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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
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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
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Key Sectors for DevelopmentKey Sectors for Development
Highway improvementsp
Long term care, acute care, primary care
Advanced Education/ Sewage
Treatment
Energy
Education Treatment
gy
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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Transportation Projects in the MarketTransportation Projects in the Market
Port Mann / Highway 1
South Fraser Perimeter Road
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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
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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
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Case Study:Case Study:
Golden Ears BridgeGolden Ears Bridge
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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
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Golden EarsGolden Ears
.
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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
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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
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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
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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
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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
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www partnershipsbc cawww.partnershipsbc.ca