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We have the answers. Our P3 educational programming have enabled dozens of organizations and hundreds of individuals to prepare for the implementation of P3 infrastructure projects. As the need to address infrastructure renewal is critical, so is the proper education and information relating to the introduction of alternative delivery methods. Cynthia Robertson and Stanley Strug design and lead PPP training sessions that may also include presentations from experts in construction, finance and risk management. Delegates in the sessions engage in an interactive dialogue on public-private partnerships, project procurement and risk management and use case studies and real world scenarios to inform and educate.
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FIRST NATIONS PPP WATER OPPORTUNITIES
ABSTRACT: The Federal Government led by Aboriginal Affairs and Northern Development Canada (AANDC) provides funding for water services and infrastructures such as the construction, upgrading, operation and maintenance of water treatment facilities on First Nation reserves. Health Canada helps to ensure that drinking water quality monitoring programs are in place in First Nations communities. Environment Canada develops standards and guidelines for wastewater systems on federal and Aboriginal lands and provides advice and technical expertise on federal legislation requirements. These agencies are responsible for development of the capacity of First Nations to conduct their own source water assessments, undertake monitoring of their source water, develop and implement source water protection plans, and manage their water in a sustainable way. Implementing PPP water solutions could provide an effective solution for the critical need to improve access to safe drinking water.
Potential PPP Projects for First Nations Communities in Canada Three federal government agencies, Aboriginal Affairs and Northern Development Canada (AANDC), Environment Canada and Health Canada are agencies directly responsible for development of the capacity of First Nations to conduct their own source water assessments, undertake monitoring of their source water, develop and implement source water protection plans, and manage their water in a sustainable way. Implementing PPP water solutions could provide an effective solution for the critical need to improve access to safe drinking water.
As of January 31st, 2013, there were 113 First Nations communities, of a total of just over 650 communities, across Canada under a Drinking Water Advisory. The reasons why many First Nations communities are on long-term drinking water advisories vary. Many First Nations communities face the same challenges in providing safe drinking water as do other small, remote or isolated communities, such as difficulties in finding and retaining qualified water treatment plant operators. It is clear that living conditions are poorer on First Nations reserves than elsewhere in Canada. Analysis by AANDC supports this view. The Department has developed a Community Well-Being Index based on a United Nations measure used to determine the relative living conditions of developing and developed countries. AANDC uses its index to assess the relative progress in living conditions on reserves. In 2010, AANDC reported that the index showed little or no progress in the well-being of First Nations communities between 2001 and 2006. Instead, the average well-being of those communities continued to rank significantly below that of other Canadian communities. Conditions on too many reserves are poor and are not improving, introducing a PPP solution to the infrastructure deficits on reserves, including water, may provide a solution to this long standing problem.
First Nations water/wastewater projects, being reflective of community size, are typically very small. Size aside, these communities could benefit from the efficiencies, competition, and risk models offered through the PPP model. In particular, the shortage of qualified water/wastewater operating staff in First Nations communities could potentially be well addressed by the O&M components of P3 delivery models. Bundling of individual First Nations projects into larger P3 projects is an obvious opportunity.
As with any P3 project, whether or not value will be delivered by a P3 approach must be examined on a project-specific (or in this case, bundle-specific) basis. Challenges to obtaining value from a bundled approach for First Nations projects stem from geographic challenges (are projects close enough together to allow contractor economies in design, construction, and operations and maintenance, are projects so remote that they cannot cost-effectively be serviced by a centralized model, etc.) and governance challenges (the contractor needs a single counterparty to perform effectively, yet each community may want project control). The governance challenges noted above will be prominent and limiting unless an over-arching project governance structure can be put in place that obviates the need for the P3 partner to deal with each individual community for procurement, payment, performance reporting, and contract management.
The expected “pipeline” of water/wastewater sector projects in Canada consists of a handful of large projects with capital cost of over $200 million, with most projects being mid-sized. Project size is not an issue for DBF or DBOM delivery models, but may be an impediment for DBFOM on mid-sized projects where the interest and ability of the market to fund smaller debt requirements is untested. Many potential project opportunities are expected to be brownfield projects in which the latent defect risk in the existing infrastructure is not likely transferrable to the contractor. The extent to which the existing infrastructure influences the project scope, and the extent to which it can be inspected or tested, will dictate whether or not this prevents Value for Money from being demonstrated. On a qualitative level, it may not be worth the effort for a municipality to undertake a P3 procurement if it is not getting a true turnkey project with full asset risk transfer.
Projects with limited operating responsibility and lifecycle risk are not likely to demonstrate Value for Money as DBFOM, as there is little benefit of risk transfer within the term of the P3 to offset the incremental cost of private financing. DBF and DBO models may be appropriate for network projects.
Remote projects may be expensive to bid (due to cost of access), are likely to be small, and may limit the potential for innovation and/or economies of scale that bidders can apply. Such opportunities may not be appealing enough to the market to make for a competitive procurement process. However, the crisis in quality of water available to this population and the infrastructure deficit generally in First Nations communities is at a tipping point, and further study and anaylsis by government agencies will not slow the need or solve this problem.