1. Changes and Benefits brought from Modern Procurement to Bridge the Infrastructure Gap
Remo Bucci, P.Eng
Infrastructure and Capital Projects
October 27, 2016

2. Overview
As governments make funding commitments to bridge the infrastructure gap, significant challenges need to be addressed to complete the large, complex and expensive projects that are being planned
Public sector agencies are using and refining modern procurement methods to meet these challenges
October 27, 2016

3. Background Value of the Infrastructure Gap
Many studies have been done over the past 10 to 15 years on the amount and source of the infrastructure ‘gap’
A recent study by the Federation of Canadian Municipalities estimates the ‘gap’ to be > $120 billion
October 27, 2016

4. Background cont’d Growth of the Infrastructure Gap
Lack of capital and maintenance funding has fueled the growth of the ‘gap’:
From the 1950’s to 1980’s spending dropped from 3% of GDP to 0.4% of GDP
Construction of new infrastructure did not keep up with the high pace of growth
Deferral of annual maintenance led to the premature end of useful life
October 27, 2016

5. Examples of Significant Initiatives to help Bridge the ‘gap’
$11.5 billion to enhance expand or otherwise improve the state of good repair of GTHA’s transit infrastructure (includes the Hurontario Light Rail Project)
October 27, 2016

6. Examples of Significant Initiatives to help Bridge the ‘gap’ cont’d
Part of the province's plan to invest more than $130 billion over 10 years into public infrastructure
October 27, 2016

7. Changes in Modern Infrastructure Procurement
Since early 2000’s Canada has moved to procure large public infrastructure projects through Public Private Partnerships (PPPs)
Infrastructure Ontario’s form of PPP is Alternative Finance and Procurement or ’AFP’ (e.g. Hurontario Light Rail Project is a Design-Build-Finance-Operate- Maintain form of AFP)
October 27, 2016

8. How PPP’s help bridge the ‘gap’?
1. Faster Deployment of Project Pipeline
Larger size and premium nature of projects increases global interest attracting best in class global participants to local market
Allows for significant sizing of projects and/or bundling into large value procurements that accelerate deployment of pipeline
October 27, 2016

9. How PPP’s help bridge the ‘gap’? cont’d
2. Shorter Time to Construction
Bundling Engineering, Construction and Procurement in a parallel maximizes channels to market and saves time
Output based risk allocation approach enables projects to be quick to market and ultimately quicker to construction
October 27, 2016

10. How PPP’s help bridge the ‘gap’? cont’d
3. Maximizing Innovation and Value
Lifecycle based Output Specifications enable trade-off decisions on engineering, construction and maintenance services maximizing the opportunities to innovate
Innovation results in higher quality often at a lower price helping to meet project budgets
October 27, 2016

11. How PPP’s help bridge the ‘gap’? cont’d
4. On Time Delivery
Risk allocation and significant security (private financing) provides incentives that anchor on-time delivery
Projects have a predictable schedule to operations fostering ability to plan deployment of projects, funds and resources
October 27, 2016

12. How PPP’s help bridge the ‘gap’? cont’d
5. Maintenance Funding Commitments
Payments are ‘hard-wired’ into contracts
Works both-ways as Public Sector partner has to pay as long as the Private Partner delivers the service
25 yr to 30 yr maintenance terms ensure annual and /or lifecycle maintenance cannot be deferred
October 27, 2016

13. How PPP’s help bridge the ‘gap’? cont’d
6. Maximizes Expected Useful Life
Contracts include hand-back conditions to ensure that assets meet the expected useful design life (up to 50 yrs)
Creates incentives to engineer and construct infrastructure assets that lasts (delays the need for significant funds to replace / refurbish)
October 27, 2016

14. Summary
As governments move to commit funding to bridge the infrastructure ‘gap’ a significant amount of projects will be completed in the next 10 years +
Modern procurement methods such as PPPs (or AFPs) will continue to be used to help bridge the ‘gap’
October 27, 2016