British Columbia has a process of requiring a business case for all large projects in order to ensure that the planning and rigour around the analysis ensures that not only the right projects are chosen, but the right procurement approach is taken.
In British Columbia we do a procurement analysis for every major project. When they're over $50 million, a PPP is considered as one of the alternates in this procurement analysis unless there's a compelling reason not to do so. In some cases the partnership model, or the design-build-finance-maintain model, as we would call it, would be that model. These partnerships are usually best suited for large complex projects with a significant opportunity for risk transfer and innovation.
In British Columbia our track record shows this accounts for about 20% of the capital spent in this province and is a reflection of the type of projects the province has been focusing on for the past decade. In most cases, the majority of the other projects are done in more traditional approaches, design-bid-build, or construction management, etc.
Over the past 10 years, the approach in British Columbia has evolved considerably. Early projects, such as the Canada Line rapid transit project, the Abbotsford hospital and the Sea to Sky Highway were the ones that led the program, and from these the lessons that have been learned have been applied to more recent projects. These projects illustrated the ability through the design-build-finance-maintain approach to experience innovation in design and construction and also achieve the risk transfer that we were hoping to achieve.
Since this time we've been focusing on improving our approach in the delivery of these projects, the contracts have improved, and the competitive selection processes have improved. We have now learned to optimize the amount of private financing used to have the risk transfer that we would like to have, but optimize the cost of that private financing.
Another evolution has been that the evaluation criteria has been fine-tuned to achieve the intended outcomes for the facility that's being procured. This is best highlighted in our most recent project, the Interior Heart and Surgical Centre that was awarded in Kelowna this summer. The evaluation criteria not only focused on price but also focused on the effect that the building itself would have on the clinical and operating costs, that far outweigh the capital costs in a health care facility.
The present value of those benefits was used in the evaluation criteria. Bidders could use the value of those points to determine whether it was more economical to spend money on those features in the building and improve that building. The outcome is that we have a better functioning building that is about $30 million below budget and will come to fruition approximately a year earlier than expected. It will be built on only three floors instead of four floors, which was the province's design, and will result in better clinical outcomes as well.
As we've heard through other presenters, while some will say PPPs are done because they are off-book, they are not. The capital cost of the project is accounted for in the same manner as a traditional project. This is not about buying projects on credit. However, we've seen from the innovation and the resulting savings from these projects, that we've been able to do more projects with those savings. This has allowed British Columbia to increase its capital plan and also to have more people put to work in building and creating benefit for people that need the projects and need the work.
I think you've heard already that Canada has become one of the most attractive PPP markets in the world. Companies of all shapes and sizes are participating in projects throughout British Columbia and Canada, and the service providers and contractors are now exporting this expertise around the world.
When you look at local participation, 90% of labour is typically from the area, and in the range of 50% to 80% of the sub-trades are local.
Contractors, lawyers, financial advisers and engineering companies from British Columbia and across Canada have been exporting their services, not only to other parts of Canada but also to the United States, South America, Australia, and other locations, such as the Middle East. This is based on the experience in Canada and the track record in delivering sound projects.
In conclusion, I'd like to take a couple of minutes to provide some examples of what the appropriate risk allocation and innovation have achieved in some of the projects in British Columbia.
We see innovation coming when a builder and a contractor work together in cooperation with the party that's going to provide the maintenance and life cycle. The approach we see built in every project is inevitably different from what the province's concept design was going to be.
It's important to have skin in the game. With optimized long-term financing at risk, all parties are incented to deliver the most sustainable infrastructure. Risk transfer is really about splitting risk between parties that are best able to manage. The Canadian model is very mature in this respect. There is not too much risk transferred to the private sector, and I don't think the province or the jurisdiction retains too much, either.
In innovation, I highlighted the Interior Heart and Surgical Centre project. It was 12 months earlier than anticipated, with creative solutions that are going to serve the clinical and operating functions of that facility for a long time to come.
With the Port Mann Highway 1 project, we also saw interesting innovation. The province was going to twin the existing bridge, but when the bidders had a look at the life cycle of locations as well as the construction implications, building one new one was the more economical approach.
In the Canada Line, the province was going to share geotechnical risk, but offered the opportunity for the bidders to choose whether they would bid on that basis or offer to take that geotechnical risk. The winner did take the geotechnical risk in the tunnel, which was completely unexpected.
Thank you for having us today. I look forward to questions.