Archive for September, 2011

Receiving little attention in Ontario as the October 6th provincial election nears is the recent interest by Infrastructure Ontario to bundle projects into larger packages and sell through an Alternative Financing and Procurement (AFP) model, sometimes called P3’s (public-private partnerships). For all my Alberta readers, Infrastructure Ontario is a crown corporation that manages infrastructure projects in Ontario (name says it all). This crown corporation is carefully looking at the potential to bundle smaller infrastructure projects, such as schools, libraries, etc. into larger projects that seek private financing.

Private developers agree to build these projects and rent/lease them back to the government based on a guaranteed rate of return for X amount of years. The benefit to the government is that the private developer takes all the risk in building the government buildings and the government does not provide the initial investment. Private developers enjoy lower interest rates when they are approaching banks with large infrastructure projects that are bundled together.

The Ontario architecture community has been abuzz about the possibility of bundling. The conversation has revolved around how efficient is bundling smaller projects to use the AFP model. How efficient is IO current delivery system for these projects? It has become common knowledge that IO internal costing of projects is weak. They tend to underestimate their budgets before the RFP stage leaving the successful proponent with the aftermath of meeting a budget that only covers the must haves.

What I am more interested in is, what effect will IO takeover of smaller projects from numerous other government organizations have on the product delivered. How will the government client be affected by bundling? Bundling creates a situation where the clients project is just one of many similar projects. Will clients receive innovative solutions that assists their stated mission and enhances the quality of services they provide? How will bundling affect the quality and lifespan of the building? How closely will private financiers have to follow the PSOS or PDC Architects design that are developed for each project? Can clients expect to see cutting edge environmental design and individually tailored solutions to their needs? The AFP model is an innovative way to bring in private money to develop public goods, however how does profit affect the construction cost and profit margins?


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