Vegas or Bust

The inaugural P3 Hub Americas conference showed that three leading regions for P3 have very different approaches but a similar commitment to advancing the model. Amanda Nicholls reports

Bringing together ‘the Americas’ for one conference was always going to be a challenge – obviously Canada, the US and Latin America are very different beasts. But the inaugural P3 Hub Americas selected three leading regions to showcase how the approach to using P3 can differ widely, but still be a success as long as the political will is behind the model.

The conference opened by focusing on Ontario – Canada’s most active province for P3. A mature P3 market with a raft of success stories, the challenge for Infrastructure Ontario is maintaining this momentum.

John McKendrick, executive vice president at Infrastructure Ontario, opened the discussion by confirming the province’s commitment to the model with 94 projects either completed, in procurement or under construction since 2005.

“Frankly we think you can apply the P3 model to virtually anything,” he said. “In my view it is a very flexible model that can be adapted to almost any type of infrastructure.”

But the province is not without its challenges and McKendrick and his team admit that a third party review of their projects showed that of the 45 that reached competition by the end of March 2015, 98% were completed on budget but only 73% were on time. He said: “So you can see we are much better at the on budget performance than on time. And we have been scratching our heads about why that is. One of the reasons I think is because interest rates are so low that the penalties for being late are not what they used to be.”

The P3 market in Colombia is at an earlier stage, but still has a good track record in the form of the well-received 4G road program.

Luis Fernando Andrade Moreno, president of procuring agency ANI, outlined that the market has around 100 projects in management covering roads, rail, port terminals and airport contracts.

With an average project size of $200-400m, Moreno said that by “accelerating the rhythm of construction in the country” since the agency was formed, it has managed to increase the development of roads per year from 60-100km to 200km.

ANI now has to show that the 4G program was just the start of a growing P3 market. One panelist commented that perhaps the rate of return for the first wave was lower than original expectations, meaning the market is waiting to see if the next wave of deals will provide a competitive environment for investors.

The challenge for California, meanwhile, is less about performance, procurement or competition – it is about winning over the hearts and minds of the legislators and public.

Miguel A. Santana, City of Los Angeles' administrative officer, admitted that a general mistrust towards the private sector has been a hard obstacle to overcome. He said: “One of the fundamental questions we always ask is, why hasn’t P3 really taken off here? And it really comes down to some fundamental issues – can we really trust them [the private sector]? Our perception of [the private sector's] motivation is the bottom line but as public servants we are motivated by different things.”

But this differing motivation should be seen as a strength of the partnership rather than a failing, according to fellow panelist Anthony Phillips, managing director of primary investment for North America at John Laing.

“It’s not about on time and on budget and lifecycle benefits,” he said. “But it is an enabler to allow the public service to focus on what is really important, which is improving services.”

A list of quotes from event participants can be found in the print edition of the magazine