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Canada provides PPP lessons for UK

Carillion has urged the government to heed the lessons of Canadian public private partnerships (PPPs) to create a quicker and more efficient procurement model in the UK.

Incoming chief executive Richard Howson told Construction News that the support services and construction giant has made representations to government on the best way forward for public private partnerships in the run-up to the government response on private finance initiatives at the end of November.

Reports published in the past two months by the Treasury Select Committee and the Committee of Public Accounts have attacked PFI as inefficient and poor value for taxpayers.

Mr Howson, at present Carillion’s chief operating officer, said lessons could be learned from the Canadian models, where experienced procurement professionals are in place to speed up the process.

Canada has a PPP federal office, set up to build procurement knowledge and capacity and get better value for money from federal investments.

Carillion, Balfour Beattyand Laing O’Rourkeare all members of the Canadian Council for Public-Private Partnerships, a nationwide network of private and public groups that promotes PPP projects.

Mr Howson, who takes over from John McDonough at the end of the year, said: “We have made our representations to the appropriate
[UK] government departments and continue to do that.

“We are also sharing what has been learnt from the other PPP markets in the world.

“In Canada, the whole bidding process can take as little as six months, from invitation to tender to being a preferred bidder, which is a very short and effective period of time.

“I think the unique feature of PPP [in Canada] is specialised procurement teams from within the provincial government, who have been through a huge number of procurements with suppliers and have a very high level of experience, and they have refined a process over time and procure very quickly.”

With most PPP focus in the UK on education and health, Mr Howson said his company is particularly interested in what proportion of the government’s £200 billion infrastructure investment target, set out in the National Infrastructure Plan, will be procured through a new public private finance model.

The government is expecting to generate 70 per cent through private investment.

In August, a Carillion joint venture reached financial close on a Canadian hospital contract worth up to £1.7bn, while Laing O’Rourke reached financial close on a £1.3bn hospital scheme in Montreal, Canada, in June.

Last month CN revealed how Constructing Excellence had backed a potential alternative to PFI, which recommended that not-for-profit companies made up of experienced procurement and construction industry professionals could handle the procurement stage.

Just last week, Scotland consigned PFI to the scrap heap. Cabinet secretary Alex Neil said PFI had “fleeced” the Scottish taxpayer for years.

Scotland will now be using its Non Profit Distributing model, which it says removes the excessive profits made by private companies on past PFI projects, gives stakeholders greater involvement in the management of projects and ensures any surplus from the project can be reinvested for public benefit.

But the NPD model has also been criticised, with questions over how attractive it will be to contractors if their profits are capped.

 

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