• FAQs - Alternative Financing and Procurement (AFP)

    1. What is Alternative Financing and Procurement or AFP?
    2. What are the key principles governing AFP projects?
    3. What are some examples of projects Infrastructure Ontario (IO) has delivered using AFP?  
    4. How does IO get involved in infrastructure projects?
    5. What are IO’s main responsibilities for delivering a project?
    6. Is AFP delivery the best way to build all projects?
    7. How often are AFP projects delivered on time and on budget?
    8. Do AFP projects cost more as a result of high financing rates charged by the private sector?
    9. What are some examples of project risks?
    10. Who owns the asset when it is built using the AFP model?
    11. How do I find out who is bidding on IO projects?
    12. How do I get involved in an IO project?
    13. What is a request for qualifications or RFQ?
    14. How are shortlisted bidders selected?
    15. What is a request for proposals or RFP?
    16. What is IO’s local knowledge requirement for bidders?
    17. How is a winning bidder selected?
    18. How long does it take for construction to begin?
    19. When is construction considered (substantially) complete?  

    1. What is Alternative Financing and Procurement or AFP?

    Alternative Financing and Procurement (AFP) is a made in Ontario approach to financing and procuring large, complex public infrastructure projects. It leverages partnerships with the private sector to expand, modernize and replace Ontario’s aging infrastructure.

    Under AFP, provincial ministries and/or project owners establish the scope and purpose of a project, while design and construction work is financed and carried out by the private sector. Typically, only after a project is completed will the province complete payment to the private-sector company. In some cases, the private sector will also be responsible for the maintenance of a physical building or roadway.

    The AFP model allows projects to be delivered more efficiently and more cost effectively than traditional procurement. AFP also protects taxpayers from cost overruns by transferring project risks to the party with the expertise, experience and ability to handle that risk best. 

    2. What are the key principles governing AFP projects? 

    Projects are guided by five key principles: transparency, accountability, value for money, public ownership and control and public interest.

    3. What are some examples of projects Infrastructure Ontario (IO) has delivered using AFP? 

    A list of all past, current and proposed AFP projects can be found on our AFP Projects webpage. 

    4. How does IO get involved in infrastructure projects?

    IO is a Crown agency created to assist the Province in delivering its long-term infrastructure plan, on time and on budget. The Ministry of Infrastructure, in consultation with other government ministries, assesses, prioritizes and determines the overall infrastructure renewal budget. The ministry also identifies which projects will be assigned to IO. 

    5. What are IO’s main responsibilities for delivering a project?

    IO’s main responsibilities include:

    • leading and implementing the procurement process
    • assisting project owners with bid documents, including design and output specifications
    • receiving and evaluating submissions
    • negotiating and awarding contracts
    • project managing the construction of the project at the request of the project owner
    • providing contract and asset management services for projects with a 30-year maintenance term 

    6. Is AFP delivery the best way to build all projects?

    No. AFP is only used on the largest, most complex projects in the province. IO also manages thousands of projects annually through traditional delivery. We believe there is room for both models.

    7. How often are AFPs delivered on time and on budget?

    Each year since 2013 IO has engaged an independent, third-party consultant to review the performance of its AFP projects that have reached Substantial Completion in the prior fiscal year.  The reports can be found here.

    8. Do AFP projects cost more as a result of high financing rates charged by the private sector?

    Costs of private-sector borrowing are more than offset by the risks AFP developers assume for the project, including the risks of increased construction costs and/or schedule delays as the project develops. Developers are not paid out until a project is substantially complete. They take out a loan to finance construction costs and commit to the province and its lenders to have it finished by a fixed date for a fixed price. If the winning bidders on AFP projects don’t complete construction by their target completion date, additional costs will accumulate – for which the developer, not taxpayers, is responsible.

    When you take into account all costs – including risks – AFP delivery costs less than the traditional way of delivering large, complex projects.

    9. What are some examples of project risks?

    There are many potential risks for any complex project in terms of design errors and omissions, unforeseen site conditions, labour and material costs, as well as ongoing maintenance and financial risks. In AFP contracts, many of these risks are transferred to the builder. 

    10. Who owns the asset when it is built using the AFP model?

    All assets, such as hospitals, courthouses and roads, constructed using the AFP delivery model are publicly owned and publicly controlled. 

    11. How do I find out who is bidding on IO projects?

    Once a project enters into the procurement phase, a request for qualifications (RFQ) invites bidders to provide information and demonstrate proven abilities in a number of areas including their financial strength, past experience, capacity and more. Following the RFQ, IO publicly announces the short list of prequalified bidders on our website. The short list or prequalified bidders announcement will provide detailed information about the teams that have committed to participating in the request for proposals (RFP) stage of a project.

    Information about all past, current and proposed AFP projects can be found on our AFP Projects webpage.

    12. How do I get involved in an IO AFP project?

    A  Request for Qualifications (RFQ) is issued for a project via www.merx.com to invite interested companies to submit their qualifications for a project.

    Contractors and subcontractors of all sizes play critical roles in all AFP projects.  We encourage interested businesses to contact prequalified bidders directly to inquire about opportunities.

    When possible, IO organizes networking sessions to provide opportunities for interested bidders to meet local subcontractors.   

    13. What is a Request for Qualifications or RFQ?

    A RFQ is issued for a project via www.merx.com to invite interested companies to submit their qualifications for a project. The RFQ process allows IO and its project partner to identify companies that have the required construction capability, experience and financial capacity (and in some cases design and maintenance experience) to undertake a large, complex project. 

    14. How are shortlisted bidders selected? 

    IO works with the client (e.g. a government ministry or project owner) to evaluate Request for Qualifications (RFQ) submissions and to determine the highest ranking project teams.

    Following the RFQ, IO announces the short list of prequalified bidders to provide detailed information about the teams that have committed to participating in the request for proposals stage of a project. 

    15. What is a Request for Proposals or RFP?

    A RFP is issued to prequalified or shortlisted project teams only. The RFP sets out the conditions and specifications required to undertake the project and asks bidder to submit their proposals to meet and/or exceed these specifications.

    Q 16. What is IO’s local knowledge requirement for bidders?

    For infrastructure projects to be successful, the companies delivering them must have a sound understanding of Ontario’s business and regulatory landscape. Local knowledge includes familiarity with local building code requirements, health and safety regulations, and other regulatory measures.

    17. How is a winning bidder selected?

    Following evaluations of RFP submissions, the highest ranking bidder is identified as the “preferred proponent.” IO and the client proceed to negotiate a final contract with this proponent.  Once negotiations with the proponent are complete, we announce the winning bidder.

    18. How long does it take for construction to begin?

    Construction can begin following the signing of the Project Agreement or contract.

    19. When is construction considered (substantially) complete?  

    Substantial completion means construction is complete and ready for use in accordance with contractual requirements.  It is the time at which the project is handed over to the owner/client.