Infrastructure Ontario - National Conference of State ......Air Rail Link completed linking...

Partnering to modernize Ontario’s infrastructure

Infrastructure OntarioApproach to large infrastructure and real estate projects


Long-term Infrastructure Plan (LTIP)

– Formal commitment every five years

Bill 6, Infrastructure for Jobs and Prosperity Act, 2015

– Community benefits/apprenticeships

Legislation, mandate, and accountability for the Agency

– Mandate letter (annual) and Memorandum of Understanding (five year)

– Infrastructure and Realty Directives

– Annual Letter of Direction

– Business Plan and Annual Report

– Internal and external audits, and Auditor General audit annual reports


Major Projects

Acts as procurement and commercial lead for all major public infrastructure projects in

the province

Real Estate

Modernizes and enhances the government real estate portfolio through asset planning,

facilities contract management, and real estate advisory services

Commercial Projects

Provides advice and negotiation support to the government and public sector partners

regarding commercial transactions, including major land developments

Loan Program

Supports the renewal of public sector infrastructure by delivering low-cost and

low-risk loans to eligible clients

Project Delivery Division Real Estate & Lending Division


Upfront planning

Empirical data and improved budgeting

Proper people resourcing

Integrating project elements

Avoiding design risk and encouraging innovation

Selecting good partners

Alignment of interests, negotiating leverage and counterparty “skin in the game”

Withholding payments in proportion to risk

Taking externalities into account

Taking a whole-life approach to projects


Since 2005, Infrastructure Ontario has been assigned nearly 90 Alternative Financing and Procurement (AFP) projects worth more than $40 billion

All AFP projects Number Capital cost

Completed 55 $18.34 billion

Under construction 20 $15.07 billion

Procurement/planning 14 $ 6.83 billion

Total 89 $40.24 billion

(as of June 30, 2016)


(as of June 30, 2016)

$14.45

$2.48

$10.07

$4.75

$1.66

AFP ProjectsCapital Cost ($ billions)

Health Care Justice

Transit Transportation

Other(Education, Sport, IT Delivery) (Education, Sport, IT Delivery)

4810

6

4

7

Number of AFP ProjectsCompleted or in Construction

Health Care Justice

Transit Transportation

Other


Third-party assessment of IO’s performance for the first 45 AFP projects to reach substantial completion

– 45 AFP projects had reached substantial completion by March 31, 2015, with an approximate capital value of $12 billion

– 98% were completed on budget (within the contract award plus post-contract contingency)

– 73% were completed on time or within one month of their scheduled completion date


IO recognizes that projects have different characteristics and requirements and has developed several AFP models:

– Build‐Finance (BF)

– Design‐Build‐Finance (DBF)

– Design‐Build‐Finance‐Maintain (DBFM)

– Design‐Build‐Finance‐Operate‐Maintain (DBFOM)

Flexibility ensures that all projects are successfully delivered

Best suited to projects with opportunity for risk transfer

Typically larger, more complex projects

Projects are often systems; project bundling has been used in rare exceptions

– IO has committed to inform industry partners when co‐sponsors have approval to implement a project as a bundle


Shareholder (government) commitment to AFP

Project assignment approach: clear commercial authority on transactions

Develop output specifications to achieve optimal risk allocation

Technical and financial due diligence is conducted in partnership with the AFP sponsor‐client, ensuring that the best team is selected

Clear, consistent timing from RFQ release to financial close

Continuity of IO involvement throughout procurement

Standardized documents and processes


IO works with clients to drive high quality design innovation through use of performance‐based output specifications

– AFP balances design‐technical merit and cost; in 80% of our projects, the winning team has both the highest ranking financial submission and one of the top two design‐technical scores.

Bidders can differentiate their bid proposals through innovative solutions that drive value, resulting in:

– Significant capital and life cycle cost savings

A whole life-cycle approach to design facilitates collaboration in design, construction, and maintenance, increasing opportunities for innovation

– Design innovations are increasingly evidence-based, resulting in improved productivity, operating performance, and customer satisfaction


Accelerated infrastructure spending– Commitment to infrastructure at all levels of government is an exciting opportunity –

but will create challenges (financial capacity; project oversight capabilities; supply of skilled trades)

Shift to linear infrastructure– Projects through urban environments have significantly different public interaction and

risk profile than other types of infrastructure– AFP can be used to manage these risks

Increasing project and partnering complexity– Larger and more complex projects result in more complex structures for both owners

(e.g., multiple funders) and project companies (e.g., multi-party DBJVs with asymmetric risks)

Authority

ContractorFacilities Management

Provider

Lender (s)Design Project Company

Design

Build Maintain

Finance

Lender’s DirectAgreement (LDA)

