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UBC P3 Project Phelps Centre for the Study of Government and Business, UBC Public Private Partnershi

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Title: UBC P3 Project Phelps Centre for the Study of Government and Business, UBC Public Private Partnershi


1
UBC P3 ProjectPhelps Centre for the Study of
Government and Business, UBCPublic Private
Partnerships The Ontario Scene in 2006 A.
Scott CarsonQueens School of BusinessQueens
University
2
The Politics
  • Current generation of Ontario P3s started with
    William Osler Health Centre and Royal Ottawa
    Hospital
  • 2003 McGuinty government
  • Political problem of baggage on P3s
  • Link with privatization
  • Union resistance
  • Faced 30 billion infrastructure deficit on
    provincial infrastructure of 250 billion
  • Created Alternative Financing and Procurement
    model (AFP)
  • Similar to UK Private Finance Initiative (PFI)

3
Ministry of Public Infrastructure Renewal
  • Review, evaluate and recommend plans submitted by
    ministries
  • Overseeing implementation of the Governments
    annual infrastructure budget
  • Develop sector-specific infrastructure strategies

4
  • Negotiate with Government of Canada on
    cost-shared infrastructure programs
  • Coordinate delivery of infrastructure programs
    through Ontario government ministries
  • Determine most effective financing and
    procurement strategy
  • Develop growth plan for Ontarios Greater Golden
    Horseshoe and other parts of the province

5
Infrastructure Ontario
  • Arms length crown corporation reporting to
    Minister for Public Infrastructure Renewal
  • renewal of the provinces hospitals, courthouses,
    roads, bridges, water systems and other public
    assets
  • Alternative Financing and Procurement (AFP)
  • appropriate public control and ownership
  • on time and on budget
  • Loans to municipalities, universities, public
    bodies to build and renew public infrastructure 

6
  • Large complex projects construction financed and
    carried out by private sector
  • Infrastructure projects guided by
  • Public interest is paramount
  • Value for money must be demonstrable
  • Appropriate public control and ownership must be
    preserved
  • Accountability must be maintained
  • All processes must be fair, transparent and
    efficient
  • 3. reflects a political promise by the current
    government. Others are governance principles that
    the predecessor government supported.

7
ReNew Ontario Program
  • 2005-10 30 billion
  • Hospitals 5 billion
  • Schools, universities, colleges 10 billion
  • Affordable housing 600 million
  • Justice 1 billion
  • Other 2 billion
  • Transportation 11.4 billion
  • Take note

8
The People
  • Ontarians agree that governments cant keep pace
    with infrastructure
  • Increasing acceptance of P3s
  • Still below rest of country for P3s in
    health/hospitals sector
  • Environics Poll for Canadian Council for Public
    Private Partnerships in 2006
  • Three slides

9
Governments are having trouble keeping pace with
demands for new or improved infrastructure and
services
Do you Agree? Yes.
Ontario in line with the other regions
10
Support P3 hospital financing and construction.
Agree? Yes.
Ontario 10 below British Columbia and 21 below
Quebec. Ontarians agree government cant keep
up, but weak and weakening support for hospital
P3s.
11
Support P3 financing and construction in Ontario.
Agree? Yes.
Only water and sewers concern Ontarians more than
hospitals for P3s
12
The Projects
  • Projects Under Construction
  • Montfort Hospital BF
  • Request for Proposals Closed - Bids Under Review
  • Durham Consolidated Courthouse DBFM
  • North Bay Regional Health Centre DBFM, 25 yrs
  • Quinte Health Care BF
  • St. Josephs Health Care - London
  • Sunnybrook Health Sciences Centre
  • Trillium Health Centre BF
  • Request for Proposals Open
  • Sarnia Bluewater Health BF
  • Sault Area Hospital DBFM, 25 yrs
  • Sudbury Regional Hospital BF
  • Youth Justice Facility BF
  • Request for Qualifications Open
  • Hamilton Health Sciences (3 projects) BF
  • Pre-Tender
  • Bridgepoint Health DBFO
  • Centre for Addiction and Mental Health
  • Credit Valley Hospital
  • Halton Healthcare Services
  • Humber River Regional Hospital
  • Kingston Cancer Centre
  • Kingston General Hospital
  • Lakeridge Health
  • Markham Stouffville/Toronto Grace Hospital
  • Ottawa Hospital
  • Royal Victoria Hospital
  • St. Josephs Health Care - Hamilton
  • St. Josephs Health Care - Parkwood Mental Health
  • Toronto Rehabilitation Institute
  • Waterloo Region Courthouse
  • West Lincoln Memorial Hospital
  • Windsor Regional Hospital
  • Womens College Hospital

13
Notables
  • Infrastructure Ontario has 36 projects. All but 3
    are hospitals!
  • Ontario support for P3s, not strong for hospitals
    in Environics Poll
  • Visit any hospital website on project list
    strong community pride in healthcare facility
    project fundraising
  • ReNew Ontario 2005-10 30 bn
  • 11.4 bn earmarked for transportation
  • No transportation deals listed by Infrastructure
    Ontario

14
Deal Structure and Risk Transfer
  • Two kinds of structure
  • Build Finance
  • Construction risk transfer
  • Fixed price
  • On time and budget
  • Improvement on traditional procurement (progress
    payments)
  • Government cost of capital lower, but on time and
    on budget provides offsetting value

15
  • Design, build, finance, maintain
  • Construction risk transfer is significant
  • Management risk is moderate
  • Operator cant achieve many economies
  • Public sector employee rights ensured
  • Back-end risk transfer significant
  • hand-back contract provisions require asset
    quality
  • Operators price life-cycle maintenance into
    contracts

16
Concluding Notes
  • Significant evolution in government thinking
  • Recognition that government borrowing rate isnt
    the only relevant financial consideration
  • Understanding the life-cycle financing must be
    planned
  • Future construction capacity issue
  • 30 projects next 2-5 years
  • Large contractors may reach capacity limites
  • Smaller contractors less leverage with trades
  • UK, Europe contractors busy
  • US appears ready to take off

17
  • Next priority likely transportation, but no
    concrete indications of when
  • Extension of Hwy 407
  • 400 series hwy improvements
  • Niagara mid corridor
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