The Conference Board of Canada recently released a report entitled "Dispelling the Myths: A Pan-Canadian Assessment of Public-Private Partnerships for Infrastructure Investments" which will undoubtedly be of interest to private and public sector participants in the Canadian infrastructure projects world.
The report assesses the benefits and disadvantages of using public-private partnerships (P3s) as a procurement vehicle for Canadian governments seeking to build or upgrade infrastructure assets. It does so by using empirical and anecdotal data gained from P3 projects in Canada executed from 2004 onward under the auspices of PPP Canada, Partnerships BC, Infrastructure Ontario, the Alternative Capital Financing Office of the Alberta Treasury Board and the recently re-named Infrastructure Québec (or the so-called "second wave" P3s).
The report's highlights include a conventional-to-P3 efficiency comparison for Canadian infrastructure project procurement, using value-for-money studies ("VfM studies") and studies of the ex post performance of P3s ("ex post studies"), an efficiency analysis of the second wave P3s and an analysis of the factors responsible for efficiency gains in P3 projects.
Among the factors deemed responsible for P3 efficiency gains are upfront risk allocation optimization, as well as the incentivising of construction phase efficiency as a result of private financing and the ensuing private sector partner's responsibility for a large portion of debt. The report also cites private sector innovation, whether in proposed outputs pursuant to performance-based contracts or relative to total project life cycle costs. The report however points out that innovation is not exclusive to the P3 model.
With regards to the second wave P3 projects, the report estimates the value of the P3 efficiency gains from between a few million dollars per project to over $750 million, which represents taxpayer savings of between 0.8% and 61.2% per project when compared to conventional contracting.
A copy of the report can be obtained from the Canadian Conference Board's website by clicking here.