Public-Private Partnership in Ontario Province

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Introduction

In its quest to deliver to the public and reduce cost, Ontario province has had a series of Public-private partnerships programs over the years. These projects have shown tremendous success in areas mandated to attend.

In these arrangements, privately owned companies are contracted to carry out projects for the provincial government. In the whole of Canada, over 100 Public-Private Participation transactions have occurred in the last 20 years.

To establish the extent of experience in public-private participation in Ontario, SuperBuild initiative is critically analyzed. A few years ago Ontario’s provincial government launched SuperBuild initiative in its budget which targeted infrastructural improvements.

The SuperBuild program emphasized private public partnership as the basis of its success. The partnership targeted private sector, broader public and authorities such as municipalities, universities and other government institutions in the province.

The initiative was planned to take a period of five years costing at least $ 20 billion. To finance the project, Ontario’s provincial government invested $ ten billion while private sector and other partners contributed additional $ 10 billion within a period of five years.

Main priorities for the SuperBuild project were to improve hospitals and healthcare centers, schools, water, transportation infrastructure and environmental protection projects.

Ontario SuperBuild Corporation was mandated by provincial government to perform all duties concerning these projects. Some of its duties included capital planning and policy development, evaluating and recommending necessary changes, develop strategies and report publicly on SuperBuild investment Priorities, plans and results.

Membership of the cooperation was drawn from private and public sectors in a bid to make it inclusive (Ontario SuperBuild, 2011). Infrastructure Ontario was established by an act of parliament in 2005 to fast-track the projects.

To ensure success of Public–private partnership, some guidelines were put in place. These guidelines have been in used for the infrastructure projects in Ontario to ensure certain thresholds are met (Murphy, 2008). The same guidelines have been used in other projects.

The Public-Private Partnership (P3s) Approach

Ontario’s infrastructure is worth close to $ 200 billion. About half is owned by public while the remaining half is owned by private organizations. All of them are publicly regulated.

Even though the infrastructure is thought to be sufficient, there has been need to expand, improve and manage them to ensure that they serve their purposes as intended.

Roads, railways, waterways, hospitals and technological infrastructure require maintenance and improvements. The level of investment at the time was not enough to satisfy current and future needs of the province.

With the need to have a long term planning and financial innovation, Public-Private partnership was the most convenient initiative which could be successfully supported by SuperBuild to achieve its goals (Ontario SuperBuild, 2011).

P3 approach includes service or management contracts, design-build construction projects, design-build-operate transfer concessions, design-build-own-finance-transfer concession and/or divestiture.

Benefits of P3s

Benefits of public-private partnerships in Ontario includes risk sharing, improving service levels, reducing cost and improving revenue, gaining access to new sources of capitals, gaining access to better skills, realizing value of under-utilized assets and realizing economic-development opportunities.

To undertake Public-Private Participation in Ontario, three considerations are made. These considerations are vital to the success of Public-Private Participation. The first is political considerations.

This is the climate which the projects are evaluated, financed and their benefits to the public are realized. Another consideration is the climate which ensures that public must maintain ownership and determine priorities of the project.

The final consideration is the climate under which disputes are resolved (Ontario SuperBuild, 2011). Procurement and implementation generate numerous disputes which require arbitration.

Distribution of responsibilities is based on which party is best suited to play which role. These considerations must be in place to avoid political representation in the project.

Use of digitalization has enhanced transparency in government dealings and political landscape in Canadian system. Members of public are encouraged to air their views on prevailing public debates. Internet use has been a key contributor to public participation in issues being debated in Ontario (Dutil et al., 2010).

Establishment of Criteria

The criterion which has been used in Ontario to select a viable project over the years has been a series. It involves:

Financial terms which are acceptable to both the government and private sector that must be used to carry out projects to completion.
Technical solutions to carry out the project must be available through Public-Private Participation.
Operational- if there are hurdles associated with operations which might hinders full implementation of the project in question.
If the project will be accepted by public.
Implementation- that there are no barriers to carrying out the project.
Timing –if there are possible constrains which can pre-empt P3 procurements.

The decision to build Brampton Civic Hospital was made in 1996 by the Health Services Restructuring Commission using the above criterion.

