The public-private partnership (P3) model may not be advocated by Ontario’s Auditor General as the answer to Canada's infrastructure deficit, but new evidence suggests otherwise.
At an Ivey Idea Forum in Toronto on October 13, the Lawrence National Centre for Policy and Management presented ongoing research demonstrating P3s may deliver better outcomes than traditional public-sector procurement for building new infrastructure.
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The research was launched in response to Ontario Auditor General Bonnie Lysyk’s recent report suggesting traditional procurement would be less costly than P3s if the projects were managed better.
“This really challenged the conventional thinking about this, not just in Ontario, but across Canada and around the world, because the conventional thinking is that P3s, when appropriate, deliver better outcomes by creating better incentives for performance,” said Professor Paul Boothe, Director of the Lawrence National Centre for Policy and Management.
The Lawrence Centre was approached by a consortium of nine firms, led by AECON, that work in both traditional and P3 environments, and asked to compare the models. The resulting study looked at six major infrastructure projects in two sectors: hospitals and rapid transit.
On time and on budget
Results showed the P3s were more often on time and on budget than the traditional projects and any risks with the P3 projects were transferred from the public to the private sector.
“The public sector due diligence that comes with private financing is worth a lot,” said Boothe. “It means the kinds of risks that we’re facing actually get costed and mitigated.”
The event also included insights from a panel of leaders from private and public corporations involved in construction and infrastructure development: John Beck, Executive Chairman of Aecon Group Inc.; Geoff Smith, President and CEO of EllisDon; and Bert Clark, President and CEO of Infrastructure Ontario.
The Lawrence Centre welcomes feedback on the ongoing P3 research at lawrence@ivey.ca.
Panellists: (L-R) John Beck, Executive Chairman of Aecon Group Inc.; Geoff Smith, President and CEO of EllisDon; and Bert Clark, President and CEO of Infrastructure Ontario
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