Delivering complex infrastructure projects and keeping an eye on value for taxpayers requires two equal partners at the table: the public and private sector.
All too often, governments at all levels lack capacity and in-house knowledge to deliver large and complex projects — that’s what the consolidated expertise at Infrastructure Ontario and similar organizations across Canada provide. We need strong public sector representation to hold the private sector accountable. We also need a strong public sector to ensure they are properly holding up their end of the bargain and are properly managing their end of the relationship.
When government ministries can rely on a hub of centralized expertise and knowledge to handle the procurement, delivery and potentially operations and maintenance process, they can focus on their core deliverables: providing critical services for Ontarians. We strongly disagree with critics like John Lorinc who argued in an op-ed for government to give up on Infrastructure Ontario and the public-private partnership mode.
Why should we kneecap Ontarians and get rid of a procurement model and agency that has successfully delivered, as of March 31, 2022, 78 public-private partnership projects — 94 per cent on budget and 67 per cent on time?
A more decentralized approach to infrastructure procurement, as advocated for by Lorinc, fails to see the many benefits the current centralized system provides — standardized processes and project documents, greater value for taxpayers, fair procurement practices, market stability and confidence, and an impressive record of delivering projects on time and on budget.
If you need medical help in Ontario, chances are you’ll be receiving care in one of the state-of-the-art hospitals the province has built over the past 20 years using public-private partnership. The standard Infrastructure Ontario has set for these builds is one of its greatest successes.
Critics consistently drag down the public-private partnership model by focusing on transit projects, despite its many successes across a variety of asset classes for 30 years in Canada. Globally, transit projects are among the most complex and expensive infrastructure projects undertaken by governments. Increasingly, they are also megaprojects ($1 billion-plus) and highly political, which layers on additional complications.
As well-known research by Bent Flyvbjerg, professor emeritus at the University of Oxford, revealed “nine out of 10 megaprojects globally have cost overruns. Overruns of up to 50 per cent in real terms are common, over 50 per cent not uncommon.” He examined projects around the globe dating back a century in a variety of asset classes and using all manner of procurement types. This is why Canada, Ontario and other jurisdictions around the globe started using public-private partnerships.
Right now, governments across Canada are bringing to market quite possibly the largest number of $1 billion projects ever. To resolve the megaproject issues and reduce risk, governments are weighing breaking these projects into a series of smaller projects (see the Ontario Line as an example). Others are using progressive public-private partnerships and the Alliance model, (a collaboration between the key project participants) to see if a different approach might curtail costs.
It’s important we have specialized hubs within government working with industry to find solutions. Innovations won’t always be successful, but agencies like Infrastructure Ontario are trying and that should be commended, not castigated.
Projects are getting more expensive to build. A 2024 report by the Toronto Region Board of Trade found the average cost per kilometre of transit infrastructure in Toronto started rising in the 2000s with the Sheppard subway and the TTC’s six-stop extension of the Line 1 Yonge-University subway into York Region. These were not public-private partnerships and are proof that delivery of transit projects, no matter the procurement model used, is more expensive than ever.
There is no doubt public-private partnerships need to evolve and improve — that is something in which The Canadian Council for Public-Private Partnerships and its public and private members are actively engaged. There is no short cut to building faster while respecting the public purse and ensuring resilient, quality infrastructure.
Timelines need to be realistic, no matter the procurement model. Weak competition, politicized decision-making, skilled labour shortages, flawed construction sequencing, supply chain issues and inflated scopes and costs are all making the work of procuring infrastructure across Canada more difficult.
But decentralizing expertise or eliminating procurement options and models from our tool box of solutions won’t solve these problems. And no procurement model can resolve politics.
Op-ed link in Toronto Star
