This Guest paper originally appeared in the November/December 2005 issue of the Taxpayer, a regular publication of The Canadian Taxpayers Federation (CTF), a federally incorporated non-profit and non-partisan organization dedicated to lower taxes, less waste and accountable government. This article is reproduced with permission and is copyright to the CTF and Sara MacIntyre © 2005.
Published here April 2006.

Editor's Note | Introduction | Design-Build-Finance-Operate
Capital Projects: What's Good, What's Bad? | Why Now? | Where is Canada on P3s?
Case Example: Abbotsford Regional Hospital and Cancer Centre


Public-private partnerships are most often associated with the United Kingdom's Public Finance Initiative (PFI). The program was started under the Conservative government and expanded under the current Labour government. The program has allowed an incredible capital expansion, with 64 new hospitals worth over $26-billion and 150 new schools with another 250 on the way. In almost every instance the P3 was designated as a Design-Build-Finance-Operate (DBFO).

A consortium of private partners come together to design, build, finance, and operate the proposed public project. This approach gives the private partner a great degree of flexibility and room for innovation. Moreover, the private partners act as a check that ultimately results in the best value for the taxpayer. Let's take the example of a road. The private partner that has agreed to provide the operation or maintenance of the road has a vested interest in the design and construction of the road, such that, the quality of the road will not inhibit his ability to maintain or operate the road at a profitable margin.

A design, build, finance and operate model binds the interests of each party to the benefit of the taxpayer. In the UK, a 2002 auditor's survey conducted by the National Audit Office (NAO) found that only 22% of P3 projects had cost overruns (all because the public partner changed project specifications) and that 75% of these projects were on time. In comparison to the track record of traditional procurement where 73% of projects were over budget and 70% were late, this is an astonishing improvement. But just because a government project is designated as a P3 or a DBFO does not mean that it is a de facto good use of taxpayer dollars.

Introduction  Introduction

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