Transcript Infrastructure Ontario - American Public Transportation

Infrastructure Ontario
Expanding Ontario’s public infrastructure by delivering innovation, transparency, accountability
and results – building a better tomorrow
APTA-CUTA International Practicum on
Innovative Transit Funding & Financing
Derrick Toigo Senior Vice President, Civil Infrastructure
June 12 2014
A decade ago, Ontario was nearing a crisis point in its
infrastructure investment program.
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Ontario’s hospitals were, on average, 40
years old, equalling the industry-standard
“useful life” of a hospital.
Annual infrastructure investment levels
were 75% lower than today’s.
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The estimated the cost of modernizing
Ontario’s hospitals was $8 billion.
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Large, traditionally delivered projects were
plagued by poor budgets, inadequate
project management and unsophisticated
commercial negotiating expertise.
Governments did not have the confidence
to properly address the large infrastructure
deficit.
November 18, 2004
Hospital construction was
‘poorly planned’
A report on the “poorly planned” new
Thunder Bay hospital contains valuable
lessons about how not to build or redevelop
Ontario health-care centres, Health Minister
George Smitherman said Tuesday.
Sault Ste. Marie Star
September 2, 2006
“The new Sudbury hospital was originally
approved at $143 million but was suspended
when the cost reached $316 million.”
“The new Thunder Bay hospital was approved
at $126 million and came in at $283 million.”
Ontario’s Long-Term Infrastructure Plan
•In 2004, the Ontario Government sought an alternative to
traditional methods of infrastructure project delivery.
̶ examined the delivery methods that had been used by
other jurisdictions to address infrastructure deficit.
Building a Better Tomorrow Framework
(2004)
Guided by five principles meant to address
lessons learned in Ontario and in other
jurisdictions when it comes to P3:
• The public interest is paramount
• Value for money is demonstrable
• Appropriate public
control/ownership must be preserved
• Accountability must be maintained
• All processes must be fair,
transparent, efficient
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ONTARIO’S
LONG-TERM
INFRASTRUCTURE
PLAN
•Publically committed to
the first ever long-term
infrastructure plan
̶ Signaled to the
market provision of a
steady pipeline of
infrastructure projects.
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•Formulated a made-inOntario approach to financing
and managing large, complex
infrastructure projects.
̶ In 2005, established
INFRASTRUCTURE
ONTARIO
ReNew Ontario (2005-2010)
Ontario’s five-year infrastructure plan
invested $30 billion in health care, justice,
post-secondary education and
transportation projects.
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AFP – A Made-in-Ontario Solution
• Ontario’s P3 model was adapted using the model from the UK and Australia where both
labour and conservative governments have used P3s.
• IO carefully reviewed issues and problems realized in other jurisdictions and
intentionally designed non-ideological procurement practices and contractual
provisions; hence the name Alternative Financing and Procurement (AFP).
• What makes Infrastructure Ontario’s AFP model different?
• Infrastructure Ontario:
̶ Protects the rights of unionized workers;
̶ Puts in no more private finance that is necessary to transfer risk;
̶ Does not include core public services; services relate to assets (e.g., HVAC and
elevator repair and cleaning);
̶ Does not outsource any service to the private sector that is new – only difference is
we have combined them and the private sector has integrated them; and
̶ Always reserves the right to terminate contract.
• Why does Infrastructure Ontario continue to be successful?
• IO continues to carefully monitor local and international issues so as to proactively
modify the model as appropriate.
• IO maintains an active dialogue with stakeholders in other jurisdictions in an effort to
share and benefit from best practices, and analyzes and modifies current practices so as
to increase overall value for money on projects.
Protecting the Public Interest: Achieving Value for Money
Using taxpayers’ money responsibly
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Value for money (VFM) analysis is a
process of comparing project costs using
two delivery models − the traditional
project delivery model (the public sector
comparator) and the Alternative
Financing and Procurement (AFP) model
− to determine which is the better value
proposition .
VFM reviews are conducted by thirdparty accounting firms based on real
project data.
Only where a VFM review demonstrates
that the value of the AFP model
outweighs the traditional model and
provides value for money will the
province proceed with an AFP project.
Value for money savings on Alternative
Financing and Procurement projects
average over 11% per project.
Value For
Money
Risk Retained
Risk Premium
Ancillary Cost
Financing Cost
Base Cost
Primary Risks Transferred to
Private Sector in AFP Model:
• Design Risks
• Financing Risks
• Maintenance Risks
• Construction Risks
• Scheduling Risks
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Protecting the Public Interest: Maintaining Accountability
Internal Mechanisms
External Mechanisms
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Client Ministries define project scope.
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Annual Report prepared in accordance with
Management Board of Cabinet directives
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Projects are assigned to IO by way of Ministerial
letter of direction.
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Freedom of Information and Protection of
Privacy Act (FIPPA) prevails with allowance for
commercially sensitive information
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Auditor General can review directives from the
Minister
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Project budgets must be approved by Treasury
Board
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Investment and Risk Committee of IO Senior
Management reviews all major transactions at
critical milestones
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IO’s private-sector Board of Directors appointed
by the Lieutenant Governor-in-Council approves
all major transactions.
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Protecting the Public Interest: Delivering Transparency
Clear disclosure guidelines to the public with
information posted on
www.infrastructureontario.ca
Key commitments include:
• Competitive tendering
• Use of electronic systems for all bids (MERX)
• Proactively releasing relevant information in press releases and
on website
• Disclosing key project documents on website, including RFPs,
final project agreements, and value for money reports.
Information deemed commercially sensitive (determined with
reference to principles under FIPPA) may be redacted
• All major procurement processes are supervised by a Fairness
Monitor
All projects are open to examination by the
independent office of the Auditor General
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IO’s Major Projects Benefit all Regions of the Province
• 93 AFP projects have
been assigned to IO
• 36 AFP projects have
reached substantial
completion of
construction
• Total construction cost
value: $6.5 billion
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What we’ve done so far…
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37 Projects have reached Substantial Completion
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27 health care
5 courthouses
3 detention centres
1 forensics complex
OPP Modernization (16 sites)
Total Construction Value: $6.5 billion
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18 Projects currently under construction
– 8 health care
– 5 transit/transportation
– 4 Pan Am Games Venues
– 1 college
Total Construction Value: $6.9 billion
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18 Projects in procurement
11 health care
6 transit/transportation
1 college
Total Construction Value: $8.3 billion
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IO’s Major Projects Attract Market Leaders
PARTICIPANT FINANCIAL INSTITUTIONS
CONTRACTORS, EQUITY PROVIDERS & OTHER NON-FINANCIAL MEMBERS
On-time On-budget - 3rd Party Review completed in 2013
On-budget Schedule Analysis
• 29 of 30 projects analyzed were completed below the established contract and contingency budgets.
• On average across the 30 projects, 51% of contingency budgets are not utilized by the time
projects are complete
On-Time Schedule Analysis
22 projects (73%) were completed on or ahead of schedule, with two projects delayed by more than five months.
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Contact Information
Derrick Toigo
Senior Vice President, Civil Infrastructure
[email protected]
www.infrastructureontario.ca
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