The criterion was not entirely followed but was later reviewed by Infrastructure Ontario (IO) to be used in subsequent projects. There were changes in leadership which affected the initial implementation of the project.

The election of supportive government was the main advantage into the implementation of this project that was proposed several years earlier (Loxley and Loxley, 2010).

Implementation and operations challenges

Most project in P3 fail because of poor procurement which results in flaws in implementation and operational challenges.

Procurement Principles

In Ontario, appropriate strike between value and fairness is a vital requirement in successful design and implementation of procurement process.

Most private organization want to maximize monetary gains while public want fairness and value for money from the process (Dutil et al., 2010).

Principles have been developed to guide the process and ensure that all bidders have equal opportunities and sufficient information is disclosed. It also ensures that evaluation process is established before bidding process begins and pre-established evaluation process is followed.

The main principles are to ensure that public policies are established and communicated before Request for Proposal is issued and identify public policy trade-offs to be made.

Public policies are made in private while perspectives of public sector and potential bidders are addressed. Appropriate responses to significant labour-force issues are developed and a fair Public-private participation procurement process is designed.

‘Value for money’ is established, confidentiality of public and private partnership is maintained and bidders are provided with full and plain disclosure, enhancing staff functions by retaining consultants.

Project Organization

Organized responsibility structure and approval process is used in projects. This is because of the large number of people involved in these processes. Some particular responsibilities and practices procedure are used in Ontario to ensure fairness and quality of product.

The roles of staff include functions in teams like Project Team, Evaluation Team, Due-Diligence Team, Steering Committee, Process Auditor, Executive (cabinet, municipal councils, school and hospital boards, etc.) and Ongoing Management.

Project Plan

Objectives and scopes of projects are explained to relevant parties before a process of selecting partner is started. Projects team engage in debates of various tradeoffs and constrains of the projects to define clearly the objectives, goals and requirements of each project. (Ontario SuperBuild, 2011).

The project team will make consultation with management, outside experts, and other stakeholders to deliberate these issues in details. A Public-private participation project plan undergoes four phases which include scoping the project, selection process, negotiations, implementation and operation.

Project Scope

The project scope is defined at the beginning of the project. The scope is defined in respect to Financial, Technical, Operational, Acceptability, Implementation and Timing (Ontario SuperBuild, 2011).

Selection Process

Selection process is developed and documented after project scope is established. Project team comes up with a plan to start the process.

This will ensure that the best partner is selected and minimum challenges are expected from public and other organizations. Tailored process must be used basing on the nature (scope) of the project. (Ontario, SuperBuild, 2011).

Negotiations

A majority of organizations in Ontario maximize the use of strategy in procurement process and negotiate later during final agreement. They eventually lose because they do not want any reverse of the won bids.

The one who succeed in negotiations is bidder who offers the best financial price for a project (Ontario SuperBuild, 2011). Sometimes negotiations are customized to suit the project in question.

In ensuring successful negotiations, it is necessary to use a project team which is empowered and ready to walk away from a bad offer. The commitments made must be measurable and appropriate proponents perspectives are addressed.

Implementation and Operations

In Private-Public participation, private contractor is not paid until a substantial amount of work has been completed. This accelerates construction and completion of a project (Murphy, 2008).

Delayed deliveries can result in penalties. This has made most of the private contractors to deliver on-time and on-budget. However, Private sector can back-track commitments made during negotiations or sometimes ignore the agreements during implementation process.

Since public sector is poor in contract administration, it is required to sort off implementation issues at different phases of project which includes development/construction, operations, at the end of term.

It is important that successful bidders are monitored, procedure is followed and commitment is delivered. However, development or construction administration in Private-public participation can be ambiguous and difficult.

The cost of construction changed several times during the time of construction of Brampton Civic Hospital. According to Barrows and others (2011), the total change amounted to 13% overrun with respect to government estimates by the end of the project.

After completion, the hospital had a capacity of 479 funded beds in December 2007. When shifting operations from the old hospital to the new facility, two deaths of patients were reported resulting in a public uproar.

