British Columbia’s PPP Market

1. British Columbia’s PPP Market Healthcare Facility Planning for Better Care Amanda Farrell, President and CEO, Partnerships BC June 25, 2014

2. Agenda • Partnerships BC overview • Value for Money Methodology • Risk Assessment • Typical Risk Allocation • Successful Responses and Proposals • Scored Elements • How has the procurement process evolved? • Market Outreach • PPP pipeline

3. Partnerships BC Overview • Established 2002 • Shareholder: Minister of Finance • Board: oversight and governance • Commercially independent – not for profit • Fee for service (consulting model) • ~15% outside Provincial Entity • 40 +/- FTEs

4. Partnerships BC Overview • Involved in: • Planning • Procurement analysis • Procurement management • Design and construction oversight • Contract administration • Majority of participation is in projects over $50 million, but not limited to that amount • 15 healthcare projects in B.C.

5. Value for Money Methodology • Identifies project delivery method resulting in greatest VFM on quantitative and qualitative basis • Established by calculating estimated cost of a project as PPP and comparing it to estimated cost if the project were delivered through traditional procurement

6. Value for Money Methodology • Quantitative Analysis involves two steps: • First step identifies procurement objectives and two most appropriate public and PPP procurement alternatives: • Public Sector Comparator (PSC) • Shadow Bid • These form the basis of comparison

7. Value for Money Methodology • Second step is a detailed quantitative analysis comparing PSC and Shadow Bid • Involves risk analysis in which each risk is priced and allocated • Financial models for each method are developed and compared • Quantitative VFM is achieved through lower overall project costs after discount rate applied • Qualitative VFM is achieved when procurement method best supports qualitative objectives of project

8. Risk Assessment • Risk is the chance of an event happening which would cause the project circumstances to change • Inherent in any project • Must be effectively managed • Can be measured qualitatively or quantitatively

9. Risk Assessment • Risk assessment includes: • Identifying major potential risk; • Analyzing possible consequences of risks; • Evaluating the likelihood and impact of consequences; • Quantifying the dollar value of risks; • Developing mitigation and treatment strategies; and • Recording the results in a risk matrix. • Risk assessment informs optimal risk allocation

10. Typical Risk Allocation in a PPP

11. Successful Responses and Proposals • At the RFQ stage: • Focus on complete responses • Demonstrate financial capacity • Demonstrate relevant experience • At the RFP stage: • Pay attention to technical requirements • Pay attention to affordability requirements • Focus on innovation • Focus on Scored Elements

12. Scored Elements • Extra “points” assigned for design elements over and above the compliance requirements • Encourages designs that positively impact health care outcomes • Categories developed using evidence-based patient outcomes

13. Scored Elements • Interior Heart and Surgical Centre • Scored Elements focused on: • Patient safety/monitoring • Corridor efficiency • Standardization of rooms • Natural light • Efficiency/way-finding

14. Scored Elements • North Island Hospitals Project • Scored Elements focused on: • Travel distance and corridor efficiency • Separation of flows • Line of site • Natural light • Standardization

15. How has the procurement process evolved? • Over the past 12 years, procurement processes have been refined and streamlined • Improved evaluation methodology • Scored Elements introduced • Capital Cost Ceiling introduced • Affordability Ceiling introduced

16. How has the procurement process evolved? • Collaborative, inclusive processes enhanced • Online RFQ information sessions encourage participation in more remote projects (ex: Queen Charlotte/HaidaGwaii, Lakes District) • Two-hour in-person information sessions for all proponents prior to first collaborative session • B2B sessions encourage subcontractor participation

17. How has the procurement process evolved? • Separation of technical and financial submissions emphasize technical compliance • Interim technical and financial submissions ensure no surprises • Project Implementation Plans (PIPs) enhanced • Building on the success Abbotsford Regional Hospital and Cancer Centre PIP

18. How has the procurement process evolved? • Improved consistency for procurement documents and timelines • Procurement document templates and guidance refined, available to market (ex: Methodology for Quantitative Procurement Options Analysis) • 12 month procurement for DBs, 18 month procurement for PPPs

19. Market Outreach • Partnerships BC continues to refine best practices • That’s why we are conducting market outreach this year • Following that outreach, we will be hosting a workshop to discuss results of that outreach • Stay tuned…

20. PPP Pipeline • Penticton Regional Hospital Redevelopment • George Massey Tunnel Replacement • St. Paul’s Hospital Redevelopment • Pearson Dogwood Redevelopment Project • Royal Columbian Hospital Redevelopment and Expansion (Part A)

21. PPP Pipeline • Penticton Regional Hospital Redevelopment • Business Case 2014 • Patient care tower • George Massey Tunnel Replacement • Business Case 2015 • Replacement of 50-year-old tunnel with new bridge

22. PPP Pipeline • St. Paul’s Hospital Redevelopment • Business Case 2014 • New 200,000-square-foot ambulatory care building • Increased capacity and upgrades to buildings over 100 years old

23. PPP Pipeline • Pearson Dogwood Redevelopment Project • Business Case 2014 • Leverages property value at 25.4-acre site • Replacement of George Pearson Centre and Dogwood Lodge with new housing options and additional residential care capacity

24. PPP Pipeline • Royal Columbian Hospital Redevelopment and Expansion • Business Case 2014 • Part A: Replacement of Sherbrooke Centre with new mental health facility

25. QUESTIONS?

26. Amanda.Farrell@partnershipsbc.ca 604-806-4161 www.partnershipsbc.ca Amanda Farrell President and CEO www.partnershipsbc.ca