Public Private Partnerships (PPP) or Alternative Financing Procurement (AFP) are known in other countries under various other names; Private Finance Initiative (PFI) in the UK and Performance Based Infrastructure (PBI) in the State of California, and are fundamentally the same Business Model for the construction and maintenance of Public Buildings and Infrastructure. The concept was first implemented in Australia and projects are currently in their life cycle process in Britain, for example. Canada, in its infancy through the process can and certainly benefits from the “lessons learned” through collaboration with experienced participants ahead of the curve. A simple definition for Public Private Partnership is Design Build Finance Maintain (DBFM) by the Private Sector for Public Buildings and Infrastructure. Typically, a consortium, consisting of several private companies that bundle together their services, bids on a project. Consortium partners generally include construction companies, design firms/architects, financiers, property management firms and, sometimes, providers of janitorial, food and other “soft” services. The consortia bid to design, build and finance a project, and the deal usually includes a multi-decade contract to maintain the building and, sometimes, to operate those “soft” services. I can Blog about the pros and cons of P3 but instead would like to explore avenues for business opportunities for shaping the “Legacy” of future generations and how this impacts our environment. The contracts that our governments are entering into with the private sector consortia’s are in fact 20 to 30 years. Procurement opportunities are available to all businesses through a fair, though onerous, process. Networking and developing relationships with teams in the initial phase is a start to capitalizing on numerous opportunities. Basic business fundamentals truly remain the same; winning designs, products, services and innovation. The quality and cost of Public Services provided to Canadians through innovative partnerships with balance. There are significant differences between individual Proponents’ bid costs, which may be due to differing approaches, with some Proponents sub-contracting more work on bids than others, and some managing external advisers more efficiently. A key component of bid costs is the design element and associated level of detailed technical information required, in particular the level of drawings requested. Businesses offering detail design of their product or service in their approach to committing to a particular project or team would allow an absorption of the bid costs to the Consortium. In 2009, design alone is the dominant cost driver (ranging between 50% and 65%, depending on the project), areview of international jurisdictions suggests that several strategies are important to achieve tighter time frames, reducing the need for more than one priced bid stage while maintaining good value for money, such as; considering how to facilitate the retention of existing skills in complex procurement and undertaking good forward planning in the procurement phase, including early risk assessment and thorough due diligence.
Food for thought; There is a growing trend in some Provinces to pay an honorarium to losing bidders, demonstrating commitment on the part of the procuring authority, and as an acknowledgement of the substantial costs associated in bidding, particularly in the design and legal components of bids. These honor-aria typically are a third to a half of losing bidders’ total external bid costs, and so are significant.