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Public-Private Partnerships (P3s) in Canada

Public-private partnerships (P3s) are becoming the path to providing lower-cost, higher-quality public infrastructure around the world.

In Canada specifically, the P3 market is ever-expanding. This steady progression – together with the ongoing success, growing expertise and stable pipeline of projects – has established Canada as a global leader in P3s.

Benefits of P3s

Reducing Canada’s Public Infrastructure Gap
“Across Canada, governments have recognized the value of engaging private sector innovation, where possible, to build more for less and deliver savings that will help to fill the infrastructure gap,” reads the PPP Canada Annual Report published last year.

P3s put the planning and forecasting of social infrastructure projects in the hands of private sector experts who are contractually accountable for successful project execution. By engaging private sector innovation, provinces achieve better value, timeliness, and accountability to taxpayers, while delivering savings that will help to fill the infrastructure gap.

“P3s leverage private sector expertise and transfer risk ensuring that best value is achieved,” the PPP Canada Annual Report reads. “At the same time, P3s keep ownership of the infrastructure with the government, guaranteeing that the appropriate level of public control is preserved.”

Mitigating Productivity Problems
Though there are various P3 models, typically, projects include private financing by private sector partners who take on construction risks and get repaid when the project is complete. With payment conditional on meeting pre-set criteria, the private-sector partner has a strong incentive to deliver favourable results.

Evidently, this method for motivating positive performance is working. A 2010 Conference Board study found Canadian P3 projects had delivered efficiency gains ranging from 1 percent to 61 percent, together with “a high degree of cost and time certainty”.

An additional report released by the Conference Board of Canada last year found 83 percent of P3 projects have met the goal of being completed early or on time.

Economic Impact
According to a Fraser Institute study released last year, public-private partnerships “provide greater value for money and opportunities for innovation.”

A study released by CCPPP in March of 2014 concludes, “public-private partnerships are major contributors to Canada’s economy, generating $51.2 billion in direct economic output and 290,680 direct full-time equivalent jobs between 2003 and 2012.”

The report also tallies $9.9 million in cost savings and $7.5 billion in tax revenue to government.

See what we have learned in our experiences working with P3s at Parkin, with a closer look at the design challenges associated and solutions we have provided for clients.

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