Why are P3s an important solution to updating the state of Canada’s infrastructure?

The P3 model

has allowed the use of private funds and knowledge to build public infrastructure where governments lacked the funding or experience to undertake these projects themselves. We now see the revitalization of urban centres subsequently driving economic growth. New toll roads have been built to handle expanding traffic, hospitals have been renovated to provide better care, transit systems have been renewed to reduce the reliance on vehicles and energy projects have been developed to mitigate the growing demand on power. The P3 model has played a role in international events coming to Canada, including the 2010 Winter Olympics and the upcoming Pan Am games.

There are two

major reasons for the P3 model to be used to update and expand Canada’s infrastructure. First is the fact that this model of development allows the replacement of full,up-front,capital cost payments with monthly payments for capital and operating costs amortized over 25 or 30 years. This allows more development to occur, overall.The second reason is that the process allows for the transfer of risk from the public sector to the private team to complete the project on-time and on-budget.

The P3 formula

allows for optimal risk allocation, best performance and predictable cost over the long term—key concerns for public administrations.The development of procurement best practices and standard project documentation has helped to promote the industry’s growth and attracted participants. Canada’s strong banking sector and bond market are also providing attractive and reliable alternative financing options.