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Wednesday, September 21, 2016

Metrolinx on Unexpected Pressures- LRT

In light of what could be a series of unexpected costs related to LRT implementation, we asked the following of the city, who redirected our question to Metrolinx. Here is our q/a with Metrolinx:

With respect to LRT implemenation plans in Hamilton, can you advise as to how much of the funding has been set aside for any unexpected pressures/surprises that may arise that will require resources and effort? 

Metrolinx's reply:
Apologies for the delay in responding to your request regarding the Hamilton LRT.

Metrolinx does not release detailed budget information prior to the procurement process in order to ensure a competitive bidding process.

65 comments:

  1. Huh. Strange answer.

    Sev

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  2. does the current government-or this particular agency-have reputations for sound fiscal management? are they known for saving for the unexpected, putting something away for a rainy day, or a rail underpass, or expropriation costs or.....?
    Their response could have read " Metrolinx has no responsibility toward accountability in this respect, certainly not to the taxpayers of Ontario"
    Please continue asking questions.

    ReplyDelete
    Replies
    1. Captain HamiltonSeptember 22, 2016

      Right on. Keep asking questions!

      The Captain

      Delete
  3. Why would someone even ask them this? Metrolinx would be stupid to answer this question. It's like telling a car salesman, well I would like to spend $30k but I actually can spend $35k if I have to.

    ReplyDelete
    Replies
    1. No..it's like saying. I'll buy the car for 30K but if I find that it needs a new engine as soon as I take it around the corner, do you have the cash to fix it?

      Not a perfect analogy tho

      The Dark One

      Delete
    2. I guess I made the point

      The Dark One

      Delete
  4. Well can't say I am surprised. The unexpected surprises like the rail underpass at Eastbend really have nothing to do with confidentiality requirements

    ReplyDelete
  5. To be expected. If I'm not mistaken, this is consistent with the procurement MO of all Infrastructure Ontario projects. Has the RFP been issued yet? If no, there is no clearly defined project, and hence no clearly defined project budget. Pretty elementary stuff, especially given the way the Alternative Financing and Procurement model works.

    Perspex



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    Replies
    1. Perpex. I would not be able to create a budget or pitch my services, unless I knew the answer to that question .Pretty fundamental indeed.

      The Dark One

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    2. Sorry. Perspex not perpex

      The Dark One

      Delete
    3. Which is exactly the point, @TheDarkOne. The budget is part of the RFP. It's not announced a year in advance of the RFP, but as part of the RFP. And the RFP is bid on by parties who have passed the RFQ round. This is all pretty basic stuff to anyone who has been following provincial infrastructure — again, I'm pretty sure it's how they've been operating for the last decade. As such, it's an answer that would have been predictable before the question was formulated, let alone asked.

      Perspex

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    4. the budget is 1.1 billion, well known for some time. The question is-"...how much of your budget is allocated toward unforeseen circumstance...?'
      I suspect it is the inevitable follow up questions that concern Metrolinx. 10% of budget (110 million)? Well you are through that amount already. 20%? Who is in charge of planning if such a broad contingency is required? You see where this is headed?
      So did the respondent for Metrolinx

      Delete
    5. You attribute too much intent. It's the agency's SOP. The estimated timeline for the AFP was published on this very blog almost 8 months ago.

      http://www.thehamiltonian.net/2016/01/lrt-project-plan-timelines-for-hamilton.html

      The procurement process doesn't even start until RFQs open in December, with the RFP process concluding by April 2018. If you follow these things.

      Perspex




      Delete
    6. of course, I disagree.
      are you suggesting the 1.1b figure is inaccurate? (do you have some "inside" knowledge you can share?)
      is it your opinion that the RFQ's include bids on scope of work which can not be defined, as it is unforeseen? How does that work?
      I believe Metrolinx is going to be hard pressed to deliver the system it has promised-from Mac to Queenston-at the forecast cost. I will not be surprised to learn there is no wiggle room afforded in the current forecast for "unexpected surprises". None.

      Delete
    7. Captain HamiltonSeptember 22, 2016

      Don't be silly. We will have lrt from one side of mac to the other side of mac

      The Captain

      Delete
    8. Given that the province's $1.1B estimate was based on a partial design (30%, I believe) it would necessarily have to be broad-brush.
      Political games alone can compound expense, and do regularly.

