Large projects suited to private development: experts

A new report by the Fraser Institute claims that private-public partnerships such as the Canada Line portion of SkyTrain are beneficial to taxpayers because private builders find efficiencies that government ministries don't. (CARMINE MARINELLI/ 24 HOURS)

A new report by the Fraser Institute claims that private-public partnerships such as the Canada Line portion of SkyTrain are beneficial to taxpayers because private builders find efficiencies that government ministries don't. (CARMINE MARINELLI/ 24 HOurs)

A report on public transportation infrastructure funding finds handing the reins to private corporations could save taxpayers money as the companies assume the risks, but a university expert warns it could also delay projects.

Commonly known as public-private partnerships, or P3, the concept revolves around government contracting private corporations for large portions of responsibility — everything from initial design and funding to actual operations.

Fraser Institute report author Christopher Lammam said Thursday well-known P3 projects around the Lower Mainland include the Canada Line, Golden Ears Bridge, the Sea-to-Sky Highway and the unfinished Evergreen Line.

Typically, he said, the more responsibilities designated to a private company the more risk that company assumes. Lammam notes if the contractor goes over budget or over time, the private company would typically pay that cost.

University of B.C. business economics professor Thomas Ross, however, said P3s come with challenges, particularly during the lengthy and expensive bidding processes the government must offer. It does, however, typically generate more competitive — and cheaper — results.

“If you hand the project off just to a government ministry, it doesn’t compete for anything. If it’s a private sector … you get the forces of competition, hopefully driving them to greater efficiencies,” Ross said.

“In general, the view has been it makes the most sense for really big projects, then the costly process is worth it. A 1% saving in the cost of a $1 billion project still kind of looks like a real good deal.”

B.C. and Ontario are considered the top users of P3 projects in Canada