]

Because of our "diversified portfolio" approach to business--operating in
different regions and practice areas--we are generally able to redeploy a
portion of our workforce when faced with changes in local, regional, or national
economies or practice area demand. Currently, we see no overall shortage of
qualified staff for our operations. Although there will always be some areas
where it will be difficult to find appropriate staff during certain periods, as
we increase in size we become better able to address these issues by using staff
from other parts of the Company either through temporary relocation or changes
in work allocation. We are continually improving our ability to work on projects
from multiple office locations through Web-based technology.

INDUSTRY ENVIRONMENT/MARKET OPPORTUNITIES

Another key driver of our Company's success is our ability to make the most of
opportunities to grow in our marketplace. We believe that growth is necessary in
order to enhance the depth and breadth of our expertise, broaden our services,
increase our shareholder value, provide more opportunities for our employees,
and lever our information technology systems. Over the last 11 years, we have
integrated a total of approximately 3,400 employees into our operations through
a combination of direct hiring and acquisitions. We are confident that we can
continue to take advantage of acquisition opportunities because we operate in an
industry sector that includes more than 100,000 firms and is estimated to
generate over US$50 billion in revenue in North America every year, of which we
currently have less than a 1% market share. (According to the Engineering News
Record, the largest 500 engineering and architecture companies in the US alone
generated nearly US$50 billion in fees in 2003.) Our strategy for increasing
this percentage is to combine internal growth with the acquisition of firms that
believe in our vision and want to be part of our growing company.

Page 28 2004 Stantec Annual Report

<PAGE>

In 2004 we completed four acquisitions, one in the US, which established a new
region for Stantec in the Northeast, and three in our Canadian operations. In
total, these acquisitions added approximately 530 employees to our Company. The
integration of acquired firms begins immediately following the acquisition
closing date and may take between six months and three years. It involves
incorporation into our Company-wide information technology and financial
management systems as well as provision of "back office" support services from
our corporate office. This approach allows our new staff to focus on continuing
to serve clients with as little interruption as possible.

Stantec's acquisition program is managed by an acquisition team dedicated to
supporting the Company's growth objectives. The team is responsible for
identifying and valuing acquisition candidates, undertaking and coordinating due
diligence, negotiating and closing transactions, and assisting with the
integration of employees and systems.

FINANCING

Stantec's success also depends on our continuing ability to finance our growth.
Adequate financing gives us the flexibility to make appropriate investments in
our future. Over the past 11 years, Stantec has grown at a compound annual rate
of 19%. To fund this growth, the Company requires cash generated from both
internal and external sources. Historically, we have completed acquisitions
using mostly cash and notes, with very little use of the Company's shares.

We have sought additional financing through the public sale of shares to
maintain our internal debt to equity guidelines at times when our growth has
outpaced our ability to generate cash inside the Company. Our practice is to
raise additional equity to replenish our cash reserves, pay down debt, or
strengthen the Company's balance sheet. To date, we have issued additional
shares for these purposes on three occasions--in 1997, 2000, and 2002.

MARKET PENETRATION

Also key to Stantec's success is achieving a certain level of market penetration
in the geographic areas we serve. Our goal is to be among the top three service
providers in our geographic regions and practice areas. With this level of
market presence, we are less likely to be affected by downturns in regional
economies. Top-three positioning also gives us increased opportunities to work
for the best clients, obtain the best projects, and attract the best employees
in a region, and is important for building or maintaining the critical mass of
staff needed to generate consistent performance and support regional
infrastructure.

                                              Page 29 2004 Stantec Annual Report
<PAGE>

RESULTS
OVERVIEW OF 2004
The following table summarizes some of our key information:

                           SELECTED ANNUAL INFORMATION
     (in millions of dollars, except per share and share amounts) (prepared
                       in accordance with Canadian GAAP)

<TABLE>
<CAPTION>
                                                               2004            2003            2002
                                                               ----            ----            ----
<S>                                                      <C>             <C>             <C>
Gross revenue                                                 520.9           459.9           428.5
Net income                                                     30.2            25.1            20.2
Earnings per share - basic                                     1.63            1.37            1.12
Earnings per share - diluted                                   1.59            1.31            1.07
Cash dividends declared per common share                        Nil             Nil             Nil
Total assets                                                  362.1           326.6           299.0
Total long-term debt                                           34.0            44.6            62.3
Outstanding common shares - as at December 31            18,871,085      18,327,284      18,282,720
Outstanding common shares - as at February 11, 2005      18,906,585
Outstanding share options - as at December 31             1,071,333       1,479,100       1,296,200
Outstanding share options - as at February 11, 2005       1,033,833
</TABLE>

The information reflected above is impacted by the four acquisitions we
completed in 2004, the four completed in 2003, and the 10 completed in 2002.
Each of these acquisitions will impact the level of gross revenue and net income
earned in the year of acquisition and going forward as further explained in the
Results of Operations section.

