Deloitte Canada's Public Private Partnerships team explores the evolving role of value-for-money analysis in supporting infrastructure project delivery selection
To P3 or not to P3?
In Canada, public-private partnerships (P3s) are increasingly being used successfully to build big infrastructure projects that involve complexity and risk — everything from public hospitals to waste-water plants to roads and bridges to transit systems. In fact, P3s across Canada have already been successfully used to deliver 170,000 square feet of new school space, 4,790 hospital beds, 170 court rooms, 930 kilometres of roads and other infrastructure.
Private-public partnerships can be a very effective way to build and manage infrastructure, but they aren’t always the right solution. In order to determine if applying a P3 model is the most effective means of delivering a project, governments conduct a range of qualitative and quantitative due diligence activities including a value-for-money (VFM) assessment to quantify and analyse the cost of delivering the project through a traditional procurement model compared with delivering it as a P3.
A number of studies, in Canada and around the world, have looked at the benefits and drawbacks of P3s. There is a growing body of empirical evidence that, when used appropriately, P3s can be a very effective means of protecting the public sector from the risks associated with large project delivery.
And while these studies show that P3s around the world are often delivered on budget and with efficiency and innovation gains, many governments still lack key data that would allow them to more accurately compare P3s to traditionally delivered projects.
As an increasing number of projects reach advanced levels of maturity, public sector sponsors should look to develop a disciplined, planned approach to collecting and analysing project data and experience to understand performance with an aim to improve future project outcomes.