One of the early studies of the cost and time performance of large conventional infrastructure projects was undertaken by the engineering firm Mott MacDonald on a sample of 39 U.K. projects. The study found that the actual duration of project construction exceeded the original targets by 17 per cent on average and that construction budgets exceeded approved capital budgets by 47 per cent on average.15 As for P3 projects, a study by the U.K. National Audit Office indicated that 29 of the 37 projects surveyed did not experience any increase in construction budgets after the start of the contract and that the cost increases in the remaining eight projects were due mainly to additional work requested by the public sector owners.16 In other words, any cost increases on the work specified in the original contracts were not passed on from the contractors to the public sector owners. However, both these studies were criticized in a report commissioned by UNISON, a public sector trade union in the United Kingdom, which pointed to problems with sampling methodology and measurement bias.17
A more recent study commissioned by the National PPP Forum in Australia attempted to address most of the criticisms in the UNISON report in its analysis of the cost and time performance of 67 Australian infrastructure projects. These projects consisted of 25 P3 projects and 42 conventionally procured projects delivering transportation and social infrastructure. The study generated the following findings:18
◆ P3 projects demonstrate greater cost certainty, with average cost increases of 4.3 per cent after contract award compared with 18 per cent for conventional projects. Comparative results are directionally similar for the period from original announcement of a project through to project commissioning, with a 24-percent cost escalation on average for P3 projects and a 52-per-cent cost escalation for conventional projects.
◆ The overall time performance of P3s and traditional contracts is similar over the whole period from initial announcement to project commissioning, with P3s and conventional projects delayed on average by 15 per cent and 17 per cent, respectively.19
◆ In the period preceding financial close, P3 projects are delayed by about 15 per cent on average, with a further delay of 2.6 per cent on these projects from financial close through to commissioning. In contrast, conventional projects reached contract award 4 per cent early, but they were delayed by just over 19 per cent from contract award through to commissioning.
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It is impossible to know whether the Australian results are also valid for infrastructure projects in Canada. |
We are not aware of any comparative analyses of P3 and conventional infrastructure projects in Canada that are similar to the Australian one. Thus, it is impossible to know whether the Australian results are also valid for infrastructure projects in Canada. Translating such results to other jurisdictions is a highly speculative exercise, due to differences in procurement processes, market conditions, and regulations, to mention just three of the myriad potential factors that could yield different results.
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15 MacDonald, Review of Large Public Procurement.
16 United Kingdom, National Audit Office, Construction Performance.
17 For example, it has been argued that "cost and time overruns are measured at a much later stage in the procurement process" for P3 projects relative to non-P3 projects, thereby leading to cost and time performance results biased in favour of P3 projects. See Pollock et al., The Private Finance Initiative, p. 3.
18 Duffield, National PPP Forum.
19 The percentage delay is the amount of time a project overruns its initially scheduled commissioning date expressed as a ratio of the amount of time between the initial announcement and the scheduled commissioning date. For example, if a project was scheduled to be completed in 10 months at the initial announcement date, but it was actually completed in 11 months, it would have experienced a 10-per-cent delay.