      Perspex

      Delete
    9. The line was originally 14km long, and is now 11km plus a 1km spur but the budget hasn’t changed. Dropping 2km from the line amounts to a 14% reduction in project scope, with presumptive benefits in terms of wiggle room. (Whether that’s enough to offset the unknown is, you know, unknown.) But yes, that’s how these projects are supposed to work: The budget is the budget, and the contractor engineers the result to fit the constraints.

      From a May 2016 Q&A with the Flamborough Chamber of Commerce:

      Q: It is our understanding that the province has committed $1 billion to the Hamilton LRT project. What happens when there are cost overruns ... and who pays for it? Or is the province saying "$1 billion for LRT... and not a penny more?"

      A: As indicated in the Metrolinx City of Hamilton Memorandum of Agreement (MOA), Hamilton is not responsible for any capital costs associated with the project unless specifically stated. Metrolinx intends to build the project as set out in the scope but it is always subject to eligible costs and budgets.

      The project will be delivered using an Alternative Financing and Procurement (AFP) approach, which requires a fixed-price contract signed by Metrolinx and the successful proponent for the delivery of the project. The project budget will include appropriate contingency to accommodate design development and address unforeseen circumstances that may arise during construction. The AFP procurement process is designed to work with the bid teams to ensure that the project comes in at or below budget.”

      http://flamboroughchamber.ca/wp-content/uploads/2016/05/FCC-LRT-QA.pdf

      Perspex

      Delete
    10. well that is certainly an interesting approach, just reduce the overall scope of work in order to meet the demands of unforeseen issues missed in the planning process.
      so for every "oops, forgot about that..." the route will be shortened. With the contractor forced to "engineer the result to fit the constraints" I am left to wonder if the end result will even resemble the original vision.
      I see Freddy chugging down the tracks on King on one of those old fashioned "pump trucks" All aboard!

      Delete
    11. It's not just an interesting approach. It's the way that the system runs — for highways, for hospitals, for courthouses, for commuter rail. And yes, for transit as well.

      Chex

      Delete
    12. kindly provide an example of a highway that was shortened because of poor planning, a hospital or courthouse that was forced to reduce service in order to be constructed. Your analogy fails.
      Poor planning erodes confidence, undermines trust
      Poor planning will result in poor effect. Poor planning is why this system will never run as visioned.

      Delete
    13. All conducted under the same AFP system. I'm sure there are many projects that rescoped prior to RFP terms being nailed down. Metrolinx has highways in its wheelhouse as well, so you can cast aspersions that way as well.


      Chex

      Delete
    14. Here is a list of infrastructure projects being constructed under the AFP model in Ontario:

      http://www.infrastructureontario.ca/Templates/Projects.aspx?id=2147488309&langtype=1033

      Chex

      Delete
    15. The Honourable Deb Matthews, Minister of Health and Long-Term Care joined hospital and foundation staff, community leaders and health care partners to announce Joseph Brant Hospital’s re-scoping of their original 2007 Redevelopment and Expansion Project.

      http://www.josephbranthospital.ca/en/news/index.aspx?newsId=189fd142-c003-4f76-873a-892bb430853b


      Just prior to last October's provincial election, health minister Deb Matthews was at the Elm Street hospital to announce the original plan, which included mental health inpatient and outpatient care units; new emergency, ambulatory care and surgical departments and new hallways to improve traffic flow and help reduce the spread of contagious illnesses.

      In March, however, the Ontario budget called for the STEGH project and several others around the province to be “re-scoped” into less expensive undertakings.

      http://www.stthomastimesjournal.com/2012/08/10/ministry-of-health-gives-green-light-to-re-scoped-st-thomas-elgin-general-hospital-redevelopment

      The McGuinty government supposedly ear-marked an estimated $130 million for an extensive redevelopment at STEGH. At least that's what Minister of Health and Long-Term Care Deb Matthews promised voters last fall as an enticement to vote Liberal in the fall election.
      The electorate was under-whelmed with Lori Baldwin-Sands and Elgin-Middlesex-London fell to the Tories.
      And, in one of the great post-election disappearing acts, the administration at STEGH is now expected to get by on $45 million to proceed with the 15 mental health bed component of the project and a re-scoping of the rest of the redevelopment.

