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Ontario’s new P3 procurement strategy based on good faith collaboration

Angela Gismondi
Ontario’s new P3 procurement strategy based on good faith collaboration
SCREENSHOT — Ontario’s Minister of Infrastructure Kinga Surma and Michael Lindsay, president and CEO of Infrastructure Ontario were on-hand at an Empire Club of Canada event to announce the Fall 2021 P3 Market Update which includes a total of 13 projects in planning, 23 in pre-procurement and 15 in active procurement, valued at an estimated $60 billion in contract value.

Ontario Minister of Infrastructure Kinga Surma presented the Fall 2021 P3 Market Update Oct. 14, highlighting projects in pre- and active procurement and introducing the use of a new P3 procurement strategy to enable certain upcoming projects.

There are a total of 38 infrastructure projects in the works, which includes 25 projects in pre-procurement and 13 in active procurement, said Surma, adding the projects combined are valued at an estimated $60 billion. The list also includes 13 additional government announced projects in the early stages of planning as each project, scope, timing and delivery model are being determined. The updates are provided by the government and Infrastructure Ontario (IO) quarterly.

Some of the projects outlined in the update include Unity Health Toronto — St. Joseph’s Health Centre Redevelopment, which has been moved into the pre-procurement stage and three projects that have moved from pre-procurement to active procurement: the Scarborough Subway Extension — stations, rail and systems; Kingston Health Sciences Centre — Kingston General Hospital Redevelopment; and Trillium Health Partners Broader Redevelopment — Queensway Health Centre.

During the virtual event hosted by the Empire Club of Canada, Surma took the opportunity to announce the use of a new Progressive P3 procurement strategy, based on stakeholder feedback which is meant to foster better collaboration between the owner and its contracting partner. The approach will be implemented on three upcoming hospital projects and two transit projects including the Scarborough Subway Extension, Weeneebayko Area Health Authority — Health Campus and Trillium Health Partners Broader Redevelopment — Mississauga Hospital Site.

The difference in this model is in the development phase where the parties will collaborate in good faith and assess the risks properly in order to lead to a smooth implementation period.

“During the early phase of the project both sides will work together to define project requirements, design, pricing and risk before entering into a final agreement,” said Surma.

“This progressive approach provides many benefits for both government and taxpayers as it enables price certainty and transparency and will help to lower financial risks for all parties involved. Complex projects of that nature will require good faith collaboration by all parties involved.”

Michael Lindsay, president and CEO of IO, was also on-hand to participate in a question-and-answer session.

“The importance of these sessions and the more or less constant dialogue we have with our members is to better realize, to actualize the vision of what is the largest investment in transit in the history of Canada. At a tactical level that has implied making decisions about how we bring these projects to market,” said Lindsay. “It’s in conversation with our market that we come to realizations like advanced tunnel contracts can be let on a design-build-finance basis for Scarborough-Yonge (subway expansion), whereas per this update, for stations, rail and systems contracts, especially in a brownfield transit corridor, it’s better to do something far more progressive with respect to design and development.”

Lindsay said some projects lend themselves to a different approach.

“It’s about the right tool for the job,” he noted. “What we want to stress is the P3 model that Ontario is world renowned for, design-build-finance (DBF), design-build-finance-maintain (DBFM), will continue to be on the social side of our business with some of the updates, evolutions that we have been talking to the market about.

“There are projects that given their innate characteristics call for a different approach. When asked to build four long-term care facilities of quality as rapidly as we can, anybody I know who has been around the construction industry will appreciate that a fixed price or fixed schedule DBF or DBFM for those sorts of works just wasn’t going to be the right model, so we created a modified approach.”

The government and IO plan to engage with stakeholders to provide more information on the new procurement model and how it works in the near future, Surma and Lindsay emphasized.

For more information on the Fall 2021 P3 Market Update click here.

 

Follow the author on Twitter @DCN_Angela.

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