public private partnerships in british columbiacharles jago northern sport centre* n/a 33 viha –...

Public Private PartnershipsPublic Private PartnershipsPublic Private PartnershipsPublic Private Partnershipsin British Columbiain British Columbia

Austin Chamber of Commerce Intercity VisitOctober 6, 2008Amanda Farrell and Neil Alexander

Partnerships British ColumbiaPartnerships British Columbia

Partnerships BC was created in 2002 by the Provincial p yGovernmentIt evaluates, structures and implements partnership solutions which serve the public interestwhich serve the public interestOwned by the Provincial Government Operates as a company with a board of directorsp p yReports to the Minister of Finance

Key Sectors for DevelopmentKey Sectors for Development

Highway improvementsp

Long term care, acute care, primary care

Advanced Education/ Sewage

Treatment

Energy

Education Treatment

gy

Projects: Operational / Under Construction Projects: Operational / Under Construction VFMProject VFM

Savings On Budget On Schedule

Sierra Yoyo Desan Resource Road* N/A Early completion

Gordon & Leslie Diamond Health Care Centre*Abbotsford Regional Hospital and Cancer Centre* CompletedCentreBritannia Mine Water Treatment Plant*

Sea-to-Sky Highway Improvement Project108 d lWilliam R. Bennett Bridge* 108 days early

completion

Canada Line (Sky-train)

Ki ki H C (Ph 2)*Kicking Horse Canyon (Phase 2)* Early completion

Golden Ears Bridge

Charles Jago Northern Sport Centre* N/A

VIHA – Long Term Care N/A

*Operational projects

Success to DateSuccess to Date

Internationally recognized Centre of Expertisey g pDeveloped policies, best practices, guidance, templates and examples for PPP projectsCompleted 25 PPP deals in 5 yearsOver $9 billion in projects to date, with about $ 5 billion f th i t tfrom the private sectorAdvised numerous other jurisdictions on PPP programs and projectsand projects

PanPan--Canadian / International PPP ActivitiesCanadian / International PPP Activities

Increase appeal of Canadian market:Create a more homogeneous Canadian marketCreate a more homogeneous Canadian marketReduce costs and duration of procurement

Memorandums of Understanding gAlberta, Ontario, Quebec, Public Works and Government Services Canada, Nova Scotia, Prince Edward Island

Information SharingInformation SharingCanada, New Brunswick, SaskatchewanCalifornia, Michigan, Arizona, Oregon, Washington, g g gGeorgiaWorld Bank, UN

PPP DefinedPPP Defined

Long term, performance-based contract between government and business to deliver infrastructure and related services

Combines design, build, operate and often finance into one contractGovernment retains ownership and control over projectRisk transfer and InnovationLifecycle planning

ObjectivesMeet budgetary fiscal and program objectivesMeet budgetary, fiscal and program objectivesFair and transparent competitive processDelivers value for money P bli i t t dPublic interest served

Procurement SpectrumProcurement Spectrum

Partnership Structures: Partnership Structures: pp

R I S K T R A N S F E R

Construction

Management and DBB

DB BF DBFO DBFOODBFM

Reasons to Consider a PPPReasons to Consider a PPP

M l i l Si l

Traditional PPP

Multiple contractsGovernment retains key schedule and budget risks

Single contract Key schedule and budget risks transferred to private

Owner exposed to deficiencies

sectorProponent not paid until project delivered as specified

One design solutionLumpy cash flow profile

Multiple design solutionsSmooth payment based on performance

Linear phases: design, bid, build

performanceOverlap phases: design, build

PPPs PPPs -- BenefitsBenefits

Long term, performance-based contract between government and business to deliver goods or servicesg g

Combines design, build, operate and often finance into one contractG t t i hi d t l j tGovernment retains ownership and control over projectMeets budgetary and fiscal objectivesLifecycle planningLifecycle planningFair and transparent competitive processTransfers appropriate riskspp pDelivers value for moneyPublic interest served

B.C. PPP Policy FrameworkB.C. PPP Policy Framework

Provincial commitment to PPPB C PPP iB.C. PPP program is a success

Track record - on time, on budget

New capital standardNew capital standardOctober 2006 - capital standard policy PPP is base case for major capital projectsPPP is base case for major capital projects Improve / expedite business case planningLever best practicesDemonstrate consistency to market

