P3s: A Commitment To Continuous Improvement
Development and Innovation Governments in Canada are increasingly using P3s to deal with infrastructure deficits and successfully build public infrastructure.
P3s are a modern way to deliver large, complex public infrastructure projects. In order for P3s to succeed a number of elements are required — policy principles that protect the public interest; strong execution capability on the part of the public sector; clearly defined roles, risk transfer, and output specifications for the private sector; and a competitive, fair, and transparent procurement process. In Ontario we have all of these ingredients for success.
The major benefit of P3s is that the government transfers risks to the private sector. Private financing is critical to transferring risks and creating strong incentives for construction companies to deliver projects on time and on budget or else face penalties. Governments withhold payment until a project is delivered and then pay during the contractual period if the asset performs as expected. This helps to limit cost overruns, delays, claims, and lawsuits that are too often the norm on traditionally delivered projects.
“In 2013, an independent assessment of 30 completed projects showed that 29 projects were on budget with one project over budget by an immaterial amount.”
Investing in the life cycle
P3s also are a way of investing in the long-term life cycle of publicly owned assets. This means a hospital, courthouse, road or transit system will have the best design, construction, and operation that will make it last for decades. That is important for public services that matter so much to us.
Infrastructure Ontario, the Crown agency responsible for building, managing, financing, and enhancing the province’s public assets, has been using our Alternative Financing and Procurement delivery model since 2006. In 2013, an independent assessment of 30 completed projects showed that 29 projects were on budget with one project over budget by an immaterial amount.
Meanwhile, 22 of the projects were completed on or ahead of schedule, and the majority of the risk and cost related to any schedule delays were the responsibility of the private sector not the government.
P3 projects are as good for delivering public infrastructure as they are for the strengthening our economy. Studies, such as those by the Conference Board of Canada and the Canadian Council for Public Private Partnerships, are showing significant benefits, including jobs from infrastructure investments and P3s.
Governments are deciding to invest in infrastructure and they are finding that partnerships with the private sector are a great way to get high quality projects done, create jobs along the way and protect taxpayers so that the public benefits from new public infrastructure.