In a period when budgetary discipline seems to be the buzzword, managing the infrastructure deficit is a major challenge. Public-private partnerships (PPPs), which have been repeatedly criticized, may prove to be an interesting model to consider for certain projects. Two infrastructure specialists at Blakes in Montreal set the record straight.
Choosing a public-private partnership
"PPPs, as a way of planning and delivering a large infrastructure project, are particularly effective when you have to rely on private enterprises' know-how. Their contribution is notable in the context of complex infrastructure projects," says Alain Massicotte, Blakes partner in Montreal, who has participated in several projects such as the CHUM, the CR-CHUM, the autoroute 25 PPP and the Maison symphonique de Montréal.
Discipline: the key to success
A disciplined approach by all parties is essential, as is close collaboration between the parties at each stage, from the planning phase to the operation phase, including the execution of the project.
During the planning stage, discipline ensures a better understanding of the particular issues of each project, and enables identification and adequate mitigation of risk.
During the project's execution, it is necessary to ensure that the budget and deadlines are being respected. These two aspects are crucial for both the private and public sectors and are based on careful planning. "Discipline is expressed by the monitoring mechanisms implemented by both the public and private side, including the lenders and by the client's strict policy regarding changes during the contract," says Alain.
"It is this discipline of the parties that explains the success of projects like the Maison symphonique," adds Clémentine Sallée, Blakes Partner in Montreal, who considers this project to be one of her proudest professional achievements.
Alain and Clémentine agree that discipline remains essential once the construction is completed and the project is in operation. The rigorous supervision of the private partner's performance is crucial, while allowing some to exercise its creativity and innovation in order to comply with its commitments. "In order to avoid onerous sanctions or penalties, the private-sector partner has to make every effort to meet its performance objectives," says Clémentine.
Advantages outweigh the drawbacks
Budget stability, costs predictability and public spending management: these are three clear benefits of PPPs for the public. It is important to remember that a PPP also involves the construction or establishment of an infrastructure with performance guarantees regarding its use and maintenance during the term of the contract. It is also worth noting that, contrary to certain beliefs, the public partner will not pay a higher price if the private partner performs as expected and set forth in the contract.
Beware of unfounded criticism, warn Alain and Clémentine. "Often, the setbacks attributed to PPPs, such as cost overrun, are not attributable to the model itself but rather caused by the stakeholders responsible for its implementation."
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