Evaluations of Canadian P3 Projects Have Missed a Significant Value
A new report from the Canadian Centre for Economic Analysis (CANCEA), brings a fresh approach to analyzing the economic impacts of Canadian public-private partnerships (P3s). "The Economic Impact of Canadian P3 Projects: Why building infrastructure 'on time' matters" adds to the conversation around P3s by quantifying -- beyond the benefits traditionally outlined -- the significant economic value from delivering such assets for public use sooner.
Using CANCEA's award-winning computer platform -- Prosperity at Risk (PaR) -- and project-level data from the Canadian Council for Public-Private Partnerships (CCPPP), the report investigates the economic impacts of 200 Canadian P3s that have at least reached 'financial close' (i.e., they will soon start construction, are under construction, or construction is complete) since 1993. The total agreement costs for these projects exceed $110 billion.
According to CANCEA's President, Paul Smetanin: "Previous CANCEA research has highlighted that the building of infrastructure itself is important, but the value of the asset itself is realized when it is built at the right scale, in the right place, and at the right time. If procurement stands in the way of delivering or enabling a vital public service at that time, then the economy suffers. By evaluating the economic importance of such timing certainty, this report highlights the added value the P3 approach can bring."
The report finds that, taken together, a one-year delay for a typical infrastructure portfolio of $100 billion reduces its 30-year value by the equivalent of nearly 10% of the total project value.
According to CANCEA's Executive Director -- and study co-author -- Matt DesRosiers: "The economic benefits of large and complex P3s come from two places. The first is the now traditional Value for Money -- that is, in the effective sharing of risks between the private and public sectors. The second area of value -- which this report is the first to quantify -- is in the economic value of reduced delays. That is, getting assets on the ground faster. This economic boost is of a similar magnitude as value-for-money. This proves that much of the (previously unquantified) benefit of P3s are in the delivery of large and complex projects on time."
CANCEA is a state-of-the-art interdisciplinary research and technology organization that is dedicated to objective, independent and evidence based analysis. They have a long history of providing holistic and collaborative understanding of the short and long term risks and returns to our sustainability and prosperity.