P3 project leaders offer insight into large-scale projects

Case studies involving two successful public-private partnership (P3) projects in Ontario and Saskatchewan were the focus of an educational discussion at the P3 Fundamentals session, hosted by the Canadian Council for Public-Private Partnerships in conjunction with its annual P3 national conference held recently in Toronto.

Representatives from the Saskatoon Civic Operations Centre project and the Bruce Power Nuclear Generating Facility refurbishment project were on hand to provide their insights into the process and to share best practices and lessons learned with the audience.

James Scongack, vice-president of corporate affairs at Bruce Power and Annesley Wallace, managing director of Borealis Infrastructure, discussed one of the largest P3 projects in Canada.

After Bruce Power took over the nuclear generating facility site in 2001 with only four reactors operating, the company returned the site to its full potential in 2012. Now it has begun 20 years’ worth of life-extension maintenance activities that will see the site operate up to 2064, Scongack said. The facility is the world’s largest operating nuclear generating facility, with eight reactors providing 30 per cent of Ontario’s electricity. "The reason why this is important from a P3 perspective is because we have a unique construct in terms of how we operate the site and how we entered into an agreement with the site," Scongack explained. "Since the company was formed in 2001 we have spent about $10 billion, when I say ‘we’ it’s Borealis’ money, but we have happily spent it to life extend our facility and now we have a runway for our facility that could go as long as 2064."

Borealis Infrastructure, an investor in Bruce Power, considers a number of elements when it invests in an infrastructure projects.

"It’s looking for critical infrastructure assets for the economy and for the government, regulated or long-term contracted models, partnerships with co-investors or governments and Bruce power has a lot of those things," Wallace noted.

One element that she said was particularly meaningful was the province’s commitment to nuclear in its Long Term Energy Plan.

"So from an investor perspective we are happy to invest initial dollars in an infrastructure asset when we know that there is strong government and community support," said Wallace.

The project not only provides reliable electricity, it provides low cost electricity, 30 per cent below the average residential price, Scongack explained. By increasing output at the site, the project has also allowed the province to phase coal out of Ontario.

Community engagement and support is key, Scongack added. While many of the employees live in the community, being part of the community is not only employing people, it’s also addressing the inequities and respecting that the facility is located on a traditional First Nation’s territory.

"There’s an important bond where it’s incumbent on us to make sure that those communities are also seeing economic benefit from the site," said Scongack, adding economic development is also important with the surrounding municipalities.

The City of Saskatoon’s Civic Operations Centre project, the city’s first P3, includes construction of a transit facility and a snow storage facility.

"We had a contribution of up to $49.2 million from P3 Canada and that was an important reason to go P3, although not the only reason," said Linda Andal, director of the Civic Operations Centre Project for the city, adding there was a need to move the hundred-year-old transit facility out of the residential area to an industrial area.

It also required education.

"We did P3 orientation for our mayor, council and senior leadership team and that really was to help them understand some of the terminology, technology and acronyms," Andal said. "People that don’t live and breathe P3s like the core team does, it’s like fitting a square peg into a round hole. It is a steep learning curve for city staff."

As for the P3 team, Andal said the core city team was very lean with one point person who was the singular decision-maker and others in charge of legal, technical and financial elements. "Made in Saskatoon" templates for the RFQ, RFP and project agreement were developed using the best P3 agreements employed in other jurisdictions.

"The team remained unchanged throughout the procurement and, in fact, once procurement was over and we moved into construction, I left the financial lead position and became the project director, so having one consistent person from beginning to end makes a huge difference in knowing the background and knowing why some of the decisions on those technical documents were made the way they were," Andal explained.

Integrated Team Solutions, a partnership between EllisDon Capital and Fengate Capital, was selected as the preferred proponent.

"One of the things that was different about this project being a municipal project is that the city didn’t work with one of the established procurement agencies, they did it themselves," said Peter Bullen, project director, EllisDon Corporation. "I think what this project goes to show is that this is a great option and a lot of the projects are successfully procured that way. The city was able to deliver this project really efficiently with their own lean internal team and then by hiring a couple of key advisors… Versus traditional procurement which the city had budgeted for, the project saved $92.3 million on a continued basis over the 25 years."

With only two years to build the project and long winters in Saskatoon, the timeline on the project was challenging, but the core city team and the design-builder worked well together. Quick responses and decision-making from the city right from the RFP stage were key, Bullen noted.

The responsibility for communications was also a challenge.

"Hire a communications team or have a communications team on the project with you," said Andal, adding it took an "enormous amount of time and effort to address community concerns" on the project.

Some of the aspects that they could improve upon was to have interim milestones stipulated for offsite work and to avoid including extraneous work not essential for the functionality of the project within the project agreement. Overall, they stressed the need to be clear and communicate expectations and requirements for the project.