Public-private partnerships can yield 60% efficiencies, says report
February 2, 2010
By Canadian Consulting Engineer
A report by the Conference Board of Canada has concluded that public-private partnerships (P3s) are bringing t...
A report by the Conference Board of Canada has concluded that public-private partnerships (P3s) are bringing time and cost savings for infrastructure projects.
However, the study also found that P3s are not appropriate for all infrastructure projects and the authors say each project should “undergo a rigorous value for money assessment” before determining if a P3 approach would provide more value.
The report, entitled “Dispelling the Myths: a Pan-Canadian Assessment of Public-Private Partnerships for Infrastructure Investments,” was funded by a slew of organizations that support P3 projects, including Infrastructure Ontario, Infrastructure Quebec, the Alberta Treasury Board, Partnerships British Columbia, and the Canadian Council for Public-Private Partnerships. However, the findings of the report “were determined solely by the Conference Board of Canada,” said a news release.
The study was based on an assessment of recent Canadian projects, i.e. those in a “second wave” of P3 projects.
The efficiencies found in P3 projects ranged from a low of less than 1 per cent, to a high of 61.2 per cent, compared to conventional methods of delivering infrastructure. In dollar terms, the savings ranged from a few million dollars to “more than $750 million in the case of the Autoroute 30 project south of Montreal.”
Renovations or extensions to existing facilities should not be done by P3s, said the report, because these are projects “where it is difficult to distinguish defects in the new work from latent defects in the existing structure.”
As well, the report found that there were disadvantages to P3s in some cases, especially when the private partners demanded a high risk premium. Financing costs are higher with private investors, and the costs of developing and monitoring the P3 contracts are high.
The report was written based on various sources of evidence. These included surveying documentation, interviews, the compilation of a database and four pairs of case studies comparing P3 projects with projects procured conventionally.
The report is available at www.infrastructureontario.ca