The Canadian Council for Public-Private Partnerships (CCPPP) is set to host its 25th Annual Conference November 6-7, 2017 in Toronto, where innovators and influencers in the public and private sectors will share their expertise and insights about how to deal with the emerging issues and challenges in the Public-Private Partnership (P3) space.
How can a robust environment that supports the development of infrastructure across Canada and the world be created, and how can approaches like P3s continue to transform and be used to deliver infrastructure in new ways? Increasing private sector investment into large, complex revenue generating projects is seen as one critical avenue, so we asked Michael Jolliffe, a senior business executive who supports GHD's business strategy in North America, about how GHD is currently involved in the infrastructure market and in the P3 space for his thoughts.
Q: Can you tell us what GHD's current involvement is with large infrastructure projects, and what kind of experience it has with P3 projects?
A: GHD is currently involved on 16 of the top 100 infrastructure projects in Canada, and globally we've worked on 25 P3 projects. The 25 includes 10 social infrastructure projects such as hospitals and courthouses, nine transportation projects encompassing rail and highways, three water/wastewater projects that were desalination and water treatment projects, and three that involved waste management facilities.
Our roles have been on both sides -- supporting both owners and proponents - through positions like lead designer, technical advisor and specialist service provider. We've been able to do this by drawing on our deep technical knowledge combined with a keen understanding of how to deliver in a lowest NPV, design-build, fixed price environment. Having seen P3 agreements from all these perspectives has given us a unique understanding of risk - technical and commercial - and enable us to identify, manage and mitigate risk in an acceptable way to all parties, which is a critical component of having a functional P3 arrangement.
Some of our more high profile projects include the Sydney LRT in Australia, the Ottawa LRT Confederation Line Phase 1 and Hwy 407 East Phase 2 in Ontario, the Sydney and Victorian Desalination projects in Australia, and Peel Region's Anaerobic Digestion Project and the Etobicoke General Hospital in Ontario.
Q: Why are P3s an effective way to deliver complex infrastructure projects?
A: In contrast to more traditional approaches to building infrastructure, P3s offer more flexibility, and a more responsive way of organizing incentives and risk. They also help governments accelerate the delivery of critical infrastructure to meet the demands of growing populations and local and regional economies.
We are seeing more governments turning to P3 arrangements for really large and complex projects where private financing is needed, where they may lack the expertise in-house to confidently commission the project, or where operating the asset long-term can be better fulfilled by others. P3 arrangements allow the public body to retain ownership and a certain level of responsibility to the public, while transferring other aspects to a trusted partnership. For private companies, P3 projects are a chance to be more involved and to have more input upfront in technical areas where their expertise can help shape the direction a project takes, and to really help optimize technical efficiencies and innovation. It can be quite beneficial to get this type of input early on, rather than at later stages when it might too costly to change. Communities will benefit if P3's are properly structured to reward improved outcomes, and if the private sector entity is able to implement an asset management strategy and operations budget that fully optimizes the entire life-cycle of the project.
Q: What barriers do you think prevent private companies such as GHD from being involved in more P3 projects? How do you think this approach will evolve to solve some of the current problems with P3 arrangements?
A: There are many barriers, however there are three common ones for firms like GHD to participate in the P3 space. Risk is by far the most prominent, both technical and commercial. Depending on the requirements that flow down to a designer, these can be too challenging for firms of a certain size. Another is capacity. Usually a P3 project is of a certain magnitude that requires enormous time to bid and execute which is why design firms partner to share risk and tap into larger pools of technical capacity to meet the demands of a given project. A third barrier is demonstrable experience. While technically most firms can execute a project, the qualifying requirements of a P3 are stringent and firms need to have both the people and projects that match what a client expects. This can be a high bar to cross and can be difficult for smaller specialized firms to attain.
Strategic partnerships help address all of these barriers: share the risk, pool your talent and demonstrate common experience on relevant projects that improve your chance of making the shortlist.
Q: Can you tell us about a particular project and what you learned from it?
A: Great question. The answer is the same from every project on which I have worked: alignment. The difference between success and failure is how well your team aligns to its goals. While the specifics of each project are unique, all working together and understanding how each other deals with risk, commercial and technical issues and truly understanding each other's perspectives is the biggest learning for me. This is another reason why strategic partnerships are critical. The more you work with and understand each other the higher the likelihood of achieving alignment - and success.
Q: What is the value of attending an event like the CCPPP's annual conference? What do you hope to gain?
A: After 25 years of P3 conferences there is still a chance to learn more, meet new people and gain knowledge from innovations in other parts of the world. It's also a venue that brings together decision-makers from all levels of government in Canada and around the globe; from First Nations; the financial community; the builders, designers and operators. My colleague Richard Fechner, who is GHD's Global Leader of Infrastructure Investment and Economics, will be coming from Australia to participate on a panel to share lessons learned from some of our transit projects, and to discuss how these can be applied to make the next generation of transit infrastructure even better. Besides the knowledge offered through the keynote addresses and conference sessions, it is also one of the best networking opportunities with P3 practitioners anywhere.
For more information, contact Michael Jolliffe.