> HOW DOES A P3 DIFFER FROM TRADITIONAL PROJECT MANAGEMENT MODELS?

Infrastructure Ontario CEO Bert Clark says there are four important components that bring a P3 project in on time and on budget. The private sector gets a premium — Clark says it usually works out to less than 1 percentage point — to take the risk for problems that emerge on infrastructure projects.

Under the traditional model, the public sector comes up with a design for a hospital, school, wastewater plant or transit line. Builders would be asked to bid on an existing design. Inevitably there are problems in the design and the contractor wants more money to repair the issue. It’s what Clark calls “the classic change order.” In the P3, the builder designs the project so they are responsible for keeping changes within the price of the bid. “Lo and behold . . . there are often cheaper ways to resolve design issues. When they’re doing the design they’re constantly looking for more efficient ways to build the building. There’s no incentive for them to be doing that when it’s your design,” said Clark.

Big projects aren’t broken into many smaller projects under the IO model. On the Spadina extension there are five contractors building six stations. On Eglinton there will be one for 25.

Under the P3 model the contractor doesn’t typically get paid until the job is done. “Under the traditional model we would pay them monthly,” said Clark. “Whenever we got in disputes, they would say, ‘If you’re going to try to make me pay for that issue we’re just going to walk off the site. I’m not going to pour more money into this project. This is your project not mine.’ So we had no leverage. The leverage you have when all the money in a project is yours is very small. We turned around and said, ‘I’ll pay you when it’s done.’ ”

In a public-private partnership where there’s also a maintenance component — as will be the case on the Eglinton Crosstown — the public agency holds back a bit of money beyond completion. “Once it’s built I say, ‘I’m going to pay you almost all the construction costs because I want to know five, 10 years, 15, 20 years from now, this thing was built to last. I don’t want to have something that is breaking down in 20 years and I’m trying to go and find the builder.’ ”