      http://www.stthomastimesjournal.com/2012/04/15/why-does-this-promise-come-with-a-bitter-after-taste

      Six hospital projects scrapped or downsized, five Tory ridings, one health minister fending off accusations of partisanship.

      http://www.lfpress.com/news/london/2012/03/28/19560921.html

      2012 Budget Addendum:
      “Capital funding enables health care service delivery through investments in infrastructure for hospitals, community care and long-term care homes. This savings measure includes cancellation of four previously announced major hospital projects and re-scoping of two others. None of these projects is under construction.
      The previously announced major hospital projects to be cancelled are West Lincoln Memorial Hospital Redevelopment; Sunnybrook Health Sciences Centre — Replace Hemodialysis Unit; South Bruce Grey Health Centre (Kincardine) — Emergency and Ambulatory Project; and Wingham and District Hospital — Phase 1 Ambulatory and Inpatient Project.
      The two projects to be re-scoped are Brockville General Hospital — Mental Health/Complex Continuing Care/Rehab — Phase 2; and St. Thomas Elgin General Hospital — Emergency, Ambulatory and Mental Health Project.”
      http://www.fin.gov.on.ca/en/budget/ontariobudgets/2012/addendum.html

      Chex

      Delete
    16. BTW, that would be the same Joseph Brant Hospital that required $60M in capital funding from the hospital's fundraising foundation and an equivalent share from the City of Burlington.

      "JBMH staff have indicated that they would be forced to re-scope phase 1 or delay the project if the city committed less than $60 million."

      http://cms.burlington.ca/AssetFactory.aspx?did=13388

      Delete
    17. "I am sure there are many projects"
      Name one.

      Delete
    18. I cited two hospital projects that were identified as being rescoped in the 2012 Ontario Budget Addendum: Brockville General Hospital — Mental Health/Complex Continuing Care/Rehab — Phase 2 AND St. Thomas Elgin General Hospital — Emergency, Ambulatory and Mental Health Project

      But the first example I cited is Joseph Brant Hospital, which was rescoped in November 2013 before the RFP was issued (January 2014).

      Because private sector capital campaigns to fund hospitals are so common these days, we don't really see them, but without those massive transfusions of private cash (eg. Hamilton Health Sciences Foundation's $100M capital campaign, Jo Brant Hospital Foundation's $60M capital campaign), you would see health care projects rescoped far more regularly.

      Chex

      Delete
    19. St. Thomas Elgin General Hospital

      Rescoped March 2012
      RFQ Released August 2014
      RFQ Shortlist announced December 2014
      RFP Released March 2015
      RFP Closed July 2015
      Contract Awarded November 2015

      Chex

      Delete
    20. as you rightly point out, those hospital projects were re-scoped because of a lack of cash.
      but that is not the issue with LRT here, correct? Why we are flush with cash in this respect, assured repeatedly any cost over runs will be looked after by Ms. Kathy.
      (how health care can be so impoverished while transit is spending like a drunken sailor remains a mystery. Priorities are on display)
      If you had provided a hospital or courthouse that was forced to reduce service by 15% from original scope directly resulting from poor planning, reduced in order to find wiggle room to address unforeseen circumstance, then we would be talking similarities.
      LRT Hamilton will prove to be a unique boondoggle. The proof will be in the pudding.

      Delete
    21. no similarities between the examples you reference and LRT in Hamilton
      the 2 hospital projects ran out of cash, insufficient funding. They did not have to re-scope in order to address unforeseen issues that were missed in the planning stage. Evidently the system runs in different directions, depending on the priority.
      LRT Hamilton is flush with cash. Repeatedly we have been assured any cost overruns will be absorbed by the Province. No need to pass the hat.
      The dichotomy between the funding for health care and transit are transparent and reveal our new priorities. They also reinforce the baseless nature of your position.
      LRT Hamilton will be unique, a mess unto itself.

      Delete
  6. Hamiltonian AdminSeptember 22, 2016

    The intent of the question was to gauge preparedness and whether consideration has been made for the unexpected- which is typical of a project of this magnitude/nature.

