Quote:
Originally Posted by Stormer
You are not correct. All the major construction companies have P3 divisions that do exactly that. Obviously they get compensated for taking the construction risk, but they are in a much better position to manage the risk given that construction is their business.
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Stormer, we're not talking about the construction companies here as the private sector - Whatever company builds this stadium won't be financing, operating, or owning this stadium, and therefore can't be considered as a private partner in the P3 sense. For example, if a municipal government (using money they borrowed, or took out of their capital budget) pays PCL to build a bridge, that doesn't make it a P3. However, if PCL used their own capital to build the bridge, and were granted a concession to collect tolls from the bridge for 30 years (or, if no tolls, paid back over 30 years by the municipality), that would be a P3. PCL would have most of the risk, rather than the municipality.
In regards to "P3" for this stadium, we're talking about private firms who will by putting up $70 M for the project (and not the construction firms). Let's say, in this hypothetical example, Mosaic put up $20 M. Do you think that if there are cost overruns, Mosaic is going to have to cover them over and above the $20 M contribution? Or, lets say the hotel association is paying $1 M a year - if there is an operating deficit, are they going to have to pay $2 M or $3 M instead? Of course not - and that is why the private sector is not taking on any risk - the overruns and defecits I mentioned will be covered by the province or city...