PPP Schedule OverviewPPP Schedule OverviewBusiness Case & Design

Concept

IssueRFQ

Issue RFP Negotiate

4-18 months

3 months to 2 years

Construction

Design

Maintenance2-4 years

Contract TermContract Term

(~15-40 yrs)Traditional Model

Preliminary Business Case Design Construction

Scope

Partnerships BC Role and ModelPartnerships BC Role and Model

Centre Of Expertise/Best Practices Competition

Market Development

Transparency

Innovation

Risk Transfer

Value for MoneyFairness

Communications

y

Delivery MechanismsDelivery Mechanisms

Business PlanningBusiness PlanningFeasibility Analysis

Procurement ProcessProcurement ProcessStandard RFQ & RFP

ImplementationImplementationValue for Money y y

Options AnalysisBusiness Case

Quantitative

Consolidated Concession AgreementRequest for I f ti d

yReportPost Financial Close Services including Project ManagementQuantitative

analysis (PSC vs alternative)Risk analysis

Information and Consultation processEvaluation

Project Management

Risk analysisMultiple Criteria Analysis (MCA)Procurement Consultant engagement

Best PracticesBest PracticesStrategic Procurement

optionsMarket Sounding

g gQuantitative AnalysisStakeholder management

gcommunicationsValue for moneyConflict of interest

New Partnerships BC Best PracticesNew Partnerships BC Best Practices

Based on Summer 2008 projects (three health and one p j (transportation)Objective is to improve project outcomes through l i titi dplanning, competition and governance

Cornerstones:Aff d bilit Li d /f il l tiAffordability Line and pass/fail evaluationThorough costingClear evaluation criteriaClear evaluation criteriaAppropriate project governance

B.C. – Projects In OperationsGordon & Leslie Diamond

Kicking Horse Canyon (Phase 2)Gordon & Leslie Diamond

Health Care Centre

Sierra Yoyo Resource Road

y ( )

Abbotsford Regional H i l d C C

Charles Jago Northern Hospital and Cancer Centre William R. Bennett Bridge

gSport Centre

Golden Ears BridgeB.C. – Projects Construction

Canada Line

Royal Jubilee Patient Care ProjectSea-to-Sky Highway Improvement P j t

Royal Jubilee Patient Care Project

Project

Other Projects Under ConstructionOther Projects Under Construction

Interior Health – Kelowna/Vernon HospitalsInterior Health Kelowna/Vernon Hospitals Fraser Health – Surrey Outpatient Facility at Surrey Memorial HospitalSurrey Memorial Hospital

Transportation Projects in the MarketTransportation Projects in the Market

Port Mann / Highway 1

South Fraser Perimeter Road

Health Projects in the MarketHealth Projects in the Market

Northern Health – Fort St. John Hospital Project -RFQ stageRFQ stageNorthern Health – B.C. Cancer Agency’s Centre for the North in Prince George - RFP stagethe North in Prince George RFP stage

PPP SuccessPPP Success“(PPPs are) a fantastic example of how the availability of private

“Greater use should be made of PPPs worldwide in order to help bridge a growing gap

availability of private capital can help governments achieve theirinfrastructure goals faster help bridge a growing gap

between infrastructure needs and available public investment.”

and at a lower cost.”

California Governor Arnold Schwarzenegger,

OECD May 2007Arnold Schwarzenegger,

May 2007

t hi bwww.partnershipsbc.ca

Case Study:Case Study:

Golden Ears BridgeGolden Ears Bridge

Golden EarsGolden Ears

New bridge crossing and road network linking the municipalities of Langley and Maple RidgeCapital cost $1.1BillionProcurement analysis started in 2004Project documents signed March 2006Bridge expected to open inBridge expected to open in June 2009ON TIME AND ON BUDGET

Golden EarsGolden Ears

.

ObjectivesObjectives OutcomeOutcome

No material change in Tolling framework – gtolling proposal as result of financing.A th it t t t ll i

gacceptable and stable toll rates to users

Authority to set toll is 100% TransLink responsibility.p yNo minimum TransLink credit rating, no T Li k fi i l

Ability (flexibility) to implement public policy to address changes in TransLink financial

covenants, no Provincial support.

address changes in circumstances in future

pp

ObjectivesObjectives OutcomeOutcome

No windfall profits TransLink retains 100% pupside (and downside) of the revenue risk.

Acceptance of business model and process by D l C t t

Competitive procurement process. Credit margins

Developers, Contractors and Financiers resulting in effective execution.

favourable with other transactions

ObjectivesObjectives OutcomeOutcome

Minimal financial TransLink retains tolling exposure to TransLink during operations. No subsidy

griskOMR risks are t f d t

ytransferred to Concessionaire

Potential for innovation Financing innovation: “credit wrap” Rating AAAcredit wrap Rating AAADesign innovation: cable stay bridge; construction y gpractices

ObjectivesObjectives OutcomeOutcome

Provide north-south Travel times are connectivity to east-west routes, reducing travel times and traffic

estimated to be reduced by 30 minutesS t i lcongestion

Promote residential and industrial development

Supports regional “Gateway” transit objectivesindustrial development

Link existing pedestrian and cycling networks

jBike and pedestrian access provided

ObjectivesObjectives OutcomeOutcome

Public accountability and Proposal conforms to ypublic safety paramount

pRFP technical requirements I d d t C tifiIndependent Certifier to certify completion.TransLink oversightTransLink oversight during constructionFull disclosure to the public of DBFO Agreements

www partnershipsbc cawww.partnershipsbc.ca