Right-sizing of P3s
How public-private partnerships are finding the right track for success
Public-private partnerships, or P3s, have become a common means of successfully delivering infrastructure projects in Canada. Over the past 20 years, they’ve been refined to ensure they are providing value to taxpayers and the public. P3s create value by balancing risk between the private and public sectors.
In exchange comes the collective experience of the partners and certainty on cost and timing. In recent years, the industry has gotten specific in understanding what size projects will benefit most from the P3 model. Bombardier, Canada’s leading mobility solutions provider, is a global leader in rail P3s, and has delivered projects of varying sizes under the P3 model.
Right-sizing P3s
“When P3s opened up a new procurement model for large projects in Canada, the industry began with small projects, such as Vancouver’s Canada Line,” says Guillaume Bouthillier, Vice President and Head of Global Partnerships at Bombardier Transport. “As P3s became more attractive, larger projects were constructed using this model, but they weren’t always as successful.” In the industry, having the right fit is essential.
“The industry is retracting somewhat and seeing that mediumsized projects lend themselves best to the P3 model. There’s a sweet spot, where the project can’t be too small or too big,” he says. Having delivered over 100,000 rail cars and moving half-a-billion people every day in 200 cities, there are a limited number of companies that can bring the kind of global experience that Bombardier has to rail projects.
Integration is key
There are a lot of components that make up any large infrastructure project, but with rail, there‘s another level of complexity, because the trains require maintenance and operation through the life cycle of the decades-long contract. It's different from a highway or bridge, which requires less maintenance. Accordingly, there is a need to bring together a consortium of partners to orchestrate the ensemble of components.
“Projects that tend to be successful are the ones where there is a holistic approach to solutions,” says Bouthillier. “Without this, you can have trains that don’t fit, or tunnels not built to the right dimensions, or weight issues on the tracks.” While these issues can often be fixed, they end up delaying projects and costing taxpayers more.
Bouthillier acknowledges that P3s are not the best solution for every project, but when it is the right model, early planning is a strong contributor to success. Planning allows for the right players to come together to manage the integration and assume the appropriate risk that will translate into good value for the taxpayer and the end user. This is important because it’s the user that is living the experience and wants to know that it’s safe, comfortable, and operates as it should. He adds that there have been some large rail projects in the UK that were derailed because they were too large to integrate correctly. These projects later ended up getting cancelled, which cost taxpayers a considerable amount of money.
According to Bouthillier, Edmonton’s light rail Valley Line, currently under construction, is a good example of what a well-integrated P3 project can deliver. Four partners, including Bombardier, have formed TransEd, which is overseeing the five-year designbuild and the 30-year operation and maintenance of the rail line. “This is the perfect size project — just under two billion dollars — for a P3 of this kind,” says Bouthillier. “The smaller size of this project made it easier to bring together the right team, and we’ve even incorporated the city’s urban planning into the project.”
“Projects that tend to be successful are the ones where there is a holistic approach to solutions.”