There were claims that there was shortage of staff and patients had to wait for long before being attended to. Public-private participation arrangement was blamed for the situation. This was rectified after some time (Barrows et al. 2011),

Conclusion

Different views have been given concerning Public-private participation in Ontario and other places in Canada and around the world. Despite numerous inconsistencies in its delivery of services and goods, it has benefits.

According to Loxley and Loxley (2010), with view of numerous projects undertaken under Public-Private partnership, majority of them have not delivered results as intended.

To make these conclusions, the two examined projects which included schools, hospitals, water treatment plants and service oriented projects. It is thought that P3s projects save a lot of money because of risk being transferred to contractor.

However, Loxley and Loxley found out that most contractors undertaking the projects finally use more money than if they had been undertaken by government.

This was clearly portrayed by Brampton Civic Hospital project with 13% increase in cost (Barrows et al. 2011), Service oriented projects under public-private participation finally provide poor services to clients and public.

They believe that if public servants provided these services or built the facilities in question, the quality would have improved while cost reduces. Accounting by government officials are misleading with the aim of making the projects look palatable which is not the case in the real sense.

This is attributed to hidden interests between government officials and private operators. Costs are inflated with the aim of making more money from public coffers. These results in unrealistic profits recorded by private operators or contractors (Loxley and Loxley, 2010).

Success of private-public participation can be measured and determined if proper mechanisms are put in place. Delivering of good services to the public can only be improved through Public-private partnerships because government does not have the capacity to undertake all projects (Dutil et al. 2010).

Service culture can be built through cooperation between public, private sector and general public. With the use of internet becoming common, basic public participation in political and other decisions are enhanced. Public involvement in political decisions may increase service delivery especially in politically determined services.

In Ontario, public-private participation has recorded success in both service and infrastructural sectors. Several projects undertaken under public-private partnership participations are completed and workings with few discrepancies being recorded.

Water, health, educational and several other sectors have benefitted from Public-private participation in Ontario. Although initial projects carried out under P3 recorded a few technical and operational problems, subsequent projects were better.

Use of Public-private participation in future needs improvements both in organization and accountability to realize optimum benefits.

Recommendations

According to Barrows and others (2011), Brampton Civic Hospital project was a pilot P3 project undertaken when government employees and members of public had little experience with Public-private participation.

Therefore, to counter political rhetoric, there should be a clear communication plan since P3 is a new model in Ontario and other places. Community management (including unique needs) should be improved to counter accusations after full implementation of projects.

Methods for managing risks should be improved and followed effectively. Risk management and estimate should be given to knowledgeable and experienced participants to effectively transfer and assess risks. Generic risks associated with Policy, Design and Construction, and Maintenance and operations must be reviewed and improved.

Since P3 is growing, people need to be educated on its working, purpose and their roles. This will improve procurements and implementation of future projects.

There is need for holistic design in e-government structure and means of airing views by public (Dutil et al. 2007). Innovation in this section must involve both government and other stakeholders in its design.

This must include responsibilities of employees in public sector in enhancing relationship with the government, capacities of private sector in both reforms and ongoing relational capacities and broadening participation from the current number to involve majority members of public.

Works Cited

Barrows, David, Ian Macdonald, Atipol Supapol, Olivia Dalton-Jez, and Simone Harvey-Rioux. “Public Private Partnerships in Canadian Healthcare A Case Study of the Brampton Civic Hospital.” OECD 3. (2011): 55-140.

Dutil, Patrice, Cosmo Howard, John Langford, and Jeffrey Roy. “Rethinking Government-Public Relationships in a Digital World.” Journal of Information Technology & Politics 4.1, (2007): 77- 90.

Dutil, Patrice, Cosmo Howard, John Langford, and Jeffrey Roy. The Service State Rhetoric, Reality and Promise. Ottawa: University of Ottawa Press, 2010. Print.

Loxley, John and Salim Loxley. Public Service Private Profits. Winnipeg, Manitoba: Fernwood Publishing, 2010. Print.

Murphy, Timothy J. “The Case for Public-Private Partnerships in Infrastructure.” Canadian Public Administration 51.1 (2008): 99-126.

Ontario, SuperBuild 2011, A Guide to Public-Private Partnerships for Infrastructure Projects. PDF file. Web.

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