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Wednesday, 18 November 2015

An Interview With Professor Matti Siemiatycki, Author of "Public-Private Partnerships in Canada: Reflections on twenty years of practice."

Q: What are two distinct characteristics of Canada's current PPPs? 
Canada’s P3 model has a number of features that are unique. 
1) The main feature is that the project delivery functions that are included in the model are
quite varied. Typically, project delivery models include design, build, finance, operations
and maintenance features. Canada’s P3s model tends to be more selective of what parts
of the project delivery bundle are included. This gives the governments’ greater
flexibility when utilizing P3s. 
2) A second feature is Canada’s P3s typically don’t include a new revenue stream and do
not implement user fees. This means that Canadian P3s tend to be more stable and less
prone to forced renegotiations or collapse because risk is allocated to parties best able
to manage it. P3s are also not a replacement for government money as it is seen as a
procurement strategy not a funding strategy. 
Q: What are three challenges/critiques of Canada's current PPPs?

1) There are questions about the extent to which PPPs actually deliver value and value for
money. In reality, P3s are not a cheap way to deliver infrastructure. Transferring risk is
its value, especially in regards to construction. A question raised in debates is how much
are we paying as a premium to transfer risk to the private sector partner. Currently
there are no detailed studies on the comparisons of risk. This was highlighted in the
auditor general of Ontario’s 2014 report. 
2) Public and stakeholder engagement in the P3 process is challenging. Community groups
have a hard time engaging in P3 planning processes due to the high level of
confidentiality of commercially sensitive information. 
3) Typically, P3s have average architecture and design. There are concerns raised about
whether we can come up with P3 models that promote design excellence. Public
buildings delivered through P3s are the types of facilities that will often be main
community hubs and we want these to be truly exceptional. Canada is trending upwards
in regards to this and many agencies are starting to encourage high quality design.  
Q: Are there any examples of current PPPs you find particularly significant in shaping Canada’s PPP model? 

On the transit front, the Canada line in Vancouver was the largest transit P3 done in Canada
and the first to use a design, build, finance, operation and maintenance P3 model. It set the
tone and demonstrated the potential of P3s. However, it is important to highlight that there
were tradeoffs to this project and lessons learned. During the planning process there was
controversy over community access to key documents necessary to meaningfully engage in the decision-making, and how risk was managed during construction. Another example of a recent P3 is the Ontario construction of the PanAm athletes’ village. It demonstrated a broader partnership approach between Waterfront Toronto, Infrastructure Ontario and a private sector partner, pushing boundaries of how P3s can work. 
Q: What predictions do you make on the future of Canada’s PPPs? 

1) I see P3s going in a number of different directions. The promise of P3s being on time
and on budget is powerful. There is currently a political boost and drive to get more
infrastructure built and this is put in jeopardy when projects go over budget or are
delayed. P3s from a technical planning and political perspective provide the capacity to
deliver projects on time and on budget and there is strong incentive and interest to
continue down this path. A couple of outstanding questions relating to his are: How
much of an insurance premium are we paying to stay on time and on budget? Can we push to get models where the architecture, design and community benefits are exceptional? I believe there are ways to do this and we are starting to learn lessons from the past. 
2) We will see a wider diversity of models used due to the variety of different projects that
are using P3s. For example the design, build and finance model may be used in cases
where it is not feasible for the private sector to operate the project. And we will see an
increase in partnerships to develop large mixed-use buildings where the public and
private sectors both own space in a shared facility. The full suite of models will be
3) In the medium term, the series of agencies that are PPP agencies such as PPP Canada,
who have a mandate to deliver infrastructure through PPPs will expand their mandate
and morph into infrastructure and procurement agencies capable of delivering
infrastructure from a broader suite of models. They will have the capacity to deliver
both PPPs and traditional procurement effectively. 
Further reading: 
Dr. Matti Siemiatycki is an Associate Professor in the Department of Geography and Planning
at the University of Toronto with research interests in transportation policy and planning,
infrastructure finance and delivery and community and regional planning.

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