                                   [PICTURE]

Page 30 2004 Stantec Annual Report

<PAGE>

HIGHLIGHTS FOR 2004

- The results we achieved in 2004 compared to the expected ranges we established
  in our 2003 Management's Discussion and Analysis are as follows:

<TABLE>
<CAPTION>
                                                                                           RESULT
MEASURE                                                      EXPECTED RANGE               ACHIEVED
<S>                                                          <C>                          <C>
Debt to equity ratio - [note 1]                              At or below 0.5 to 1         <0.0
Return on equity - [note 2]                                  At or above 14%              17.3%
Net income as % of net revenue                               At or above 5%               6.7%
Gross margin as % of net revenue                             Between 52 and 54%           54.2%
Administrative and marketing expenses as % of net revenue    Between 39 and 41%           40.9%
Effective income tax rate                                    Between 36.5 and 37.5%       32.4%
</TABLE>

----------
Note 1--Debt to equity ratio is calculated as long-term debt plus current
portion of long-term debt plus bank indebtedness less cash, all divided by
shareholders'equity.

Note 2--Return on equity is calculated as net income for the year divided by
average shareholders'equity over each of the last four quarters.

- Earnings per share--Our basic earnings per share increased 19.0% to $1.63 from
  $1.37 in 2003.

- Effective income tax rate--Our effective tax rate decreased to 32.4% in 2004
  from 36.7% in 2003.

- Growth by acquisition--We completed four acquisitions in
  2004, including the addition of The Sear-Brown Group, Inc., a New York-based
  firm with approximately 400 employees, the acquisition of two architecture
  companies--GBR Architects Limited and Dunlop Architects Inc.-- and the
  addition of Shaflik Engineering Ltd. through an asset purchase.

- Investment in costs and estimated earnings in excess of billings and in
  accounts receivable-- We reduced our investment (measured by number of
  days'revenues) to 101 days at the end of 2004 from 119 days at the end of
  2003. The implementation of our new enterprise management system during 2003
  had a significant impact on our resources--both in terms of people and
  finances. Adjusting to the breadth of the new system created a significant
  learning curve. One of the impacts was an initial increase in the time
  required to prepare invoices to send to clients. As a result, we experienced
  an increase in costs and estimated earnings in excess of billings during the
  fourth quarter of 2003.

                                   [PICTURE]

                                              Page 31 2004 Stantec Annual Report

<PAGE>

                                   [PICTURE]

- Divestitures--In 2003 we entered into an agreement in principle to dispose of
  our 50% share in Lockerbie Stanley Inc. This agreement was finalized in Q3 04.
  During Q4 04, we divested of our interest in Goodfellow EFSOP(TM) technology,
  which comprised our Technology segment.

- Property sale--During the fourth quarter of 2004, we completed the sale of our
  office building in Edmonton, Alberta, for cash proceeds of $34.5 million.
  Concurrent with the sale, we leased the property back for a period of 15
  years. The gain of $7.1 million realized on the sale has been deferred and
  will be recognized as a reduction of rental expense over the 15-year term of
  the operating lease.

CRITICAL ACCOUNTING ESTIMATES

The notes to our December 31, 2004, consolidated financial statements outline
our significant accounting estimates. The accounting estimates discussed below
are considered particularly important since they require the most difficult,
subjective, or complex management judgments. Because of the uncertainties
inherent in making assumptions and estimates regarding unknown future outcomes,
future events may result in significant differences between estimates and actual
results. We believe that each of our assumptions and estimates is appropriate to
the circumstances and represents the most likely future outcome.

REVENUE AND COST RECOGNITION ESTIMATES ON CONTRACTS

Revenue from fixed fee and variable fee with ceiling contracts is recognized
using the percentage of completion method based on the ratio of contract costs
incurred to total estimated contract costs. We believe that costs incurred are
the best available measure of progress toward completion of these contracts.
Estimating total direct contract costs is subjective and requires the use of our
best judgments based upon the information we have available at that point in
time. Our estimate of total direct contract costs has a direct impact on the
revenue we recognize. If our current estimates of total direct contract costs
turn out to be higher or lower than our previous estimates, we would have over-
or underrecognized revenue for the previous period. We also provide for
estimated losses on incomplete contracts in the period in which such losses are
determined. Changes in our estimates are reflected in the period in which such
changes are made.

