UNDERWAY

The first of these projects - South Fraser Perimeter Road - is now underway. The new 40-kilometre, four-lane road will link Vancouver's ports, rail yards and industrial areas to three major highways heading into Eastern Canada and the US.

"It's a road designed for trucks," says Freer, who manages the project for the Ministry. "Also, of course, commuters will use it." But "the primary objective is for moving goods".

With an overall project cost of $1.2 billion, it was clear the South Fraser Perimeter Road was a candidate for PPP delivery: any project over $50 million undergoes a study to determine whether there is a compelling business case to get the private sector involved.

In 2004, the Ministry began discussions with Partnerships BC, the PPP delivery body. Soon it became clear it made sense to do the project as a PPP. It was complex to design and build.

But it also would involve a lot of risks - such as land acquisition, right-of-way permitting, environmental mitigation and site preparation - which private investors would be unlikely to want to take up.

So the Ministry of Transportation split the project into two phases. Phase one, which began in 2008, involved a lot of de-risking activities like property acquisition and site preparation, and phase two, which involves the road's privately financed design and construction.

"We bought over 500 pieces of property at a cost of over $200 million," Freer says. In 2008, once the route for the road was in place, the ministry started "pre-loading" the site with additional soil so that it could actually support a road. This was necessary because the South Fraser Perimeter Road runs along Vancouver's Fraser River, meaning that the soil nearby is moist and prone to settlement. The pre-loading cost another $100 million which, together with another $200 million of other preparatory costs, brought the phase one total to about $500 million.

South Fraser Perimeter Road (artist's impression): will link Vancouver ports with major highways