The more things change, the more they stay the same.
When it comes to the need to build new public infrastructure—schools, hospitals, roads, etc.—that statement rings true. How to deliver these important projects is what seems to evolve over time. With the move towards fiscal responsibility when spending public funds, the public-private partnership (P3) model rose in popularity more than 30 years ago, but has recently fallen from favour in some circles, challenged by other delivery methods, such as the alliance and progressive models.
But as P3s approach middle age, some believe that the model remains relevant and viable, particularly when it comes to social infrastructure.
“By the mere fact of fiscal headwinds, governments, whether federal or provincial, are forced to consider alternative sources of financing and delivery of infrastructure,” says Derron Bain, chief executive officer of Concert Infrastructure, in an interview with ReNew Canada. “So, I think there is going to continue to be a need and a demand for private sector investment in public infrastructure and that means the P3 model.”
Provinces across the country, including Ontario, Alberta and Newfoundland and Labrador, are committing to the model under the right circumstances, for the right project, according to Bain.
“When I look across the country, I see potential and opportunities moving forward.”
Launched in 2010, Concert Infrastructure is owned by more than 200,000 Canadian workers, represented by union and management pension funds, “who keep us focused on generating steady, long-term value through our infrastructure projects,” says Bain, adding that partnering with governments to deliver critical public infrastructure assets that support essential public services that strengthen the economic and social fabric of Canadian communities and the well-being of Canadians, such as the workers represented by Concert’s ownership.
One of the criticisms of large P3 projects is that smaller, local contractors and suppliers often miss out on participating, but in Bain’s experience the opposite is true.
“Certainly in the projects we’ve delivered, we rely on those local companies and they’ve benefited from the experience of being involved with the model,” says Bain, pointing to the example of Saskatchewan-based Wright Construction Western Inc.
“We brought them in as part of our team in a joint venture with Bird Construction on the Saskatchewan Schools Project and they had never worked on a P3, but it built their experience and capacity and now they’re winning all sorts of public infrastructure projects.”
That includes Concert Infrastructure’s latest completed P3 project, which delivered five high schools for the Government of Alberta.
The five high schools, located in Leduc, Blackfalds, Langdon and two in Edmonton, were designed to provide new space for more than 6,900 students. Constructed with sustainable practices and energy-efficient systems, each school is poised to achieve LEED Silver Certification.
Concert Infrastructure was the project lead investor and manager, with construction by Bird Design-Build Construction Inc. and Wright Construction Western Inc., design by BR2 Architecture, and maintenance and renewal by Ainsworth Inc. Under a 30-year design-build-finance-maintain contract, the high schools will be owned and operated by their respective school jurisdictions.
“We’re proud to have delivered these much-needed schools on time and within budget, reinforcing Concert Infrastructure’s reputation for community-building and our quality infrastructure,” expressed Bain. “These high schools are more than mere buildings; they epitomize modern educational institutions poised to nurture learning for generations, enhancing the economic and social vitality of our communities—a commitment further underscored by the investment of Canadian union and management pension plans in this essential public infrastructure.”
According to Pete Guthrie, Alberta’s Minister of Infrastructure, “P3 builds represent our government’s commitment to ensuring schools are built efficiently, and Alberta taxpayers get the best value for their investment.”
Bain says the value for money exercise demonstrates that there are economies of scale in these bundled projects in terms of project management construction and the use of suppliers, where efficiencies can be gained.
Procurement is underway to deliver another bundle of seven new Alberta schools using a P3. Once opened, these new schools located in Airdrie, Blackfalds, Calgary, Chestermere, Okotoks and two in Edmonton will create over 7,000 spaces for Alberta students.
In addition to value for money, the other key value drive of P3 projects is maintenance and lifecycle, something that has been overlooked by governments in the past when considering how to deliver public infrastructure projects and a story that needs to be told, says Bain.
“We see it time and again whether it’s the state of the Ontario Science Centre or closing of a public pool in Vancouver’s Kitsilano neighbourhood. What do we expect when we allow our governments to starve infrastructure, starve assets of maintenance and lifecycle? We end up in this situation.”
If governments are going to commit to investing in building an asset, they need to be prepared to invest in the required maintenance and lifecycle requirements, says Bain.
“To me, one of the values and benefits of the P3 model is it forces governments to commit to that.
“And I think we as an industry and as a sector, we need to do a better job of telling that story, demonstrating to taxpayers the difference between a P3 investment and what it looks like in terms of maintenance and lifecycle versus traditional builds.”
From the social infrastructure perspective, when you look across Canada and see the use of the P3 model, the track record is pretty clear in terms of construction delivery, on-time and on-budget, says Bain.
“And I think that record speaks for itself.”
Making an Alliance
The Alliance contract is a multi-party contract, which does not allow parties to take legal action against each other, thereby eliminating claims, outside of highly defined occurrences of willful default. A collaborative contract, this model utilizes a joint governance and management structure between owners and private sector parties. The contract aligns the interest of the parties through pain-share/gain-share provisions, which share risk and reward among the parties of the alliance. The Alliance model is typically associated with complex infrastructure projects where the project scope is difficult to define fully, risks cannot be adequately defined or measured, or the cost of transferring risk to the contractor is too high.
Metrolinx recently signed an Alliance Development Agreement with Rail Connect Partners (Project Management and Construction) and Hatch (Design) to deliver Toronto’s East Harbour Transit Hub project. Rail Connect Partners is a 50/50 joint venture between AtkinsRéalis and Bird Construction Inc.
Under the alliance development agreement, services include optimizing the design solution, preparing detailed estimates for resources, costs and schedules, preparing a Project Proposal, finalizing the Project Alliance Agreement, and performing Early Works.
As part of the SmartTrack Stations program, East Harbour Transit Hub will be an interchange station in the Riverdale neighbourhood, immediately east of the Don Valley Parkway and south of Eastern Avenue. Located on the Lakeshore East and Stouffville GO lines the station will provide connections to the Ontario Line subway and future TTC transit services.
“The alliance development agreement represents a significant development for us in how we execute large projects without a fixed price contract model,” said Ian L. Edwards, president and CEO, AtkinsRéalis.
John Tenpenny is the Editor of ReNew Canada.
[This article appeared in the September/October 2024 issue of ReNew Canada.]
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