Page 32 2004 Stantec Annual Report

<PAGE>

PROVISION FOR DOUBTFUL ACCOUNTS

We use estimates in determining our allowance for doubtful accounts related to
trade receivables. These estimates are based on our best assessment of the
collectibility of the related receivable balance based, in part, on the age of
the specific receivable balance. Future collections of receivables that differ
from our current estimates will affect the results of our operations in future
periods.

GOODWILL

Goodwill is assessed for impairment at least annually. This assessment includes
a comparison of the carrying value of the reporting unit to the estimated fair
value to ensure that the fair value is greater than the carrying value. We
arrive at the estimated fair value of a reporting unit using valuation methods
such as discounted cash flow analysis. These valuation methods employ a variety
of assumptions, including revenue growth rates, expected operating income,
discount rates, and earnings multiples. Estimating the fair value of a reporting
unit is a subjective process and requires the use of our best estimates. If our
estimates or assumptions change from those used in our current valuation, we may
be required to recognize an impairment loss in future periods.

RESULTS OF OPERATIONS

In 2004, because the operations associated with our Design Build and Technology
segments were disposed of during the year, all of our operations are included in
one reportable segment--Consulting Services.

Our Company provides knowledge-based solutions for infrastructure and facilities
projects through value-added professional services principally under
fee-for-service agreements with clients. In the course of providing services, we
incur certain direct costs for subconsultants, equipment, and other expenditures
that are recoverable directly from our clients. The revenue associated with
these direct costs is included in our gross revenue. Since such direct costs and
their associated revenue can vary significantly from contract to contract,
changes in our gross revenue may not be indicative of our revenue trends.
Accordingly, we also report net revenue, which is gross revenue less
subconsultant and other direct expenses, and analyze our results in relation to
net revenue rather than gross revenue.

                                   [PICTURE]

                                              Page 33 2004 Stantec Annual Report

<PAGE>

The following table summarizes our key operating results on a percentage of net
revenue basis and the percentage increase in the dollar amount of these results
from year to year:

<TABLE>
<CAPTION>
                                            PERCENTAGE OF NET REVENUE   PERCENTAGE INCREASE
                                            -------------------------   -------------------
                                             2004      2003      2002    2004 VS.   2003 VS.
                                                                            2003       2002
                                             ----      ----      ----    -------    -------
<S>                                         <C>       <C>       <C>      <C>        <C>
GROSS REVENUE                               116.0%    117.5%    117.3%     13.2%      7.3%
NET REVENUE                                 100.0%    100.0%    100.0%     14.8%      7.2%
Direct payroll costs                         45.8%     46.9%     47.6%     12.0%      5.7%
GROSS MARGIN                                 54.2%     53.1%     52.4%     17.2%      8.6%
Administrative and marketing expenses        40.9%     39.5%     39.9%     18.7%      6.4%
Depreciation of property and equipment        2.7%      2.5%      2.6%     20.9%      4.3%
Amortization of intangible assets             0.2%      0.2%      0.3%      0.2%    (14.3%)
Net interest expense                          0.6%      0.7%      0.7%      6.4%      0.3%
Foreign exchange (gains) losses               0.0%      0.2%      0.0%    (115.3%)  743.9%
Share of income from associated companies    (0.1%)    (0.1%)    (0.1%)   (33.6%)    63.4%
INCOME BEFORE INCOME TAXES                    9.9%     10.1%      9.0%     12.7%     19.7%
Income taxes                                  3.2%      3.7%      3.5%     (0.6%)    12.8%
NET INCOME                                    6.7%      6.4%      5.5%     20.4%     24.2%
</TABLE>

                                  [BAR GRAPH]

As indicated in the highlights above, our operating results for 2004 are
generally consistent with the goals we established in 2003. In particular, our
administrative and marketing expenses were within the range we expected to
achieve, while our gross margin slightly exceeded expectations. In addition, our
effective tax rate continued to fall and, for 2004, was below the expected range
due to factors discussed below.

                                   [PICTURE]

Page 34 2004 Stantec Annual Report
<PAGE>

GROSS AND NET REVENUE

The following tables summarize the impact of certain of the above-noted items on
our gross and net revenue for 2004 compared to 2003 and for 2003 compared to
2002.

