Projects should go through an internal review to evaluate whether a P3 delivery would add value to the project. The identification of projects with P3 potential first occurs during the capital planning process. Program Ministries identify whether a potential project could offer value for money if delivered as a P3. This project could be identified by the ministry itself or by an SIO. This identification is performed in accordance with the guidance in Alberta's (internal) Capital Planning Manual. Projects are assessed against the P3 criteria noted below.
Generally, it is difficult for projects less than $50 million capital cost to generate value as a P3, but other factors must also be considered. For example, bundling smaller projects with commonalities into P3 procurement may generate value.
Suitability for P3 procurements is enhanced if:
■ the project scope is well defined;
■ there is a history of cost overruns in projects of this type;
■ provision of the capital asset can be defined in a performance or output specification;
■ for non-road projects, the asset is new infrastructure and does not include a retrofit or brown field development component;
■ there is a potential opportunity to integrate design, construction and maintenance or to introduce innovation to achieve quality, cost savings and/or time advantages;
■ there is a presence of significant associated ongoing operation, maintenance and/or service requirements;
■ long-term operational or service needs can be clearly defined in a performance or output specification and are capable of being costed out on a life cycle basis;
■ the asset is of an enduring, long-lived nature;
■ performance requirements will be relatively stable throughout the duration of the contract;
■ payment and/or revenue can be tied to performance;
■ risks can be clearly identified and there are cost-effective opportunities to transfer some risk to the private sector;
■ there are no legislative or other legal impediments to an alternative procurement;
■ there is sufficient expertise and capacity in the private sector to conduct a competitive procurement;
■ a fair, accountable and transparent selection process can be used;
■ there is sufficient internal capacity and time to plan and draft documents, develop the procurement and manage an alternative procurement project;
■ it is demonstrable that the P3 process is likely to offer greater value for money to the GOA or SIO compared to the, traditional form of procurement;
■ on-time/on-budget delivery and protection against scope creep is important; and
■ competitive private sector financing can be obtained, and the cost of private sector financing will be offset by delivery and/or user savings.
The use of a P3 will be unsuccessful where:
■ Accountability in public service could not be met, as in most forms of frontline service delivery;
■ Private sector investment is not available or cannot be obtained at an acceptable cost;
■ The transaction costs of pursuing the P3 are disproportionate compared to the value of the investment;
■ The fast pace of technological change make it too difficult to establish long term requirements, such as information and communications technology (ICT) requirements;
■ High levels of systems integration make risk allocation difficult;
■ There are substantial regulatory or other legal restrictions on the provision of the service;
■ The form of the capital asset will be chosen through a design competition;
■ There is insufficient support within the Program and Service Delivery Ministries and SIO to champion and resource the P3 procurement;
■ Performance specifications are not adequately defined;
■ Appropriate time is not allocated to accommodate the procurement.
Where projects satisfy a majority of the suitability criteria, ministries are required to contact ACFO to complete an initial assessment of the P3 potential of the project. The results of the initial assessment then form the basis to determine if an Opportunity Paper should be completed for the project.