Evidence of meeting #59 for Government Operations and Estimates in the 41st Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was project.
A recording is available from Parliament.
9:35 a.m.
NDP
The Chair NDP Pat Martin
Thank you, Dr. Loxley.
Thank you, Mike.
Next, for the NDP, Kennedy Stewart.
9:35 a.m.
NDP
Kennedy Stewart NDP Burnaby—Douglas, BC
Thank you, Mr. Chair.
Thank you to the witnesses.
I have questions about the Kelowna and Abbotsford hospitals that have been used as examples this morning. Are there any operational aspects built into these contracts, or is that still done by the public sector? Do you have any knowledge of that?
9:35 a.m.
President and Chief Executive Officer for North America, Bilfinger Berger Project Investments Inc.
I do, Mr. Stewart. I have quite detailed knowledge of that project. It's one that I was involved in personally, with bidding, and I sit on the board of that project company, so I know it very well. We worked very closely with Interior Health on that project, but the scope of our services is restricted to designing and building the four new buildings that are now involved in that project, maintaining them, and ensuring that all of the life-cycle renewals are completed for the period of the contract.
We also have maintenance obligations for the existing estate of buildings on both the Vernon Jubilee Hospital site and the Kelowna General Hospital site. I think what we've found in maintaining those buildings is that there have been many, many decades of neglect, which we are making great inroads in rectifying.
I would say that the reaction from the users of the hospital and the front line staff has always been extremely positive about the improvements we're making to the whole of the facilities.
9:40 a.m.
NDP
Kennedy Stewart NDP Burnaby—Douglas, BC
Only in charge of maintenance? That's not cleaning, for example. That's still within the health board's purview.
9:40 a.m.
President and Chief Executive Officer for North America, Bilfinger Berger Project Investments Inc.
Exactly, so—
9:40 a.m.
President and Chief Executive Officer for North America, Bilfinger Berger Project Investments Inc.
There was a discussion of that at the bidding time, but it was a decision that Interior Health made. They wished to keep the housekeeping, catering, and all of the other support services with their existing staff. Arguably, that is a set of services that is closer to the front line core service of health care, whereas building maintenance arguably is very remote from the front line services of health care.
9:40 a.m.
NDP
Kennedy Stewart NDP Burnaby—Douglas, BC
Professor Loxley, on the U.K. experience, where they did try to move into operational contracting, what happened in many hospitals is that infection rates increased quite rapidly. There was a series of deaths resulting from these infection rates. Have you come across anything in terms of operations that could add to what I've just passed along there?
9:40 a.m.
Professor, Department of Economics, University of Manitoba
Well, what I would say is that the distinction between clinical and non-clinical services in hospitals is in many ways an artificial one, and that the quality of maintenance, cleaning, food, and so on is intimately related to the clinical side of hospitals. There has been a lot of concern in the literature, both in the U.K. and in Canada, about the spillover effects of separating these two out, especially in times of budget constraints.
What has happened in the U.K. is that there has been an interference in clinical services by these other services that have been cut back significantly. Plus, there have been problems with the quality of health care when maintenance and design of hospitals, for instance, have not been what the medical side would like. I don't think we can separate these two out quite as clearly—and should I say clinically—as we've been told you can.
9:40 a.m.
NDP
Kennedy Stewart NDP Burnaby—Douglas, BC
Time is short here, so I'll move on quickly.
We've talked about local government infrastructure, but local governments are often elected on short cycles of two or three years. Does it happen sometimes that inexperienced local councils might enter into infrastructure builds they can't afford simply because their election cycles are so short and they don't have to continue the payments into the future?
Professor Loxley, do you have any comment on buyer beware for local governments?
9:40 a.m.
Professor, Department of Economics, University of Manitoba
I think there is an issue of the life of the projects versus the political life and bureaucratic life of institutions. It's even worse than that in Winnipeg. I think most city councillors would argue that they had not seen the details of these projects before they'd been implemented, and did not have the chance to question them in the way, for instance, that we are questioning them today. I think it goes beyond the life cycle of politicians.
9:40 a.m.
NDP
Kennedy Stewart NDP Burnaby—Douglas, BC
Mr. Joy, would you like to comment on the ability of local governments to predict what infrastructure might be necessary for them, and perhaps buying things they shouldn't because they can't afford them?
9:40 a.m.
President and Chief Executive Officer for North America, Bilfinger Berger Project Investments Inc.
Yes. All I can say is that there are probably 20 years of experience. Professor Loxley has obviously found lots of research about the projects and the concept of P3s.
I think that with every form of public procurement, if specialist advice is available and there is knowledge and research to back any important procurement decision, then councils are well advised to take it.
9:45 a.m.
NDP
The Chair NDP Pat Martin
Thank you very much, Mr. Joy, and thank you, Mr. Stewart.
We have only a few minutes left.
Kelly Block has been waiting patiently.
You have maybe two or three minutes, Kelly, and then we have to give a few minutes to change over for our next panel.
October 25th, 2012 / 9:45 a.m.
Conservative
Kelly Block Conservative Saskatoon—Rosetown—Biggar, SK
I'll make this really quick.
We heard in previous testimony that the P3 model doesn't necessarily work for all projects, but that it needs to be considered as an additional tool when looking at infrastructure projects. I know the comment was made earlier that the private sector is always involved in construction, whether we're looking at a P3 model or not.
Mr. Joy, would you comment on the value of having the private sector engaged at the front end and definitely the need to attend to the total life cycle of the construction and operations of a project?
9:45 a.m.
