Public-private partnerships boast 'mixed record,' expert warns

As the messy aftermath of Ottawa's light rail launch plays out across the city, some are beginning to wonder whether the partnership model behind the project was a good idea in the first place. 

That's because public-private partnerships, or P3s — when government agencies and private-sector companies collaborate on major infrastructure projects — don't always work out, said Matti Siemiatycki, interim director of the University of Toronto's School of Cities.

I think what we'll find out in the Ottawa case is whether the enforcement, the monitoring of that contract and the transparency of that contract allows this to be a good value for residents and for taxpayers. - Matti Siemiatycki, University of Toronto's School of Cities

"There's been a really mixed record with public-private partnerships in Canada, and globally," Siemiatycki told CBC Radio's Ottawa Morning Monday. 

The Confederation Line was built through one such partnership. The line was a joint venture between all three levels of government and the Rideau Transit Group (RTG) consortium of private companies.

But the system has been beset by construction delays and a bevy of technical problems, which are as costly as they are frustrating. 

"The Ottawa Confederation Line ... not only had challenges during construction, but is now having significant issues during operations," Siemiatycki observed. 

The city is bringing 40 buses back into service to compensate for delays, and continues to withhold payments from RTG. It's bringing additional buses into service earlier than expected to act as backup transport when the Confederation Line inevitably breaks down.

Transferring risk

Normally, the whole point of the partnerships is to manage risk, Siemiatycki said.

"Big transit projects have had real challenges in terms of on-time and on-budget project delivery," he said. "Public-private partnerships are a model to transfer risk from government, who typically bears the costs ... and transfer that risk to the private sector."

But P3s can also pave the way for private innovation — often at the lowest possible price tag.

Giacomo Panico/CBC

The sector wants to "lower costs [so] they're more competitive in the bidding process and that they ultimately win and get to deliver the project," Siemiatycki explained.

The key problem is that when things go awry, governments are sometimes forced to buy back the project to cut down on mounting costs.

Stage 2 using same model

That's a concern, considering Stage 2 of the LRT is also a P3.

"This model protects taxpayers from the costs associated with construction risks that almost always occur during the construction of a large and complex transit infrastructure system," said Mayor Jim Watson back in February when announcing second stage's preferred builder. 

But not everyone on city council thinks the partnerships are beneficial.

"The risk of P3 procurements include the lack of transparency, it includes a lower grade of construction, it includes maintenance deals for 30 years," said Coun. Shawn Menard. 

Siemiatycki said it ultimately comes down to who's involved. 

"It depends on who the partners are, it depends on how the contract is written and then it depends on the appropriate information being shared and enforcement of that contract," he said.

"I think what we'll find out in the Ottawa case is whether the enforcement, the monitoring of that contract and the transparency of that contract allows this to be a good value for residents and for taxpayers."