    ReplyDelete
  7. If I was bidding on this, one of the important things I would need to know is how much is set aside for things that are discovered and were not expected. It is a key question so that I can ensure those surprises would have no impact on my ability to deliver. They would probably have to disclose that to all bidders anyway. Either they misunderstood the question or are being cagey.

    The Dark One

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  8. It's a ridiculous response because noone bids while absorbing unexpected pressures. In fact, you'd be very silly to not insist that you are indemnified by such things. Further, any contractor worth their salt would put in language that guarantees payment of their services, if an insurmountable surprise emerges. I'm not a contract lawyer, but it's pretty much common sense.
    Sorce

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    Replies
    1. What prevents the City from doing likewise?

      Allan March

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    2. I don't think there is anything that prevents the city to put in such language, but I am not sure if any such attempt would succeed. The province could insist that the city eat the risk or share the risk. With a contractor, it is different.

      What people are losing sight of, or are choosing to be willfully ignorant of, is that revealing how much is put aside for pressures, does not affect the bidding process. This is because that money is frozen until such time that need surfaces (pardon the pun). Metrolinx is trying to downplay the tremendous risk of the unknown and the cost of that unknown factor. I am glad The Hamiltonian asked the question. it tells us a little bit more about how shaky this whole thing is.
      Sorce

      Delete
  9. “The 2015 Track Record Report (TR2015) is an analysis of Infrastructure Ontario’s On-Budget and On-Time performance for 45 Alternative Financing and Procurement (AFP) projects that have reached Substantial Completion as oat March 31, 2015 and seven traditional Direct Delivery (DD) projects that were completed during the 2013-14 and 2014-15 fiscal years… It is our professional opinion, based on this analysis, that Infrastructure Ontario’s On-Budget and On-Time performance exceeds generally accepted industry standards for AFP infrastructure projects and traditional Direct Delivery Projects.…

    AFP: 98% (44 of 45 projects) were delivered On-Budget; 73% (33 of 45 projects) were On-Time or within one month of Substantial Completion, which is a result consistent with the 2014 Track Record

    DD: 71% (5 of 7 projects) were delivered On-Budget; 86% (6 of 7 projects) were On-Time or within one month of Substantial Completion. This is within industry standards and a solid performance for a small portfolio.”

    http://www.infrastructureontario.ca/WorkArea/DownloadAsset.aspx?id=2147492939

    Chex

    ReplyDelete
    Replies
    1. it is whose professional opinion? Yours?
      was Tim Hortons Field the only Infrastructure Ontario AFP project to come in late and over budget?

      Delete
    2. I was quoting from the document that was linked to, not expostulating based on original research that I conducted. Apologies if anyone was confused by that.

      Chex

      Delete
    3. A dissenting view on the province's AFP pweformance from the Auditor General of Ontario, suggesting that the governmnet should play a larger role in the P3 mix.

      http://www.auditor.on.ca/en/content/annualreports/arreports/en14/305en14.pdf

      Chex

      Delete
    4. so Infrastructure Ontario believes Infrastructure Ontario does a swell job. Nice.

      Delete
    5. I know that this blog doesn't make these links clickable, but if you cut and paste you'll see that while the link is hosted by Infrastructure Ontario, the review was conducted by third party consultants Hanscomb Limited.

      http://www.hanscomb.com/Services

      Sorry that there's another contextual link. I know that some find such citations irritating.

      Chex

      Delete
    6. "third party consultants Hanscomb Limited" have been retained by Infrastructure Ontario and Metrolinx to provide "cost planning and control" on Mississauga's Hurontario LRT as well as the Eglington Crosstown project in Toronto, among others.
      In essence, an employee.
      Suggesting we can expect relevant, objective and unbiased critique from such a source seems quite desperate.
      How about a review from a 3rd party consultant without any skin in the game?

      Delete
    7. Your indignation is positively radiant this morning, Jim.

      In case you missed it, I have simply tried to provide context rooted in something other than subjective bias, personal prejudice or anecdotal heresay, which are the three modes of choice in comment rolls.

      That context has supplied detail on how the province's AFP process works (as many seem to know little or nothing about it) as well as varying critical perspectives on the province's AFP performance. I don't want to spoil the surprise by telling you which is which. I encourage you to actually read that which you have reflexively prejudged.