<TABLE>
<CAPTION>
                                                                                  2004 VS.  2003 VS.
GROSS REVENUE (in millions of dollars)                                              2003     2002
                                                                                  --------  --------
<S>                                                                               <C>       <C>
Increase over prior year                                                            61.0      31.4

Increase (decrease) due to:

   Acquisitions completed in current and prior two years                            42.3      41.0

   Net internal growth                                                              30.0      10.2

   Impact of foreign exchange rates on revenue earned by foreign subsidiaries      (11.3)    (19.8)
                                                                                   -----     -----
</TABLE>

<TABLE>
<CAPTION>
                                                                                  2004 VS.   2003 VS.
NET REVENUE (in millions of dollars)                                                2003      2002
                                                                                  --------   --------
<S>                                                                               <C>        <C>
Increase over prior year                                                            57.8      26.3

Increase (decrease) due to:

   Acquisitions completed in current and prior two years                            36.4      36.7

   Net internal growth                                                              31.3       7.0

   Impact of foreign exchange rates on revenue earned by foreign subsidiaries       (9.9)    (17.4)
                                                                                    ----     -----
</TABLE>

Gross revenue earned in Canada during 2004 increased to $325.8 million from
$290.4 million in 2003, and gross revenue generated in the US increased to
$190.4 million from $161.6 million. Gross revenue earned in our International
region in 2004 was $4.7 million, compared to $7.9 million in 2003. As indicated
above, the change in exchange rates from 2003 to 2004 impacted the level of
gross revenue from our US operations by $11.3 million. As noted in our 2003
Management's Discussion and Analysis, the acquisition of The Sear-Brown Group,
Inc. in April of 2004 was expected to result in an overall increase in our
US-generated revenue. The continuing strength of the Canadian economy also
resulted in growth in revenue from 2003 levels.

                                  (BAR CHART)

                                              Page 35 2004 Stantec Annual Report

<PAGE>

GROSS MARGIN

Gross margin is calculated as net revenue minus direct payroll costs. Direct
payroll costs include the cost of salaries and related fringe benefits for labor
hours that are directly associated with the completion of projects. Labor costs
and related fringe benefits for labor hours that are not directly associated
with the completion of projects are included in administrative and marketing
expenses. The increase in our gross margin percentage in 2004 is due to the
lower proportion of total labor that was charged to projects during 2004
compared to 2003 as well as the mix of projects in progress and being pursued
throughout the year. Total labor costs as a percentage of net revenue are
consistent from 2003 to 2004 at approximately 67.4% for both years.

ADMINISTRATIVE AND MARKETING EXPENSES

Administrative and marketing expenses as a percentage of net revenue for 2004
were 40.9% (within the expected range of 39 to 41% for these expenses), compared
to 39.5% in 2003.

Administrative and marketing expenses fluctuate as a result of the amount of
staff time charged to marketing and administrative labor, which is influenced by
the mix of projects in progress and being pursued throughout the year. In 2004 a
higher proportion of total labor was charged to administrative and marketing
labor compared to 2003.

DEPRECIATION OF PROPERTY AND EQUIPMENT

Depreciation of property and equipment as a percentage of net revenue increased
to 2.7% in 2004, compared to 2.5% for 2003. In 2004 we began depreciating our
new enterprise management system as well as our new office building in Edmonton,
Alberta.

                                   (PICTURE)

FOREIGN EXCHANGE (GAINS) LOSSES

We recorded a foreign exchange gain of $0.1 million in 2004, compared to a
foreign exchange loss of $0.6 million in 2003. The foreign exchange gains and
losses reported in 2003 and 2004 arose on the translation of the
foreign-denominated assets and liabilities held in our Canadian companies and in
our non-US-based foreign subsidiaries.

In 2003 the Canadian dollar rose from US$0.63 at the beginning of the year to
US$0.77 at the end of the year, and the impact of this significant change on our
overall exposure to foreign currency assets resulted in an exchange loss of $0.6
million. In 2004 the Canadian dollar continued to strengthen to US$0.83. To
minimize our exposure to foreign currency fluctuations, we used
US-dollar-denominated debt in 2003 and through most of 2004, and late in 2004,
with the improvement of our cash position, we were able to reduce the amount of
this debt. As a result, we entered into forward contracts to sell US dollars in
exchange for Canadian dollars to minimize our exposure to currency fluctuations.
At December 31, 2004, we had contracted to sell US$10.0 million at forward rates
ranging from 1.2050 to 1.2386.

