C O M P A N Y O V E R V I E W
PPP Canada
PPP Canada Delivering Maximum Value to Taxpayer How one unique approach to infrastructure is overhauling Canada Written by: Ian Hanner Produced: Association
rs
3
PPP CANADA
A
s the world moves further into the 21st century, much the infrastructure of the last 100 years will need replacement or upgrades, and in Canada taxpayers will know for certain that these projects are being completed with value in mind. Founded in 2008 as a whollyowned corporation of the Canadian federal government, PPP Canada exists with one mission in mind: to assess the P3 viability of largescale infrastructural projects throughout Canada and to deliver the maximum value on each project to the taxpayers. John McBride, chief executive officer and the first employee of PPP Canada, has the task of steering the company along as it demonstrates the benefits of the P3 model. “We work with all levels of government in Canada to make sure that P3s are used in a wise and effective way,” McBride said. “When we work with provinces and municipalities, we have a fund that we can commit to good P3 projects to encourage their use at the provincial and municipal levels. And 4
March 2015
we work with the federal government to screen, structure and execute P3 projects.” How a P3 Works Short for “public-private partnership,” the P3 model transfers a significant amount of risk away from the public to the private sector by structuring payments to a developer out over the useful lifespan of a project, optimizing efficiency, reducing costs and attracting the best talent from around the world. McBride describes the P3 model as an excellent solution for infrastructural projects that meet a few certain criteria. First, they need to carry a price tag for taxpayers of more than $50 million—though probably more than $100 million— to make the P3 model financially viable while attracting companies to the bidding process. Second, the organization attracting bids for a project needs to be able to specify performance standards over the lifespan of the development, only paying the remaining amount owed after the long-term obligations are
ENERGY
SRO Dowtown Eastside Vancouver_BC Housing
fulfilled. Finally, successful P3s adopt a whole life-cycle approach, transferring the risks of some, or all, of the components (design, build, finance, operation and/or maintenance) of a project to the private sector and deliver positive Value for Money. “Part of the advantage of a P3 is that you’re getting the best skill set on the planet with a certain type of expertise to come and help you,” McBride said. “If you’re building a hospital—a community doesn’t normally build a new hospital more than once in a generation. So there usually isn’t expertise built into the institution about how to build a new hospital.”
He added, “It’s kind of like building your own house. By the time you get to your third house, you’ve learned a lot of lessons, but if you’re doing it yourself you’re going to pay the cost of your own inexperience.” P3s at Work in Canada While a relatively young organization at just five years in business, PPP Canada has an impressive portfolio of large-scale projects under its belt. Perhaps its most significant project right now, PPP Canada is acting as the lead P3 advisor on the procurement of a bridge to replace the aging Champlain Bridge in Montreal as part of the St. Lawrence project. According to McBride, PPP w w w. p 3 c a n a d a . c a
5
PPP CANADA
Evan-Thomas Water and Wastewater Treatment Facility project Kananaskis Country, Alberta
Canada is actively working with Infrastructure Canada “to complete a study to support their procurement process. PPP Canada
6
March 2015
is similarly involved with Transport Canada and Windsor-Detroit Bridge Authority in the development of the Detroit River International Crossing.�
ENERGY
With a long list of other ongoing projects, it would seem the private sector is eager to do business in the sector despite the risk that the P3 model transfers to them. “These are business opportunities for them,” McBride said. “They are experts in their field and they’re experts in knowing how to assess and manage these types of projects and risks. They’re certainly doing it because they see it as a profitable enterprise for them. And there’s value for taxpayers because they’re better at doing it than the public sector is. So it’s a win-win situation. They can earn business revenues and profits and the governments can reduce risk and get better value.” A far cry from the days of five years ago when the organization was new and McBride was the only employee— there are now around 60— McBride’s main focus now that PPP Canada is staffed by experts is to raise awareness of the benefits of the P3 model throughout Canada. While the organization’s successes are many, McBride is looking to the future. “I’m hopeful that by the end of the next five years, all jurisdictions in Canada will be participating in P3s,” he said. “And that we will have made entries into new sectors of infrastructure. I think that in the next five years people are going to be starting to see more and more of the good results of P3s— on-time and on-budget.
Company Information INDUSTRY
Federal Crown corporation HEADQUARTERS
Ottawa, Ontario, Canada FOUNDED
2008 The Government of Canada has committed to supporting innovative public infrastructure projects, using the Public-Private Partnership (P3) model that deliver maximum value for Canadians, stimulate the economy, create jobs and support long-term prosperity. To this end, it created PPP Canada, a federal Crown corporation, with an independent Board of Directors reporting through the Minister of Finance to Parliament.
w w w. p 3 c a n a d a . c a
7
PPP CANADA 100 Queen Street, Suite 630, Ottawa, Ontario K1P 1J9 www.p3canada.ca