Dispelling the Myths: A Pan-Canadian Assessment of Public-Private Partnerships for Infrastructure Investments

Public-private partnerships (P3s) are an increasingly popular procurement vehicle for Canadian governments seeking to build or upgrade infrastructure assets. But is the enthusiasm warranted? Evidence from the latest wave of Canadian P3s suggests the answer is yes, provided governments pick the right projects for P3 procurement. For example, studies comparing what an infrastructure project would cost under a P3 and under a conventional contract show that Canadian P3s can deliver efficiency gains ranging from a few million dollars to $751 million (from 0.8 per cent to 61.2 per cent of the cost of a conventional procurement approach). In addition, the P3s that have completed the construction phase have delivered a high degree of cost and time certainty from financial close through to completion of construction. Factors driving P3 efficiency gains include optimal risk allocation between the public and private partners, upfront assessment of project costs, output-based contracts, and private financing.