Originally Posted by spaceprobe
My question is, if the project was built and funded completely by the province (ie, not P3), how much would the province be "losing" when accounting for all costs (ie debt and interest payments)? Will it be higher or lower than with P3? In my opinion, the question isn't whether the bridge needed to be replaced, but rather, whether P3 was the appropriate option. This is something we (the province) can learn from before deciding on the next bridge to build.
Simple question indeed.
To get the answer for the port mann bridge, hopefully the answer is publicly available without a FOI:
No two projects are identical, and there are unknown future differences like the banks financing the Golden Ears bridge P3 went bankrupt during construction but were bailed out by their own governments before it caused too much trouble.
For the Port Mann bridge, they changed to BC borrowing and then lending the money instead of banks in 2009 and claimed doing so saved $200 million. After the project was completed it was supposed to transition back to private financing.
Interest rates for private infrastructure-backed borrowers may be lower today as neither inflation nor growth has been sighted, but they could diverge significantly at any time in the future.
The auditor general's website search function didn't turn up a review of the Port Mann project to show financing costs.
It's still a small time span and small sample of projects to compare the public vs p3 projects but in general the P3 will finish on time, and hit their budget. While public projects are within 10% of budget and schedule. If private financing is used, the public option finishes cheaper (compound interest on not just the multi-year construction, but covering the higher borrowing rate for the lifetime of the payback period.)
However as we have seen with the Port Mann bridge, sometimes the schedule or budget is met by eliminating de-icing gear from the design. The split of obligations is point by point and adversarial, but it shouldn't be an issue if it was all planned for and expected.
It's important to remember that the work is done by the same cluster of smaller contractors. Short of believing there is significant waste in the decision for what each sub-contractor is worth paying, P3s supposedly earn their keep in design + financing. IMO P3s are a political tool to say the budget is balanced, and are preferred despite when the public/other option results in better value.
related: Vaughn Palmer: The fine art of dissecting debt from contractual obligations