Value for Money and Risk Assessment

Projects delivered by Infrastructure Ontario under the alternative financing and procurement (AFP) model must offer value for money versus had they been delivered using a traditional delivery model. AFP must offer potential cost savings. Infrastructure Ontario recognizes the importance of having a valid and objective way of assessing possible approaches before a project begins.

“Infrastructure and investment renewal is not only important to Ontario's economy, but it will also create more high paying jobs. The construction industry has seen considerable activity in public sector projects in the past four years and our expertise will continue to be a big part of this sector in the future.”

Andy Manahan, Executive Director
Residential & Civil Construction Alliance of Ontario

For this reason, Infrastructure Ontario retained an experienced, independent, third-party construction consulting firm to develop a template for determining and comparing the project risks that the public sector faces under AFP against the project risks under the traditional approach. Using data from actual projects as well as its own knowledge base, the firm tabulated the expected outcomes under both approaches for the construction costs and risks involved in building public facilities – such as hospitals and courthouses. Click here to view the report.

Assessing Value For Money: A Guide To Infrastructure Ontario’s Methodology offers a general outline of how using alternative financing and procurement compares to traditional approaches in terms of risks and costs. As such, it is intended both for readers who have experience in project management, construction and infrastructure finance, as well as non-technical readers who want to learn more about AFPs.

KEY DOCUMENTS

• Risk Assessment Template: Design-Build-Finance-Maintain projects
• Risk Assessment Template: Build-Finance projects
• Assessing Value For Money: A Guide To Infrastructure Ontario’s Methodology

RELATED DOCUMENTS

• Capital Redevelopment Review: Thunder Bay Regional Health Sciences Centre
• Creating the Winning conditions for Public-Private Partnerships in Canada: TD Economic Report
  • "...it is argued that private sector borrowing is more expensive than public sector borrowing. This view, however, is short sighted. Lower interest rates for public sector borrowing exist because they are assumed to be risk free, which, of course they are not. Risks exist as long as there are potential problems with cost overruns, scheduling delays, and so on – problems, by the way, that are common with public sector projects and lead to higher taxes in the future. The higher risks of private sector borrowing serve as protection against an unforeseen future cost on taxpayers." - Derek Burleton -TD Bank Financial Group 2006, p.13