PPP Canada CEO talks bridge funding

Tyler
Tyler Clarke
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PPP Canada CEO John McBride. 

While the city’s elected officials consider bridge funding options, PPP Canada CEO John McBride is suggesting that his organization might be a worthy assistant.

 

“Bridges have demonstrated themselves as good candidates for P3s,” he summarized, clarifying that while he’s aware that a Prince Albert application might come forward, he’s yet to formally receive one.

On Monday, Premier Brad Wall announced that the provincial government would be a willing partner if the city’s elected officials choose to adopt the P3 funding model.

The Saskatchewan NDP responded a few hours later with a press release, labeling P3 agreements as profitable for corporations, but that they “typically cost taxpayers more while the public loses control over its local infrastructure.”

Pursuing the most direct-possible explanation of what a P3 funding model is and how it works, the Daily Herald contacted McBride by phone on Wednesday at his Ottawa office.

PPP Canada is a crown corporation that since 2009 has divvied out $1.2 billion of federal funding among 22 projects worth a total of $6.5 billion.

P3s (public-private partnerships) link levels of government with the private sector in order to get major infrastructure projects done.

P3 funding models aren’t too great a stretch from how things are already done, McBride said, describing P3s as “working with the private sector in a new way.”

Using a traditional funding model, public-funded projects usually involve various contracts with private companies, such as a contract to design the project, a contract to build the project and a contract to operate or maintain the project.

“In a P3, you bundle the design, build, operation and maintenance together into one contract,” McBride summarized.

“The projects that make the best P3s are projects that tend to be complex, because one of the major benefits of a P3 is that it allows you to transfer risk to the private sector.”

Aware of Prince Albert’s P3 musings, McBride suggested that residents could look an hour or so down the highway for “a great example of how P3s can be a good tool for bridge projects.”

The City of Saskatoon is poised to receive $66 million from the federal government through P3 Canada toward the construction of two bridges.

Following P3 Canada guidelines, the lowest compliant bid will adhere to P3 Canada’s build-finance-operate-maintain model over a 30-year contract.

It all comes down to how private enterprise operates, he said, noting that with a P3, it’s the private company’s money at risk.

“There’s nothing like the incentive of their own money at risk to make sure they do it right, do it on time and to do it on budget.”

Although P3 Canada has approved 22 projects (four of which are in Saskatchewan) since 2009, “many, many” proposals have been turned down, McBride said.

Addressing the criticism that P3s cost the public more, McBride notes that this is one of the reasons P3 Canada has rejected so many projects.

Labeling P3s as “a tool to be used for better value for taxpayers,” McBride said that proposals that don’t meet this standard are quickly weeded out.

                                                                                                                                               

Playing with numbers

Although the provincial government has yet to announce what formula they plan on using to help fund a Prince Albert bridge, they agreed this year to fund $50 million of Saskatoon’s $252.6 million bridge projects.

Plugging this contribution level into a North Saskatchewan River Crossing at Prince Albert (estimated to cost $150 million), the provincial government’s contribution would be $29.69 million.

The full 25 per cent P3 Canada funding would rake in another $37.5 million, leaving the city with a $82.81 million expense.

However, these costs are speculation at this stage. The city is poised to take on additional funding partners (surrounding municipalities or even private enterprise such as northern mining companies are possibilities,).

Mayor Greg Dionne has also questioned the $150 cost estimate, noting that it includes the construction of a swath of highway that might not be necessary.

On top of that is the reality that the city’s elected officials have yet to decide on whether they’re interested in pursuing a P3 Canada application. 

Organizations: Prince Albert, Daily Herald, North Saskatchewan River Crossing

Geographic location: Ottawa, Canada, Saskatoon Saskatchewan

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