      FWIW, here is a list of third party reports hosted by Infrastructure Ontario.

      http://www.infrastructureontario.ca/Templates/News.aspx?id=2147492380&langtype=1033

      A critical reader such as yourself can learn a great deal from "insider" reports. But you still have to read.

      Finally, Ontario's Auditor General, Ombudsman and the Privacy Commissioner are all direct employees of the province and thus can be argued to have "skin in the game". You would argue that we could never expect relevant, objective and unbiased critique from such a source. Yet their work is highly regarded by many. Are those admirers desperate?

      Chex

      Delete
    8. FWIW subjective bias is exactly what you provided. Hardly original.
      Comparing the Ombudsman's Office with Hanscomb confirms your despair.

      Delete
    9. I never suggested that Hanscomb and the Ombuds are equivalents, merely that they both satisfy your criteria for credibility explosion: employment by the provincial government. I enjoyed your flavourful interpretation though. Points for that.

      Since you evidently missed the earlier citations, I posted two substantive critical reads on Infrastructure Ontario's AFP track record, which you either missed or are incurious about. Both dissenting views are recommended reading, though both are funded by the Province of Ontario, so make of them what you will. They are as follows:

      "Cost Overruns on Infrastructure Projects: Patterns, Causes, and Cures"
      Institute on Municipal Finance and Governance
      IMFG Perspectives No. 11
      (January 22, 2016)
      >> http://munkschool.utoronto.ca/imfg/uploads/334/imfg_perspectives_no11_costoverruns_matti_siemiatycki.pdf

      "Infrastructure Ontario—Alternative Financing and Procurement"
      Auditor General of Ontario
      2014 Annual Report, Chapter 3: Reports on Value-for-money Audits
      (December 9, 2014)
      >> http://www.auditor.on.ca/en/content/annualreports/arreports/en14/305en14.pdf

      Hopefully you won't be disappointed to learn that both papers identify challenges/problems but also offer solutions that can improve the province's infrastructure project delivery. Not all critiques need end in ruin; tenacious criticism can lead to constructive solutions.

      Chex

      Delete
    10. sure you did, you introduced them to the conversation and drew the parallels, for the record, I believe it is your credibility which has exploded.
      I have found your links and citations to be pointless and irrelevant, essentially a waste of time and effort. So yes, incurious.

      Delete
    11. I'm sorry that you're so uninterested and yet utterly unable to resist comment, Mr. Graham. That must be terribly inconvenient.

      I drew the parallel as a comparator to illustrate the problematic nature of using employment as a disqualifying criteria.

      I did not suggest that they are equivalent and I do not think that they are equivalent. The latter three are eminently commendable, as I pointed out.

      Despite your conviction that critical assessments of infrastructure project costing and AFP performance are "pointless and irrelevant, essentially a waste of time and effort," I would again recommend to readers of this site with an interest in this topic to read the following documents:

      "Cost Overruns on Infrastructure Projects: Patterns, Causes, and Cures"
      Institute on Municipal Finance and Governance
      IMFG Perspectives No. 11
      (January 22, 2016)
      >> http://munkschool.utoronto.ca/imfg/uploads/334/imfg_perspectives_no11_costoverruns_matti_siemiatycki.pdf

      "Infrastructure Ontario—Alternative Financing and Procurement"
      Auditor General of Ontario
      2014 Annual Report, Chapter 3: Reports on Value-for-money Audits
      (December 9, 2014)
      >> http://www.auditor.on.ca/en/content/annualreports/arreports/en14/305en14.pdf

      These are the most interesting and holistic studies of the subject at hand that I have been able to find, though I would not lay claim to omniscience. If anyone is able to enrich the conversation with studies or reviews of the subject at hand — or any other topic on this site, I would encourage them to do so.

      I, for one, am anything but incurious.

      Delete
    12. you may be curious, but you are far from convincing.
      While most folk pursue their curiosity with personal experience, you have chosen unsolicited public service as your outlet.
      You have drawn parallels to highways, hospitals and courthouses, yet are unable to provide a similar example. Interjected the Ombudsman, the Auditor General and the Privacy Commissioner because you think they are dissimilar.
      You believe you have enriched us with studies and reviews, enthralled with links and attachments, beguiled with your unique perspective.
      Because it is not just an interesting approach, it is the way the system runs.
      Backwards.

