Columns: P3 Projects And Public Accountability

By Laila Yuile. “Looking beyond … to future P3 projects, there is a need for stronger public accountability requirements.” ~ Office of the Auditor General of B.C. No kidding. With the recent combination of distractions revolving around strata president duties, my sons highschool graduation and my garden, a very important report I have waited on nearly escaped my attention. I say nearly, because thanks to a wonderful reader who knows I have a fetish for such things, I spent the greater part of my free time yesterday evening mulling over the report, and not watching the Canucks take on game 5.

The office of the Auditor General of BC finally issued a long-awaited report on the Academic Ambulatory Care Centre at Vancouver General Hospital – one of the earlier P3 projects completed in BC.

There are a number of findings as well as a number of key recommendations the Auditor General makes that I find alarming and should be brought to the attention of all British Columbians and yet again, there has been nothing in the press that I can find about this report. Although this project was started in the early part of this decade – it was not opened until 2oo6-in my experience researching the P3 projects built since then, nothing has changed.

Among the Auditors key findings:

Overall, we concluded that not all of the key value-for-money goals of the Academic Ambulatory Care Centre P3 project were met:

* Construction was completed on time, but the final capitalized value of $123 million was 29.5% higher than the estimated capital cost of $95 million disclosed in the Project Report.

*The use of a P3 contract was not effective in controlling VCHA initiated design and scope changes.

* The performance-based payment structure for operations and maintenance of the facility does not represent good practice.

* Facility users are generally satisfied with the building and services provided. However, there has been no public reporting on the ongoing results of the project since the Project Report was released in 2004.

* The P3 agreement is flexible in allowing for change. However,VCHA was unable to provide us with documentation to support the analysis and approvals for key contract amendments.

Stunning findings to some, but not to myself and others who have called for similar audits on more recent P3 projects such as the Sea to Sky highway, the William R. Bennett Bridge and the Canada Line.

The government has repeatedly been shown to be incorrect in the biased and incorrect Value for Cost reports issued at completion of a P3 project. They have repeatedly been shown to be in a conflict of interest with regards to Partnership BC being in charge of promoting and pursuing P3′s for the government, but also evaluating them.

This report supports my calls for an independent body being charged with overseeing the public’s interest in P3 projects being considered by any government body, and I am not alone in that request.

I spoke with Erik Andersen, who is a founding director and economic advisor of the BC First Party, about this report last night, and he had this to say:

“After more than ten years of gaining an appreciation of how P3 projects have turned out in Canada (see John Loxley’s “Public Service: Private Profits“) one would think our government would be way up the learning curve on this process.Sadly that seems not so.

BC Auditor General’s audit of this P3 project found that instead of it costing $95 million, it ended up at $123 million. He gives two main reasons for the over-run. $11 million occurred because of less than adequate pre-construction preparations and $17 million because games were played with the selection of discount rates in order to give favorable pre-contract status to the P3 option.

Professor Loxley recounts a generous collection of these kind of games picked up by other Canadian Auditor Generals. It seems our government has a decided bias to P3s no matter the evidence available from other jurisdictions that these are not crafted and executed in the publics’ best interest.”

Erik has been a valuable colleague and resource for my work, as our interests and concerns are remarkably similar in nature. While I have mainly concentrated on the governments many P3 infrastructure projects, Erik has led the charge for a full reveal on BC Hydro’s structural changes and operations, which he believes are designed to bankrupt the crown corporation to sell it off to private interests, not unlike BC Rail. Not just theory, he supports this belief with comprehensive studies and analysis.

I can say with confidence that I look forward to more revealing reports to come forward as this report indicated the office of the Auditor General will be looking at other P3 projects in the future. Considering the repeated examples of P3 projects being conducted to preserve and protect the interests of the private corporate partner rather than taxpayers dollar, I could not more strongly urge all British Columbians to take an interest in this report, and P3 projects in general.

You can read the entire report here

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Originally Posted on February 6, 2011

Laila Yuile is an independent journalist whose work can be found at http://lailayuile.com