Page 36 2004 Stantec Annual Report

<PAGE>

INCOME TAXES

The effective income tax rate for Stantec in 2004 was 32.4%, compared to 36.7%
in 2003 and 39.0% in 2002. In our 2003 Management's Discussion and Analysis, we
anticipated that our effective tax rate would be in the range of 36.5 to 37.5%.
This rate was estimated based on known statutory rate reductions as well as
estimates of income in each of our taxing jurisdictions. Throughout 2004, the
effective tax rate reported in each quarter was reduced to account for the 0.75%
reduction in provincial statutory rates during the year as well as to reflect
increases in earnings in some of our lower tax rate jurisdictions. During Q4 04,
on the basis of an actuarial report, we reflected additional income in our
regulated insurance subsidiary. A portion of that income of the subsidiary is
subject to tax at lower rates, contributing 1.2% to the reduction of our
consolidated tax rate.

                                  (BAR CHART)

QUARTERLY OPERATING RESULTS

The following is a summary of our quarterly operating results for the last two
fiscal years.

                           QUARTERLY OPERATING RESULTS
               (in millions of dollars, except per share amounts)

<TABLE>
<CAPTION>
                                        2004                                       2003
                      ----------------------------------------------------------------------------------
                      Dec 31     Sep 30     Jun 30    Mar 31     Dec 31     Sep 30     Jun 30     Mar 31
                      ------     ------     ------    ------     ------     ------     ------     ------
<S>                   <C>        <C>        <C>       <C>        <C>        <C>        <C>        <C>
Gross revenue         127.0      139.8      136.8      117.3      111.6      120.8      119.1      108.4

Net income              9.6        8.5        6.4        5.7        6.3        7.3        6.5        5.0

EPS - basic            0.52       0.46       0.35       0.31       0.35       0.40       0.35       0.27

EPS - diluted          0.50       0.44       0.33       0.30       0.33       0.38       0.34       0.26
</TABLE>

The quarterly earnings per share on a basic and diluted basis are not additive
and may not equal the annual earnings per share reported. This is due to the
effect of shares issued or repurchased during the year on the weighted average
number of shares. Diluted earnings per share on a quarterly and annual basis are
also affected by the change in the market price of our shares since we do not
include in dilution options whose exercise price is not in the money.

                                              Page 37 2004 Stantec Annual Report

<PAGE>

The comparability of our quarterly results is impacted by the following items:

(in thousands of dollars)

<TABLE>
<CAPTION>
                                                 Q4 04 VS.    Q3 04 VS.    Q2 04 VS.   Q1 04 VS.
                                                  Q4 03        Q3 03        Q2 03        Q1 03
                                                 --------     ---------    ---------   ---------
<S>                                              <C>          <C>          <C>         <C>
Increase (decrease) in gross revenue due to:

   Acquisitions completed in
      current and prior two years                 14,637       12,832       10,080       4,730
   Net internal growth                             3,418        7,547        9,399       9,667
   Impact of foreign exchange rates on
      revenue earned by foreign subsidiaries      (2,675)      (1,438)      (1,740)     (5,520)
                                                  ------       ------       ------      ------
Total increase in gross revenue                   15,380       18,941       17,739       8,877
                                                  ------       ------       ------      ------
</TABLE>

During Q4 04, our gross revenue increased $15.4 million, or 13.8%, to $127.0
million from $111.6 million in Q4 03. Approximately $14.6 million of this
increase resulted from the acquisitions completed in 2002, 2003, and 2004 and
net internal growth of $3.4 million, offset by the effect of a change in foreign
exchange rates of $2.6 million.

Our effective income tax rate for the full year 2004 was 32.4%. To the end of Q3
04, the effective tax rate was estimated at 35.0%. The year-to-date change is
reflected in the Q4 04 rate of 26.1%.

                                   (PICTURE)

                                   (PICTURE)

FINANCIAL CONDITION AND LIQUIDITY

Our cash flow from operating activities was $77.4 million in 2004, compared to
$16.9 million in 2003 and $36.1 million in 2002. The implementation of our new
enterprise management system in the fourth quarter of 2003 contributed to the
significant reduction in cash flows from operating activities for the year. The
reduction in our investment in costs and estimated earnings in excess of
billings and in accounts receivable from 119 to 101 days during

Page 38 2004 Stantec Annual Report

<PAGE>

                                   (PICTURE)

2004 was the primary reason for the increased cash flow in 2004. Maintaining and
slightly improving this level of investment will continue to provide adequate
funds to finance our working capital requirements.