      Delete
  10. I thought it was a necessary question that unfortunately received a political answer. One thing is certain and is already occurring- unexpected expenses arise- some quite substantive- when you start a radical change of ripping up infrastructure in favour of a technology that is drastic and in my view, unnecessary.

    So, this is not a RFP /RFQ thing. it's a mater of being able to finish what you start. And the question goes there very directly.The reply is not at all confidence -inspiring.
    Sorce

    ReplyDelete
  11. "The Planning, Design and Engineering phase 1 completes the design and planning to a level sufficient for a transit Environmental Assessment to be completed.

    Projects that are now in Planning, Design and Engineering phase 1 development:
    > Hamilton King-Main Rapid Transit
    > Hurontario-Main Rapid Transit

    After Planning, Design and Engineering phase 1, a transit Environmental Assessment can be completed. This six-month review is called a Transit Project Assessment Process.

    If the Transit Project Assessment Process is approved, the project can move to Planning, Design and Engineering phase 2 to complete 30 per cent of the design."

    http://www.metrolinx.com/en/regionalplanning/projectevaluation/planningdesignandengineering/planning_design_engineering.aspx

    Chex

    ReplyDelete
    Replies
    1. AFP: Frequently Asked Questions

      http://www.infrastructureontario.ca/Templates/FAQ.aspx?id=2147485351&langtype=1033

      Chex

      Delete
    2. From the federal parallel, FWIW:

      1.10.10. Procurement Best Practices

      (g) Maintain Confidentiality
      The contracting officer must treat all information of a confidential or personal nature, including bid information, in a secure and confidential manner. This ensures the integrity of the contracting process, and protects the interests of suppliers and clients.

      https://buyandsell.gc.ca/policy-and-guidelines/supply-manual

      Chex

      Delete
  12. Captain HamiltonSeptember 22, 2016

    BTW, I stumbled upon The Hamiltonian based on a tweet I got. I'm glad I did. This is a very useful forum for people to explore LRT and other things.

    The Captain

    ReplyDelete
  13. $ for unexpected pressures will not give anyone a competitive edge, because these $, by their nature, are set aside from unanticipated issues. So the confidentiality excuse is just that; an excuse.

    People quoting procurement rules are lost.
    Sorce

    ReplyDelete
  14. From an article on the Hurontario LRT, in February of this year:

    "Metrolinx is currently in discussion with City staff about roles during the RFP submission process. Given that the RFP has not been issued, Metrolinx is not in a position to confirm dates for construction or cost estimates."

    http://www.mississauga.com/news-story/6261584-metrolinx-finalizing-plans-for-port-credit-mobility-hub/

    Again, my take is that Metrolinx's answer was predictable before the question was asked.

    Perspex

    ReplyDelete
    Replies
    1. ...and yesterday:

      "Details are yet to be released on the specifics of the design. The city will be using a Metrolinx procurement process since the provincial agency is footing the bill for the LRT. That procurement process is much less prescriptive than that of the municipality, and will rely on the creativity of companies who will submit bids for the design and construction of the project. As such, costs have yet to be determined."

      http://www.mississauga.com/news-story/6870827-vision-for-lrt-transit-stops-in-mississauga-taking-shape/

      Perspex

      Delete
    2. I can't respond to you any more Perspex. I don't think you understand the relationship between the question asked, and the procurement process. Sorry.
      Sorce

      Delete
  15. Another interesting perspective from the Munk School's Institute on Municipal Finance & Governance.

    http://munkschool.utoronto.ca/imfg/uploads/334/imfg_perspectives_no11_costoverruns_matti_siemiatycki.pdf

    Chex

    ReplyDelete
  16. Forgive me if this is overwriting stuff you already know, but for those new to the provincial infrastructure file:

    Alternative Financing & Procurement (aka AFP) is a form of public-private partnership (aka P3s) increasingly used in Ontario. Contractual agreements between the government and the private sector define AFP arrangements, under which, private-sector businesses deliver large infrastructure projects (such as hospirals, stadia, highways and higher order transit lines) and provide other services (such as operation and/or maintenance of same), and the various partners share the responsibilities and business risks. The public sector defines the scope and purpose of the project, but construction of the project is ultimately financed & carried out by private sector contractors.

