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

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

30 30 Source: xxx

Lecia Stewart

Lecia@thestewartgroup.ca 604-764-8424