Project Agreement

Ongoing need to balance risk transfer and cost of financing

– Ongoing tension between creating fully aligned incentives and ensuring sufficient skin-in-the-game, while minimizing the cost of private financing


Local knowledge

Safety

Balancing the costs of financing with risk transfer

Vendor performance (such as improving on-time performance)

Ethical bidding practices / conflict of interest

Managing public disruption and community benefits


Nearly 5,000 buildings under management in 383 communities, Canada’s second largest real estate portfolio

– 44 million rentable square feet of owned and leased space

– $13.7 billion replacement value

– $652 million annual operation/maintenance expenditure

– $278 million annual capital reinvestment

– 130,000 acres of land under management

– $25 million in annual gross revenue from land and building sales transactions


1.22 million 3,600 15 9

Total rentable area in square feet; the complex is used as

government offices

Approximate number of OPS employees in the Macdonald

Block complex

Number of ministries located within the Macdonald Block

complex

Number of Ministers’ offices located within the Macdonald

Block complex

The Macdonald Block complex in downtown Toronto is the administrative centre of the Ontario government, accommodating 3,600 staff in 15 Ontario government ministries

– The initiative involves the extensive reconstruction of the Macdonald Block complex, which includes the Macdonald Block podium, and the Hearst, Hepburn, Mowat, and Ferguson towers

– This long-term project will take approximately eight years to complete


The Realty Transformation Strategy is a 10-year commitment to transform the way government manages its real estate holdings.

Office footprint reduction targets includes:

– reduction of 1 million square feet of office space in Toronto

– reduction of 300,000 square feet of office space outside of Toronto

Inside Toronto

Achieved In Progress

Outside Toronto

Achieved In Progress

(as of March 31, 2016)


Mandate and governance matter– Political will, policy direction, and centralized government expertise are essential– Project delivery capacity levels the playing field for government

Government/ProjectCos should hire construction/operations subject matter experts– At IO, 75% of employees have private sector experience in architecture, engineering,

law, finance, procurement, facility management, or communications

Public ownership and public interest

– Financing is not funding; confidence in budget commitments must be firm

Standardized approaches can drive competition and excellence– Technical, financial and budget due diligence must be done up front – Templates for procurements and contracts, and project pipeline matter to the market

Develop a project financing and delivery model that can be adapted– Flexible model can address different asset types and client needs


35 new or expanded health care facilities completed

13 health care projects under construction

Over 1,000,000 m2 of new health care space

Humber River Regional Hospital, Toronto550-650 in-patient beds

Receiving 450,000 ambulatory visits and 100,000 emergency visits in its first year

North America’s first fully digital hospital with 75% of supplies delivered via automation

Project Type: Design-Build-Finance-Maintain

Contract Price: $1.75 billion


10 justice projects completed, including courthouses and detention centres

18 Ontario Provincial Police facilities constructed across Ontario

300,000 m2 of new justice and public safety space

Waterloo Region CourthouseSpace for 30 courtrooms, including a multiple-accused high security courtroom

Eight judicial conference rooms

ProjectType: Design-Build-Finance-Maintain

Contract Price: $379 million


One educational project completed; one project in construction; one project in transaction

63,000 m2 of teaching, study, and administrative space

Humber College Learning Resource CommonsSix-storey, 24,000 m2 academic support and student services facility

Features a new library, group and independent study spaces, a centralized hub for student services, and a student gallery

ProjectType: Design-Build-Finance

Contract Price: $84 million


Two major highway projects completed; one project in construction; one project in pre-tender

20 provincial highway service centres redeveloped on Ontario’s principal highways

Rt. Hon. Herb Gray Parkway, Windsor11 km six-lane highway and four-lane service road

34,000 m2 of retaining walls; 14 bridge structures

11 covered tunnels from 120 m to 240 m long

Use of proven techniques to reduce noise levels




Air Rail Link completed linking Toronto’s Pearson Airport to Union Station

Two major Toronto Light Rapid Transit projects entering procurement or construction

Eglinton Crosstown LRT, TorontoIO is managing procurement; Metrolinx will oversee detailed design/construction

19 km corridor will include 25 stations and stops and a 10 km tunnel



Scheduled completion: 2021


IO was TO2015’s partner in delivering the largest, most complex facilities for the Pan/Parapan Am Games

IO partnered to build the Athletes’ Village and six sports facilities with a total value of $959 million:

– York University Stadium

– Hamilton Stadium

– Milton Velodrome

– Toronto Pan Am Sports Centre

– Markham Pan Am Centre

– University of Toronto Field Hockey Centre

Infrastructure Ontario - National Conference of State ......Air Rail Link completed linking...

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