Public Private Partnerships: The Canadian Experience John Gamble, CET, P.Eng. President & CEO ACENZ / CFNZ / RNZ Joint Conference Rotorua, New Zealand August 6, 2014
ACEC Canada Association of Consulting Engineering Companies Leading voice for the business of consulting engineering in Canada Represents 450 firms across Canada Federation of 12 provincial and territorial associations Collaborates with national stakeholders Unapologetic advocate on business, regulatory and public policy issues No regulatory mandate
Canada at a glance
Canada at a glance "Kanata" in Iroquois meaning "village Confederation of 10 provinces, 3 territories Spans six time zones Area = 9,984,670 km 2 (2 nd ) Population = 35,500,000 (36 th ) GDP = $1.717 trillion CAD $1.00 CDN = $1.07 NZD
PPP experience in Canada 20 years of history with PPP in Canada 211 projects as of July 2014 o 120 in operation o 49 under construction o 42 in procurement Projects valued at over $65 Billion Range from $1 Million to $4.25 Billion Average project value is $414 Million
PPP experience in Canada Sector Number Value ($B) Transportation 46 28.6 Hospitals & Healthcare 81 20.8 Justice & Corrections 19 5.4 Energy 6 4.3 Education 10 1.7 Recreation & Culture 16 1.4 Real Property 3 0.9 Defence 1 0.9 Environmental 23 0.6 Government Services 4 0.5 IT Infrastructure 2 <0.1 Total 211 >65
Confederation Bridge, New Brunswick/Prince Edward Island
Forms of PPP projects Source: The Canadian Council for Public Private Partnerships
Canada Line, Vancouver, British Columbia
ACEC PPP study ACEC recognizes PPPs are here to stay Need to educate ACEC members and their clients Information is available from different sources Opportunity to report on state of PPPs in Canada and members experience with PPP projects Engaged Strategies 4 Impact! Inc. to assist with report: Understanding Public Private Partnerships in Canada
ACEC PPP study Understanding Public Private Partnerships in Canada Why PPPs? PPP models in Canada Opportunities/benefits Risks/challenges The PPP process Roles for owners/consultants Additional resources www.acec.ca www.strategies4impact.com
Bridgepoint Health Centre, Toronto, Ontario
Key findings PPP is a valid form of project delivery when used in the appropriate circumstances But PPPs are not a panacea Must assess each project to determine if PPP will deliver best value for money Other models deliver similar benefits (e.g. Quality-Based Selection) Advice from designers at outset is an investment in project success
Key findings (cont d) Greatest benefit of PPPs generally occurs when private sector maintains/operates the asset for 25 or more years Best results are achieved through fair sharing of risk and reward Success is highly dependent upon having the right team Owners must be diligent in assessing qualifications of the team they are making a 'leap of faith'
It s all about risk Consortium is responsible for schedule/budget Owners expect warranties & liquidated damages Significant risks downloaded to consultant Beware of third party or other uninsurable risks But risk can be a business opportunity if o Your risks are well understood o You have the technical, managerial and contractual ability to manage or mitigate risk o You are fairly remunerated for your risk PPP is not for the faint of heart!
Durham Region Provincial Courthouse, Oshawa, Ontario
Advice for owners Assemble qualified team knowledgeable about PPP, including owner's engineer Educate decision-makers within owner's organization on PPP Develop a comprehensive business case Compare benefits/risks of PPP to other delivery models Perform value for money analysis If the analysis supports PPP, determine most appropriate model
Advice for owners (cont d) Run a competitive and fair procurement process Compensate pursuit costs to encourage participation (Proposals are expensive) Ensure project agreement is comprehensive: clear definition of roles, responsibilities, scope and deliverables Conduct a post-construction evaluation Ensure performance maintenance and/or operations criteria meet owner's needs Monitor and audit compliance
Communications Security Establishment Canada Long-Term Accommodation Project, Ottawa, Ontario
Advice for consultants Develop a comprehensive business case before engaging in PPPs Carefully assess risk and reward Investigate insurance needs and availability of coverage Carefully assess team members including the consortium and owner Assess necessary resources, knowledge and experience to manage fast pace of PPPs Consider pursuit costs and compensation Protect your intellectual property rights
Advice for consultants (cont d) Negotiate terms and compensation appropriate to the scope of services and risk Adopt and adhere to robust project management processes Adopt and adhere to robust quality management processes Exercise and stand by professional judgement if questioned or challenged Remember who is your client and what is your role
Municipal Water & Wastewater System, Goderich, Ontario
The most important advice? Choose the right Team! You will have to live with each other for a long time
Athletes Village, 2015 Pan Am Games, Toronto, Ontario
Closing thoughts PPPs are now a fact of life Do not assume that PPP is THE solution PPPs do NOT create free infrastructure Assess all applicable delivery models, including conventional delivery Remember, design consultant is not owner s agent in a PPP Allocate risk and reward fairly Don t give away services or IP for free NEVER forget the end user!
Maison Symphonique de Montréal, Québec
Thank you!