Canadian P3 Rail Experience August 21, 2018 The Stewart Group | - - PowerPoint PPT Presentation

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Canadian P3 Rail Experience August 21, 2018 The Stewart Group | - - PowerPoint PPT Presentation

Canadian P3 Rail Experience August 21, 2018 The Stewart Group | www.thestewartgroup.ca | +1 604-428-4424 | #207 990 Homer St. | Vancouver, CA 1 Canadian Transit Market Overview 2 2 Vancouvers Canada Line


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1 The Stewart Group | www.thestewartgroup.ca | +1 604-428-4424 | #207 – 990 Homer St. | Vancouver, CA

Canadian P3 Rail Experience

August 21, 2018

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Canadian Transit Market Overview

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Vancouver’s Canada Line

  • Project Background
  • Structure
  • Performance
  • Lessons Learned
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Project Background

  • Canada’s first & largest P3 partnership
  • 19 km with 16 stations, Automated
  • Opened 2009
  • Separate line
  • Separate O&M
  • 35-year concession agreement
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Project Background

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Structure - Contractual

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Structure - Funding

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Performance - Ridership

  • --- Actual Ridership
  • --- 2005 Ridership Forecast
  • Day 1 – 82K passengers
  • Year 1 - 36.2M passengers
  • 3.8M passengers during

Winter Olympics

  • System availability – 99.9%
  • Station availability – 99.9%

Source - TransLink

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Performance - Customer Satisfaction

Source - TransLink

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  • Accept a certain amount of loss of control
  • Risk transfer – retain those that are important to your organization
  • Distance project decisions from politics
  • There will be disputes – ensure resolution process is clear and

acceptable

  • Difficult to manage and implement
  • Anticipate growth and changes, clarify in PA

Lessons Learned – Owner’s View

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Lessons Learned – Proponent’s View

  • Performance based; not overly prescriptive
  • Reasonable honorarium
  • Limit the amount of change (freeze scope)
  • Risk costs money - concessionaire will always price risks that are

transferred to them

  • Reasonable handback standards
  • Tight budget and schedule made it a good candidate for P3
  • Knowledgeable owner’s team acting for all gov’t stakeholders
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P3 Projects in Development

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Edmonton Valley Line

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Project Background

  • 27 km “urban-style” LRT
  • Largest transit investment in City’s

history - >$4B

  • Developed in two phases
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Project Background

  • Phase 1 - $1.8B
  • Pre-procurement and procurement phase 2012-2016
  • 13 km
  • 12 stations/stops
  • At-grade, elevated and tunnelled
  • Bridge crossing
  • New technology - low floor, surface rail
  • Separate but integrated
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Structure

  • Edmonton’s first P3 rail project
  • Contract awarded – Feb 2016
  • DBFOM + V
  • 30-year O&M term
  • VfM achieved – 24%
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Performance

  • 2.5 years into construction
  • Schedule and financial pressures
  • City monitoring Project Co closely
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  • 14 km extension, connecting in Downtown Core
  • $2.2B - $2.4B estimate
  • Early availability of funding accelerated project timeline
  • P3 contract schedule on expansion provided limited guidance on

expansion protocols

  • Owner faced with possible sole source for scope elements vital for

system interoperability

Phase Two - Challenges of Expansion

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  • Re-negotiating a 30-year O&M contract is challenging
  • Agreements not designed for flexibility
  • Lender’s issues
  • Interface and integration risk
  • Customer experience (transfer point)
  • Performance to date
  • Maintaining VfM achieved in Phase One
  • Untested O&M performance

Considerations

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Ottawa Confederation Line

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Project Background

  • 4th largest metropolitan hub in Canada
  • $2.1B LRT system
  • 12.5 km with 13 stations/stops
  • At-grade, elevated & 2.5 km tunnel
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Structure

  • Ottawa’s first P3 rail project
  • Contract awarded - Dec 2012
  • DBFM + V
  • 30-year maintenance term
  • Operated by municipality
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Performance

  • Construction launch – Winter 2013
  • Original revenue service date - Spring 2018
  • Revised revenue service date - Fall 2018
  • Sink hole challenges
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Challenges of Expansion

  • Package of three rail extensions
  • Contract didn’t contemplate extension of this magnitude
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  • Required sole source and competitive tender
  • Owner purchased additional vehicles, maintenance, systems and

expansion to OMF ~ $500M

  • Project Co also given CM role to maintain quality regime
  • Competitive tender for remaining scope
  • Interface agreements required
  • Systems integration an evolving challenge
  • Satisfying lenders costly - long-term debt buy-out required

Approach

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Surrey-Newton-Guildford LRT

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Project Background

  • Two phase LRT project in Vancouver suburb
  • Phase One – 10.5 km of surface rail; fully funded
  • Phase Two – 16.5 km (technology still under review)
  • Phase Two not funded
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  • DBFOM
  • Shorter O&M term – 7 years
  • Rationale
  • Start up and early Ops risk

transferred to private sector

  • Shorter term gives owner

more flexibility on expansion & avoids expensive termination payments

Approach for Phase One

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  • Contemplate future expansion; plan for it in the PA
  • Understand termination costs at project outset
  • Examine possibilities of pre-pricing certain key expansion elements/

both civil and debt

  • Lenders are a big deal
  • Change is inevitable in a transit system
  • Current P3 model not designed to be flexible

Conclusions

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30 30 Source: xxx

Lecia Stewart

Lecia@thestewartgroup.ca 604-764-8424