    Because the system for Hamilton is still in the Design phase and the AFP Delivery Model for Hamilton is still being determined, it would complicate attempts to ballpark a cost as requested. (This is the very unknown — i.e. who will operate and maintain the service — that LRT critics often cite as a deal-breaker.) Hamilton’s LRT could be constructed under any of the following:

    • Build Finance (or BF), as used for Hamilton Health Sciences’ Juravinski Hospital and Cancer Centre

    • Design Build Finance (or DBF): as used for Hamilton Health Sciences Ron Joyce Children’s Health Centre, Joseph Brant Hospital, Regional Express Rail & York Viva’s BRT Expansion

    • Build Finance Maintain (or BFM) — as used for Woodstock General Hospital

    • Design Build Finance Maintain (or DBFM) — as used for St. Joseph's Health Care’s West 5th Campus, Eglinton Crosstown LRT, Finch West LRT, Ottawa’s Confederation Line LRT, Highway 407 East, and the Highway 427 Expansion

    • Design Build Finance Maintain Operate (or DBFMO), though this is largely a theoretical category — I can’t point to any examples

    In any of these cases, price of contract & estimated value for money appear to be formally announced after Financial Close.

    As has been said, it’s the way that Infrastructure Ontario and Metrolinx operate and have done for the last 10 years.

    You can certainly argue that any bureaucratic protocol can be discarded. I suppose it depends on how optimistic you are about government agencies being pliable to queries fielded by the public or the media.

    My experience is: Not very.

    Chex

    ReplyDelete
    Replies
    1. Captain HamiltonSeptember 24, 2016

      Interesting. These PPP arrangements also rely on the solvency of the partners. The Ontario government is unlikely to go bankrupt. The rest...well...time will tell.

      The Captain

      Delete
    2. Like when the City of Hamilton privatized its water and wastewater in 1994, handing control to Philip Utilities Management Corp., which went bankrupt five years later. Made in Hamilton solution.

      http://www.municipalservicesproject.org/sites/municipalservicesproject.org/files/uploadsfile/remunicipalisation-chap5-Hamilton.pdf

      Chex

      Delete
    3. As we have seen through the CHCH experience and U.S. Steel, companies can get pretty crafty when they need to. PPP are always fraught with that risk.
      Sorce

      Delete
    4. Certainly fraught with risk and deserving of stringent oversight — as you could probably say of any megabudget project, however it is funded. You're absolutely right about PPP/AFP risk, but I imagine that there are potential potholes in traditionally-contracted projects as well (consider the track record of the City's nearly quarter-billion annual Public Works budget, for example, or their chronic habit of sole-sourcing contracts).

      Again, I'm not arguing that IO's AFP practice represents any kind of Platonic ideal, or that it's better than a scenario whereby the city and province direct-fund such investments, just that it's the system under which the province is operating, and the one with which we would do well to become acquainted if we hope to make the best of similar infrastructure investments in the future.

      Here, again, is the Auditor General's take:

      "Infrastructure Ontario—Alternative Financing and Procurement"
      Auditor General of Ontario
      2014 Annual Report, Chapter 3: Reports on Value-for-money Audits
      (December 9, 2014)
      >> http://www.auditor.on.ca/en/content/annualreports/arreports/en14/305en14.pdf

      Chex

      Delete
    5. @Chex

      I am not suggesting projects not proceed because of the risk. I am just saying that we should not get too cozy about it. When businesses start to fail or feel the pinch, they often restructure, file for bankruptcy or do other clever things to skirt the issue. So shifting risk, which is what PPP is all about, does not mean it is foolproof.
      Sorce

      Delete
    6. @Sorce

      Sorry if that was your takeaway. I may have been unclear. I think we're in agreement that this should be something we look at with a view to protecting our interests in the event that things go pear-shaped. I would never suggest that these things are foolproof. I don't think that there's any grounds for arguing thus, any more than you could argue the opposite — that abject failure is preordained.

      Chex

      Delete
    7. @Chex

      It's all good.
      Sorce

      Delete

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