PPP Canada Publishes Schematic Design Estimate Guide for Public-Private Partnerships

OTTAWA, April 30, 2014 /PRNewswire/ - PPP Canada, the Government of Canada's centre of expertise for public-private partnerships (P3s), today released a Schematic Design Estimate Guide to assist Canadian governments at all levels procuring public infrastructure through P3s. The guide provides detailed advice on developing appropriate schematic designs that support the preparation of accurate and reliable cost estimates for P3 projects.

"PPP Canada is actively developing knowledge products to grow Canada's capacity to deliver high-quality P3s", said John McBride, CEO of PPP Canada. "We are committed to sharing our expertise. This guide is the latest in a series of studies and guides the Corporation has developed to make P3s, and the value and accountability they provide, more accessible to Canadians".

Because P3 projects encourage design innovation and integration, only minimal design work is undertaken by public authorities ahead of procurement. This means that the resulting cost estimates carry significant contingencies to account for variance. The guide highlights industry best practices aimed at achieving a high degree of accuracy. It addresses design requirements, approaches to the application of contingences, sector-specific considerations, and the treatment of outputs. Through use of the guide, practitioners will develop cost estimates that are easily verifiable and can be benchmarked against existing construction cost data. The guide's methods also promote a consistent approach to the preparation of cost estimates, allowing for improved cost comparisons over time.

Previous releases by PPP Canada include:

• P3 Business Case Development Guide;
• Identifying P3 Potential: A Guide for Federal Departments and Agencies;
• Water / Wastewater Sector Study;
• Public-Private Partnerships: A Guide for Municipalities; and
• two guides to assist Building Canada Fund applicants in navigating the new P3 screening process, which PPP Canada manages in collaboration with Infrastructure Canada.

All of these documents are available for download in English and French. They can be found in the Resource Library section of www.p3canada.ca.

PPP Canada is the government of Canada's centre of expertise on P3s. As a federal Crown corporation mandated to improve the delivery of public infrastructure by achieving better value, timeliness and accountability to taxpayers, through P3s. The Corporation was created to deliver more P3s by leveraging incentives, demonstrating success, providing expertise; and promoting best practices and capacity-building.

Increasing the visibility of P3s as a procurement solution for governments is one of the Corporation's major accomplishments. Canada has recently emerged as a global leader in the use of P3s.

For more information about PPP Canada please visit www.p3canada.ca.

BACKGROUNDER - SCHEMATIC DESIGN ESTIMATE GUIDE

The Schematic Design Estimate Guide was developed to provide Project Sponsors with the minimum requirements for preparing cost estimates suitable for quantitative analysis when considering a P3.

As key inputs to the financial models, cost estimates form the basis of the selection of the preferred delivery option. Accuracy in cost estimates is essential for P3 projects, and research shows that gaps between estimated and actual project costs have been significant. For example, a recent report from the Joint Federal Government/Industry Cost Predictability Taskforce examining traditional procured projects found that "40% of tenders had low bids that varied, either up or down, by more than 30% from the pre-tender estimate and fewer than 20% of tenders had bids within 10% of the estimate." Variations were determined to be independent of market bidding behavior and were primarily influenced by the techniques used to forecast project costs.

Source: Joint Federal Government / Industry Cost Predictability Taskforce (2012) Guide to Cost Predictability in Construction: An Analysis of Issues Affecting the Accuracy of Construction Cost Estimates.

SOURCE PPP Canada