A must read for our members and others involved in Canada’s infrastructure sector: Today, Ontario Auditor General Shelley Spence released a performance audit into a selection of recent procurements by Infrastructure Ontario and sponsoring government ministries. This analysis by Auditor General Spence and her team makes 16 recommendations — several which echo recommendations issued by the Council and its public and private sector members in early August in Modernizing Canada’s Approach to Public-Private Partnerships (P3s).
A fair and balanced review of Canada’s public procurements is necessary as the industry navigates an unprecedented set of circumstances affecting the market. From labour shortages, to inflation, ensuring value for taxpayers through P3 procurements is imperative. We recognize that a full-lifecycle, performance-based approach can benefit Ontarians, but we must remain adaptable as we harness lessons learned.
The first recommendation in today’s report is critical: that new strategies be assessed “to increase market competition for projects based on feedback received from market participants while maintaining incentives for contractors to complete project on time and on budget, including the allocation of risk and whether it would be feasible to break projects into smaller components.”
As CCPPP noted in our report: “Where possible, governments should consider breaking large, projects (exceeding $500 million) into phases to attract greater competition, produce greater market tension and greater certainty in execution, and cost savings for taxpayers.” And: “Governments should evolve procurement approaches to ensure early engagement with private-sector proponents and foster a solutions-oriented procurement environment.”
We’re also supportive of recommendations 14 and 15, calling for an update to the quality oversight framework for highway construction and conducting an analysis of P3 contracts from other jurisdictions for clauses that add clarity for a timely dispute resolution process.
This is important as we continue to advocate for the use of P3s for major highway projects in the province. Highway P3s have a strong record of success across Canada but issues need to be addressed in a constructive manner to improve upon the model and ensure ongoing success for the future.
As we recommended in our report: Governments need to see themselves not merely as contractors or service providers but as “industrial owners” with a vested interest in a project's long-term success. They must actively oversee P3 contracts and provide centralized support to P3 contract management to minimize disputes and enhance transparency.
And: “In the spirit of increasing transparency, rebuilding trust and delivering top quality infrastructure for Canadians, governments should work with each other to share best practices and establish new cross-Canada standards.”
IO has a strong reputation in Canada, as both a leader in advancing P3s and alternative models, but as a strong collaborator and partner to the private sector and we encourage ministries to adopt the same approach. In particular, as we continue to evolve Project Agreements to facilitate and encourage collaboration amongst the partners.
We also appreciate the AG’s thoughts on the difficulties in setting budgets for projects in the last few years because of volatility in market pricing for building materials.
It is refreshing to read an AG report that focuses on what matters most: improving the delivery of dependable, resilient and innovative assets — at the best value — for all of us every day, rather than simply attacking the P3 model for philosophical reasons. There is nuance in this report in understanding and weighing the pros and cons of the different procurement models, from traditional to classical P3s and now Progressive P3s. And, as such, much for all of us to digest and ponder as we prepare to enter a new year.
Our industry is not only open to change, but are leading it.