President and Chief Executive Officer for North America, Bilfinger Berger Project Investments Inc.
Absolutely, I think it is a very important area.
The contrast between design-build or design-bid-build procurement versus P3s, is that our money, our guarantees, are at risk for the long-term performance of the infrastructure we're building. We're not guaranteeing this for a two-year warranty period following construction; we're on the hook here for 30 years. If there's a failing, our equity and the money we borrowed from the banks, that's all at risk.
We thoroughly analyze at the front end what it's going to cost us to maintain buildings or to maintain roads and bridges. In competition with some of the most competent private sector partners in the world in that competition, we refine that judgment about the responsibilities we're taking on, and there is no escape from those responsibilities.
We're acutely aware that if there's a major problem, for example, if I have to replace a chiller in Kelowna General Hospital, that's my money. I'm extremely motivated when I'm designing those facilities to make sure that those chillers are going to be long-life assets. I'm going to plan for their renewal when it's necessary. I'm going to have top maintenance staff making sure that they're kept in good condition. We plan for all those eventualities because it's our money that's at risk.
9:45 a.m.
Conservative
Kelly Block Conservative Saskatoon—Rosetown—Biggar, SK
I want to follow up with one other quick question, and then I know a colleague would like to make a quick comment.
9:45 a.m.
NDP
The Chair NDP Pat Martin
I don't think you're going to be able to, Kelly.
Please finish your brief comment, and then I'm afraid we'll be out of time.
9:45 a.m.
Conservative
Kelly Block Conservative Saskatoon—Rosetown—Biggar, SK
Okay. We've also heard significant testimony that P3s succeed because the private sector has more skin in the game, so to speak, and therefore must find ways to deliver the service more effectively.
Would you comment on the potential of P3s to foster innovation in Canada, relative to classic tendering?
9:45 a.m.
President and Chief Executive Officer for North America, Bilfinger Berger Project Investments Inc.
I think innovation, which is important for the public sector, is often centred on the things I'm talking about. Building something so that it survives the two years until you walk away as a builder is a whole different mindset from designing something that you know you're responsible for, for 30 years. We innovate to ensure that we achieve a whole-life view of the asset. I think that's the important area of innovation.
There are also design innovations regarding better functionality of the facilities as well. That's another area that we work hard at.
9:45 a.m.
NDP
The Chair NDP Pat Martin
Thank you, Kelly.
Thank you, Mr. Joy, and thank you, Professor Loxley. Those were very useful contributions from both of you. We thank you for being here. It was an early start for you, especially in Manitoba.
9:45 a.m.
Conservative
Ron Cannan Conservative Kelowna—Lake Country, BC
Mr. Chair, I wanted to say thank you, Mr. Joy, on behalf of the constituents of Kelowna—Lake Country. The KGH addition in Vernon is greatly appreciated.
I used to be in the hospital district, so thank you.
9:45 a.m.
NDP
The Chair NDP Pat Martin
He snuck that in, even though it wasn't his turn.
Thank you, gentlemen. It's been a great pleasure.
Our next panel is being hooked up by teleconference.
Our next panel of witnesses must have gotten up very early to be with us today, and we appreciate the effort very much.
We'd like to welcome, from Partnerships British Columbia, Sarah Clark, president and chief executive officer, and Mr. Larry Blain, the chair of the board of directors. Welcome, Ms. Clark and Mr. Blain. Also by video conference, from John Laing Investments Ltd., we have Mr. Marcus Akhtar, project director, and Tara Rogers, bid director. Welcome to you, as well. Thank you for being here.
Our practice is to invite witnesses to make a brief presentation of five to ten minutes and then open it to questions from the members of our government operations committee.
The order on our agenda is to invite Partnerships British Columbia to be the first presenter. Please limit your remarks to five to ten minutes, to give ample opportunity for committee members to ask questions.
Ms. Clark, the floor is yours.
9:50 a.m.
Sarah Clark President and Chief Executive Officer, Partnerships British Columbia
Good morning, everyone. I'd like to thank you for inviting us to participate. I will keep our remarks within the time limit allotted.
To provide some background, Partnerships BC is a company owned by the Province of British Columbia. It's governed by a board of directors, and our sole shareholder is the Minister of Finance. We were established 10 years ago.
Partnerships BC, with the Province of British Columbia, has a 10-year record of planning, delivery, and oversight of more than 30 major infrastructure projects in transportation, rapid transit, health, corrections, education, energy, and recently, housing. The value of these projects is over $12.5 billion, with about $5.5 billion in private financing. All of these projects have been delivered, the ones that have been completed, on time and on budget.
We were established 10 years ago to provide the provincial government with a central agency that had both the commercial and procurement expertise to implement these projects using alternative procurement approaches. The goal was to provide certainty in the delivery of these projects in the areas of schedules and budget and to address life-cycle and deferred maintenance issues.
The majority of our projects have been delivered using the design-build, finance, maintain, or operate approach. B.C. also uses design-build. It uses design-bid-build construction management across the many projects it delivers on an annual basis.
In British Columbia, we're committed to providing certainty and fairness and discipline for the taxpayer. By certainty, we mean taxpayers know that they're going to get a project that's delivered on time and on budget through a pay-for-performance contract.
By fairness we mean projects are delivered through a transparent process that leverages private sector investment, innovation, and expertise while also ensuring that government ownership and responsibility are maintained.
By discipline we mean that British Columbia is devoted to discipline in the planning process for projects large and small.
Excuse us for a moment. We have an incoming call. We don't want to answer it. We're not in our office.