Alberta Schools Alternative Procurement (ASAP) Projects. Public School Construction Program September 19, 2011 Baltimore, USA
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1 Alberta Schools Alternative Procurement (ASAP) Projects Public School Construction Program September 19, 2011 Baltimore, USA
2 Presentation Outline P3 s in Alberta - An Overview Alberta Schools (ASAP) Projects P3 Procurement and Process Best Practices in Alberta P3
3 P3 s in Alberta - An Overview Alberta defines P3 s as: An infrastructure project in which a private contractor: - Provides some or all of the financing for the project; - Designs and builds the project, often providing operations and maintenance for the project, and often backed by an extended warranty ; and - Receives payments from the government over an extended period of time, subject to deductions for failing to meet contractually defined performance standards
4 P3s in Alberta - An Overview Manage Project Program Plan Design Build Maintain Program Delivery Facility Management Services P3 Procurement Finance Project Own Building Own Land Manage Project Traditional Procurement Program Plan Design Build Maintain Finance Project Own Building Program Delivery Facility Management Services Own Land Public sector Private partner
5 P3s in Alberta - An Overview A Typical P3 Arrangement Province Availability Payments Capital Contribution Concession Agreement P3 Contractor Subcontractors Investment Payments Private Finance Design Build Operate/ Maintain
6 P3 Characteristics Integrated, whole-life approach to design, construction and maintenance of a facility Demonstrate Value for Money (VfM) Cost Certainty (fixed price for construction) Schedule Certainty (fixed term for construction) Contract period Warranty of 30 years (long-term maintenance) Determine facility performance through output specifications Risk-sharing between private and public sectors
7 P3 Projects in Alberta Constructed and operational - Anthony Henday South East (Edmonton) - North East Stoney Trail (Calgary) - ASAP I - 18 schools (Calgary and Edmonton) Under construction - Anthony Henday North West (Edmonton) - ASAP II - 14 schools (Edmonton, Calgary & surrounding areas) - South East Stoney Trail (Calgary) In procurement - Anthony Henday North East (Edmonton) - ASAP III - 13 schools (across Alberta) - Evan-Thomas Water & Waste Water Treatment Plant (Kananaskis Country)
8 Potential P3 Projects P3 projects that could be considered: - Remaining ring road segments in Calgary and Edmonton. (NE Anthony Henday in procurement) - Water/wastewater Treatment Plant. (Evan-Thomas project in procurement) - Additional social infrastructure such as health care facilities, post-secondary institutions, government buildings
9 Alberta Schools Alternative Procurement Eighteen Schools ASAP I K-4, K-6, and 2 types of K-9 Schools (DBFM) Four School Boards ASAP II Fourteen Schools K-6, 5-9, K-9 (DBFM) and 4 high schools (Design-Build) Eight School Boards Two Municipalities (Edmonton, Calgary) Six Municipalities (Edmonton, Calgary, Sherwood Park, Spruce Grove, Okotoks, Langdon)
10 ASAP III
11 ASAP Projects Consolidated approach to designing, building, financing and maintaining (DBFM) new schools Schools designed using a core design with modular classrooms LEEDTM Silver standard for all schools Project includes 30 year maintenance and renewal (M&R) component
12 Ownership and Access New schools owned and operated by school boards. Private sector will not own or lease schools there will be no 3rd party revenue. Use and access to new schools will be the same as existing schools. School boards will provide: Educational programming Furniture and equipment (supply and install) ICT cabling maintenance
13 Contract Highlights GoA runs transaction process in collaboration with School Boards GoA signs contract Payments made by GoA Performance adjustments monitored by School Boards Turn over provisions at end of term
14 Transaction Process Open, competitive, transparent process. Invite consortia to submit their qualifications (RFQ). Short list to 3 consortia. Invite short-listed teams to submit detailed proposals (RFP). Staged technical submissions during RFP. Legal agreement terms and conditions optimized during RFP. Opportunity for innovation in design during RFP. If proponent passes all stages then submit fully-priced bid. Contract awarded on basis of lowest NPV bid only. No negotiation after award.
15 Maintenance & Renewal Features 30-year life-cycle maintenance: 5 year building evaluation year 25 evaluation to include renewal plan to attain a 30 year old school in good condition Custodial services remain responsibility of school board: cleaning operational support (moving desks, etc.) monitoring boiler cycles scheduling fans
16 Private Financing Payments to contractor (over the 30-year contract) depend on availability and performance If contractor does not perform province cannot pay lender Size of project attractive to institutional investors Investors provide oversight to protect their money
17 Value for Money By constructing a large number of schools at once cost per school is lower Design efficiencies from core school approach Cost and supply chain management by using single consortium Accelerated construction schedule Provide schools where the students live and learn
18 Value for Money PROJECT PSC NPV Bid NPV VFM NEST (2006 $) $ B $650 M $350 M NW AHD (2008 $) $1.6 B $1.4 B $200 M ASAP I (2008 $) $752 M $634 M $97 M ASAP II (2010 $) $358 M $253 M $105 M Compare bids to a Public Sector Comparator, or PSC (cost estimate to deliver using traditional process) to calculate VFM All risks must be accounted (some risks were missed in the SE AHD PSC) Includes design, construction and O&M/Rehab for the next 30 years on net present value (NPV) basis
19 ASAP I - Today Project completed on-schedule Positive feedback from the industry and contractor Minimal changes during construction Schools with early availability were allowed to have school board F&E work started Quality of schools is very good by all reports Contaminated site required compensation for clean-up and acceleration to meet availability
20 ASAP I - Modular installation
21 ASAP I - Our new Schools
22 ASAP II - Today Project to be completed on-schedule Schools will open in September 2012 Very few issues or problems
23 Alberta s Best Practices for P3s Maintain lowest compliant NPV bid wins approach as being fair, simple and transparent Negotiate project agreement upfront - no changes after financial bid submission Allow complete flexibility with financing - provided team has demonstrated capacity, we leave process up to proponents Bundle social infrastructure assets to generate effective economies of scale Assign risk to those who can best manage it Keep technical requirements to maintain standards, but welcome innovation where it makes sense.
24 Concluding Comments P3s not a panacea for all projects P3s complement conventional and other delivery methods Made in Alberta P3s can provide value to Albertans for the right type of projects Social infrastructure offers many interesting challenges and opportunities ASAP approach achieves GoA and Board objectives and delivers value
25
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