During Q4 04, our gross revenue increased 13.8% to $127.0 million.

In 2004, $10.2 million in cash was used in investing activities, compared to
$33.5 million in 2003. A number of significant investing activities occurred
during 2004, including the sale of our Edmonton office building, the sale of our
interest in Goodfellow EFSOP(TM) technology, the completion of our largest
acquisition to date, and our investment in short-term investments related to
self-insured liabilities arising on the implementation of our regulated
insurance company. In 2003 our investment activities included investment in our
new enterprise management system, investment in construction costs associated
with an addition to our Edmonton office building, and investment in four
acquisitions. The net impact of these various investment activities was to
decrease the amount of cash used in 2004 from 2003 by $23.3 million. We used
$36.0 million in financing activities in 2004, compared to the use of $4.2
million in 2003. Additional funds received in 2004 on the exercise of share
options, as well as the net decrease in funds used to repurchase shares under
our Normal Course Issuer Bid, were offset by the use of funds to pay down our
bank indebtedness and long-term borrowings. This bank indebtedness had been
incurred in 2003 and early 2004 to finance the level of investment in accounts
receivable and in costs and estimated earnings in excess of billings that
resulted from the implementation of our new enterprise management system.
Improvement in the level of these investments, as well as proceeds received on
the sale of our Edmonton office building, provided the additional funds to repay
our long-term debt and bank indebtedness.

                                              Page 39 2004 Stantec Annual Report

<PAGE>

The following table summarizes the contractual obligations due on our long-term
debt, other liabilities, and operating lease commitments:

CONTRACTUAL OBLIGATIONS

<TABLE>
<CAPTION>
(in thousands of dollars)                                    Payments Due by Period
                                     --------------------------------------------------------------------
                                      Total      < than 1 year  2 - 3 years   4 - 5 years   After 5 years
                                     -------     -------------  -----------   -----------   -------------
<S>                                  <C>         <C>            <C>           <C>           <C>
Long-term debt                        33,975        12,820        19,585         1,459            111

Other liabilities                     19,868         3,050         6,079         3,400          7,339

Operating lease commitments          207,666        29,509        50,301        34,211         93,645

Total contractual obligations        261,509        45,379        75,965        39,070        101,095
</TABLE>

During 2004, we renegotiated our credit facility with a major Canadian chartered
bank. Our new credit facility provides for an operating line of credit of $30
million. At December 31, 2004, none of this facility had been utilized ($8.3
million had been used at December 31, 2003). We also maintain a US$17 million
acquisition credit facility, which was unused at December 31, 2004, and a
four-year reducing US-dollar-denominated term facility, of which $24.0 million
was used at December 31, 2004 ($19.2 million had been used at December 31,
2003).

Our shareholders' equity increased $28.6 million to $189.1 million from $160.5
million in 2003. This increase resulted from net income of $30.2 million in
2004, the recognition of the fair value of share-based compensation of $0.7
million, and the issue of shares on the exercise of options of $3.5 million,
offset by the repurchase of shares pursuant to the Normal Course Issuer Bid of
$0.7 million during the year and the $5.1 million change in our cumulative
translation account arising on the translation of our US-based foreign
subsidiaries. The $5.1 million change is due to the continued strengthening of
the

Page 40 2004 Stantec Annual Report

<PAGE>

Canadian dollar -- from $0.77 to $0.83 -- in relation to the US dollar
during the year. Our Normal Course Issuer Bid was renewed in 2004 and allows us
to
repurchase up to 554,388 shares. We continue to believe that, from time to time,
the market price of our common shares does not fully reflect the value of our
business or future business prospects and that, at such times, outstanding
common shares are an attractive, appropriate, and desirable use of available
Company funds. In 2004 we purchased 29,300 common shares at an average price of
$24.57 per share for an aggregate price of $720,000. In 2003 we purchased 74,700
common shares at an average price of $18.63 per share for an aggregate price of
$1,392,000.

ACQUISITIONS

We completed four acquisitions in 2004 for total consideration of $20.3 million
and four acquisitions in 2003 for total consideration of $9.4 million.

In April 2004, we acquired the shares of The Sear-Brown Group, Inc.
headquartered in Rochester, New York, adding 400 employees and opening a new
geographic market in the US Northeast and a new practice area in the
bio/pharmaceuticals industry. This addition was followed in May by the
acquisition of GBR Architects Limited, an architecture, planning, interior
design, and facilities management consulting firm based in Winnipeg, Manitoba.
In October we completed the acquisition of Dunlop Architects Inc., one of the
top architecture firms in Toronto, Ontario, increasing our architecture and
interior design presence in the Greater Toronto Area, and in November 2004, we
acquired the assets and business of Shaflik

                                   (PICTURE)

Engineering Ltd., a firm based in Vancouver, British Columbia, that provides
services in our Buildings Engineering practice area.

