World PPP models
PPPs are being adopted by governments worldwide with European PPPs, including the United Kingdom, accounting for 85% of all PPP contracts (see Figure 6.1).
Even where there is strong political motivation to develop PPPs the complexity of the individual projects/contracts and the need to develop the capability to create an enabling environment, results in progress being slow initially. In countries where PPPs have been introduced, generally speaking, they have developed along the following lines:
A highly centralised ‘big picture’ model was developed in Ontario, Canada. The Ontario SuperBuild Corporation, effectively a private company, was created in December 1999 in response to a report by the Ontario Jobs Investment Board in which the Board called attention to the province’s severe infrastructure decline. Many of the schools and hospitals in Ontario date back to the 1920s whereas roads and sewerage treatment plants are now over 50 years old. The scenario is a classic one. Billions of dollars of investment is needed and new projects are required to come on stream but without the traditional long lead in time and unpredictable completion dates. The government responded by creating the SuperBuild Corporation as a $20 billion, 5-year initiative, to address Ontario’s infrastructure needs and meet the economic challenges of the new millennium. The intention was that the initiative’s goals would be achieved through the use of PPPs. SuperBuild’s mission was to coordinate strategic planning and capital expenditure which in the past had been dealt with by each provincial ministry, hospitals, education etc., who received their funding. Ministries are required to take stock of the age, condition and value of capital assets as well as projecting future capital needs. Hospitals and universities also must develop long-term capital asset plans as a condition for receiving capital investment support. Approvals for capital plans by ministries must be referred to SuperBuild and then to the Cabinet Committee on Privatisation which undertakes a strategic review and develops a capital plan for the government. In May 2005, the SuperBuild Corporation was rebadged the Ontario Infrastructure Project Corporation with a focus on non-traditional
procurement strategies. Perhaps being conscious of the poor image of PPPs in certain parts of the media, the government decided to rebadge them as Alternative Finance and Procurement, stating that the drive to renew public sector projects would be based on a set of policies to guide private sector participation in public sector projects entitled, Building a Better Tomorrow. This framework establishes very clear requirements that must be met at every step of any public infrastructure project where the government has a financial interest. The framework now applies to every major project in Ontario like the North-South Light Rail Transit Project in Ottawa, the Durham Courthouse and the North Bay Hospital. The principals for the new initiative are based upon protection of the public interest, which is sought to be achieved in the following ways:
Projects will be undertaken only if they will improve the delivery of public services or contribute to the Province’s economic competitiveness.