Bundling Projects - the Alberta School Experience. Public Sector Perspective

1. Bundling Projects - the Alberta School Experience. Public Sector Perspective September 2014 SASKATCHEWAN P3 SUMMIT Strategic Partnerships Office, Alberta Infrastructure

2. The Strategic Partnership Office (SPO) • The SPO is a Division within Alberta Infrastructure • The Office is the central authority within Government for P3s and other innovative infrastructure partnerships • The SPO is being positioned to focus on four lines of business: • Non-conventional partnerships • Conventional P3s • Agreement Stewardship • Practice Management 2

3. Alberta’s P3 Schools • Single contract for 32 years (2 year build and 30 year maintenance). • Contractor: • Designs and builds • Provides some of the financing • Maintains (an “extended warranty”) and • Receives payments from the government over 30 years, subject to deductions for failing to meet contractually defined performance standards • Operations and building ownership remains with School Board 3

4. Value Proposition • Quality learning environment for growing neighbourhoods • Schedule certainty and cost certainty • Integrated life-cycle approach driving efficiencies • Long term warranty (30-year) with payment on performance • No deferred maintenance • Added discipline in both public and private sectors • Allocate risk appropriately • Value-for-money (private financing costs offset by benefits and efficiencies) 4

5. Alberta School designs • New schools built to provincial standards • Core school/modular classroom approach (elementary/middle) • Standard school designs common to new schools regardless of delivery method • Modifications made to meet School Board program requirements • LEED certified • Add or remove modular classrooms to accommodate changes in student population 5

6. Alberta School designs 6

7. Why Bundle Schools? • Fast track significant increase in school capacity • Savings to the taxpayer • Provides critical mass • Attractive to investors (equity and bond) • Construction economies of scale • Standardization of material and equipment • Volume of work for maintenance provider • Simplifies maintenance • Increased productivity • Incents better long term partnerships • Reduces long term procurement and administration costs 7

8. Alberta School Bundles – Risk Strategy • Standard design • No ambiguity around Government requirements • Jurisdictional equity • Clarifies School Board expectations • Tight technical requirements to maintain standards • “Personalize” schools • Reduces opportunity for innovation • Aggressive schedule • Government secures sites • Government secures development permits 8

9. Alberta School Bundles - Challenges • Multiple School Boards and municipalities • Creating timely community partnerships • Simultaneous commissioning of multiple buildings • Short period for School Board fit up • Any sub-optimal design features reflected in multiple buildings • Modular classroom supply capacity • Sub-trade capacity in tight markets • DB completion risk (1 project of many schools, not many projects of 1 school) • Number of maintenance providers 9

10. Alberta School Bundles - Value Achieved 10

11. Alberta School Bundles - Outcomes • Taxpayer savings (short and long term) • Significant increase in neighbourhood student spaces • High quality work • Owner and user satisfaction • Environmental and community responsibility • Motivated employees • Volume of work (designers and contractors) • Business development and growth Well built, well maintained schools that exceed community expectations 11

12. Thank you