FUTURE EXPECTATIONS

Our Company continues to operate in a highly diverse infrastructure and
facilities market within a North American economy that varies significantly from
region to region. The market is made up of many technical disciplines, clients,
and industries

                                              Page 41 2004 Stantec Annual Report

<PAGE>

                                   (PICTURE)

and engages both the private and public sectors. Over the next few years, we
expect the demand for services in this market to be driven by continued
population growth, government regulations, and the need to maintain and replace
an aging North American infrastructure. The market should also benefit from
continued outsourcing of technical services, especially in the public sector.
Its fortunes are at least partially tied to the performance of the economy, and
the overall market outlook offers increasing prospects for accelerating growth,
particularly in the non-residential sectors.

Much of the actual growth seen in 2004 and over the past several years has been
driven by residential construction; however, spending on public construction
appears to be rising, while private non-residential construction continues to
rebound from an extended downturn. Commercial and industrial owners will be
increasingly looking to raise capital spending as their respective earnings
prospects improve. In addition, a variety of public agencies have begun planning
for increased investment in infrastructure projects after several years of
below-trend spending. As predicted by many forecasters, the residential
construction market could flatten this year both in Canada and the US. However,
2005 will continue to be a high-performance year for housing, contributing to
ongoing strong performance in our Urban Land market segment. As well, we expect
strength in commercial construction markets, particularly industrial projects,
to support higher project activity.

Although much attention has been focused on delays in US government funding for
programs such as the Transportation Equity Act for the 21st Century, a recovery
in state tax revenues as incomes improve is likely to be a more significant
factor in driving spending on transportation, environmental, and other capital
projects in the US. Our Canadian market should also benefit from the promised
transfer of federal funding to the provinces for health care and to
municipalities for new infrastructure and the rehabilitation of existing
facilities.

Within this overall market outlook, our Company expects to continue to grow
through a combination of internal hiring and acquisitions. We target to

Page 42 2004 Stantec Annual Report

<PAGE>

We plan to support our targeted level of growth using a combination of cash flow
from operations and additional financing while maintaining a return on our
equity at or above 14% and a net income at or above 5% of net revenue.

achieve long-term average annual compound growth rates of 15 to 20%, although we
may not see growth in this range every year. We have chosen this target because
we believe that it is an attainable goal that allows us to enhance the depth of
our expertise, broaden our service provision, provide expanded opportunities for
our employees, and lever our information technology systems. Our ability to
continue to grow at this rate depends to a large extent on the availability of
acquisition opportunities. Since our industry is made up of 100,000, mostly
small firms, there are many acquisition candidates. At any one time, we are
engaged in discussions with up to 20 or more firms. Currently, the firms with
which we are in some stage of discussion have between 10 and 1,000 employees.

We plan to support our targeted level of growth using a combination of cash flow
from operations and additional financing while maintaining a return on our
equity at or above 14% and a net income at or above 5% of net revenue. Although
we believe that a normal debt to equity ratio at or below 0.5 to 1 is an
appropriate target for our Company, opportunities to conclude transactions may
make it necessary for us to increase the amount of debt we carry beyond that
limit. If the need to finance a larger acquisition arises, we will seek to raise
cash by issuing additional shares.

                                   (PICTURE)

Looking at the results of our current mix of project activity in the US and
Canada, we anticipate that our gross margin as a percentage of net revenue will
remain in the range of 53 to 55% for 2005 and that our administrative expenses
will remain in the range of 40 to 42% of net revenue. In addition, we expect our
effective tax rate for 2005 to be between 33 and 35%.

                                              Page 43 2004 Stantec Annual Report

<PAGE>

RISK
OPERATIONS

Like all professional services firms in the infrastructure and facilities
industry, we are exposed to a number of risks in carrying out the day-to-day
activities of our operations. These operating risks include the following:

      -     The timing of the completion of projects

      -     The potential cancellation of client orders and projects

      -     Our ability to complete projects on schedule and within budget

      -     Our clients' satisfaction with the quality of our services

      -     Potential litigation through exposure to third-party claims

      -     Competition for new contracts, including pricing pressures

      -     Economic factors that impact the ability of clients to contract for
            our services

      -     The availability of qualified staff and personnel

                                    (PICTURE)

We mitigate operating risks through our business model.

      -     The quality of our clients and their credit risk

      -     Our ability to integrate acquired businesses

      -     Our ability to obtain the necessary licenses and permits to carry
            out our projects

      -     Risks associated with working in international locations.

We mitigate these operating risks through our business strategy and other
measures. As mentioned previously, our three-dimensional business model based on
geographic, practice area, and life cycle diversification reduces our dependency
on any particular industry or economic sector for our income. Stantec also
differentiates itself from competitors by entering into a diverse range of
contracts with a variety of fee amounts.

                                   (PICTURE)

Page 44 2004 Stantec Annual Report

<PAGE>

To address the risk of competition for qualified personnel, we offer a number of
employment incentives, including training programs, access to a plan that
provides the benefit of employee share ownership (for Canadian employees), and
opportunities for professional development and enhancement, along with
compensation plans that we believe to be innovative, flexible, and designed to
reward top performance. In 2004 we completed an extensive review of our benefits
programs for both our US and Canadian employees with the objectives of providing
more personal choice in coverage and emphasizing wellness and preventative care.
Our new plans are scheduled for implementation across the Company in the first
quarter of 2005.

We also maintain insurance coverage for our operations, including professional
liability insurance. In addition, we have a regulated captive insurance company
to insure and fund the payment of any professional liability self-insured
retention related to claims arising after August 1, 2003. We, or our clients,
also obtain project-specific insurance for designated projects from time to
time. And we invest resources in a Risk Management team dedicated to providing
Company-wide support and guidance on risk avoidance practices and procedures.
One of our practices is to carry out select client evaluations, including credit
risk appraisals, before entering into contract agreements to reduce the risk of
non-payment for our services.

In 2004 we created a Practice Enhancement team to champion continuous
improvement in project management and the sharing of best practices across the
Company, along with promoting the enhanced reliability and consistency of the
services we provide to clients. In addition, we expanded our Company-wide
project manager training program during the year. This program is aimed at skill
development in risk mitigation, project planning, quality control and assurance,
and financial administration, among other project management responsibilities.
We recognize that through improved project management across our operations we
will increase our ability to deliver projects on schedule and within budget.

As well, we believe that our experience and knowledge in conducting business
outside North America help us diminish the risks of undertaking international
projects. Among other issues, international work involves dealing with political
uncertainties, entering into contracts with foreign clients, and operating under
foreign legal systems.

                                   (PICTURE)

                                              Page 45 2004 Stantec Annual Report

<PAGE>

MARKET

We are also exposed to various market factors that can affect our performance.
Three such market risks include the availability of debt financing, the impact
of the rate of exchange between Canadian and US dollars, and the effect of
changes in interest rates.

As mentioned previously, our Company currently has a term loan and revolving
credit with one financial institution for which we continue to meet our required
borrowing ratios. However, we have no assurance that debt financing will
continue to be available from our current lender or another financial
institution on similar terms. As our need for debt financing increases, we will
seek financing from more than one financial institution.

                                   (PICTURE)

Because a significant portion of our Company's revenue and expenses is generated
or incurred in US dollars, we face the challenge of dealing with fluctuations in
exchange rates. To the extent that US-dollar revenues are greater than US-dollar
expenses in a strengthening US-dollar environment, we expect to see a positive
impact on our income from operations. Conversely, to the extent that US-dollar
revenues are greater than US-dollar expenses in a weakening US-dollar
environment, we expect to see a negative impact. This exchange rate risk
primarily reflects, on an annual basis, the impact of fluctuating exchange rates
on the net difference between total US-dollar professional revenues and
US-dollar expenses. Other exchange rate risk arises from the revenues and
expenses generated or incurred by our non-US-based foreign subsidiaries. Our
income from operations will be impacted by exchange rate fluctuations used in
translating these revenues and expenses. In addition, the impact of exchange
rates on the balance sheet accounts of our non-US-based foreign subsidiaries
will affect our operating results. We also continue to be exposed to exchange
rate risk for the US-dollar and other foreign currency-denominated balance sheet
items carried by our Canadian and International operations.

Finally, changes in interest rates present a risk to our performance. All of our
Company's bank facilities (i.e., operating loans and acquisition loan) carry a
floating rate of interest. We estimate that, based on our balances at December
31, 2004, a 1% change in interest rates would impact our earnings per share by
less than $0.01.

Page 46 2004 Stantec Annual Report
</TEXT>
</DOCUMENT>
