REPORT TO: City of Toronto · · 2016-01-21REPORT TO: City of Toronto . REPORT FOR: F.G. Gardiner...

Attachment 1shy

AMERON CONSULTING INC Infrastructure Advisors

REPORT TO

City of Toronto

REPORT FOR

FG Gardiner Expressway Rehabilitation Project Peer Review of Methodology for Value For Money (VFM) Analysis

PREPARED BY

AMERON CONSULTING INC January 14 2016 | Unpublished Work copy 2016 Ameron Consulting Inc

AMERON

2016 January 14

City of Toronto ndash Corporate Finance Division

City Hall

5th Floor East Tower

100 Queen Street West

Toronto Ontario M5H 2N2

Sent by email jfaragtorontoca and rhattontorontoca

Attention Mr Joe Farag (cc Mr Rob Hatton)

Dear Mr Farag

Re FG Gardiner Expressway Rehabilitation Project

Peer Review of Methodology of Value for Money Analysis

The attached report is prepared and submitted in accordance with the terms of reference

(included in the attached report) for the above-referenced assignment

Please contact the undersigned should you have any questions or require further input

Yours truly

AMERON CONSULTING INC

Mehran Avini

City of Toronto FG Gardiner Expressway Rehabilitation Project VFM Peer Review Unpublished work copy 2016 Ameron Consulting Inc

CONTENTS

1 EXECUTIVE SUMMARY 1

2 BACKGROUND 2

3 REPORT OF FINDINGS 6

4 SUMMARY OF FINDINGS AND CONCLUSION 22

APPENDIX A ndash TERMS OF REFERENCE 23

APPENDIX B ndash REFERENCES MEETINGS CONTACTS AND DOCUMENTS 27


1 EXECUTIVE SUMMARY

The scope of this assignment is a peer review of Infrastructure Ontariorsquos (IOrsquos) Alternative

Financing and Procurement (AFP)1 Value for Money (VFM) methodology in comparison to

other jurisdictionsrsquo and a review of the application of IOrsquos VFM methodology to the FG

Gardiner Expressway Rehabilitation Project

The scope of this peer review does not include validating or analyzing the input data (such

as costs risks financial modelling etc) The review relies on the information provided

review of available material from other agencies and interviews with project contributors

and stakeholders

The City with the assistance of Infrastructure Ontario has applied Infrastructure Ontariorsquos

2015 updated Value for Money methodology to the FG Gardiner Expressway Rehabilitation

project which included Infrastructure Ontariorsquos updated risk methodology and criteria for

civil projects

Any Value for Money analysis including the one performed for FG Gardiner Expressway

Rehabilitation project is a quantitative analysis based on expert input and professional

judgement and reflects a snap-shot view of the project status and assumptions at the time

the analysis is performed Value for Money analyses consistent with IOrsquos practices are often

updated at various stages of a project

Infrastructure Ontariorsquos VFM methodology is in line with Canadian and international

practices and is perhaps one of the better publicized and documented practices in Canada

It as with practices elsewhere includes a number of inputs that are based on professional

judgement

Infrastructure Ontariorsquos Value for Money methodology including its updated Base Civil

Risk Matrix have been appropriately applied to the FG Gardiner Expressway project

IO engages third-party experts to provide input and perform analyses and benefits from its

experience and available data having implemented a number of Alternative Finance and

Procurement projects in recent years ndash more than any other agency in Canada

Should the project proceed as an AFP project it is suggested that the VFM analysis is

updated before a request for proposal for FG Gardiner Expressway project is issued or

sooner should substantive changes in scope or compelling new data become available

1 Alternative Financing and Procurement (AFP) is the term used by Infrastructure Ontario for public-

private partnership (PPP P3) procurement In this report the terms AFP PPP and P3 have the same

meaning

City of Toronto FG Gardiner Expressway Rehabilitation Project VFM Peer Review

Unpublished work copy 2016 Ameron Consulting Inc 1

2 BACKGROUND

21 VFM Peer Review Scope

City of Toronto Council directed staff to hire a qualified third-party to perform a peer review

of the Value for Money (VFM) Methodology and the analysis that has persuaded the City to

undertake the FG Gardiner Expressway Rehabilitation project (hereafter referred to as the

Expressway) under a public-private partnership methodology

Ameron Consulting Inc (Ameron) has been retained to provide this peer review Ameron is

an infrastructure advisory practice with over 20 years of experience providing senior level

technical expertise and business experience in publicly and privately-financed infrastructure

planning procurement operations and program management

The terms of reference for this peer review are included in Appendix A of this report The

scope of this peer review is summarized below

Commenting on Infrastructure Ontariorsquos VFM methodology in general and based on

practices elsewhere

Comment on the application of Infrastructure Ontariorsquos VFM methodology and its risk

matrix to the FG Gardiner Expressway Rehabilitation Project

The scope of this review does not include an analysis of input data and the project

assumptions such as technical costing schedule project-specific risks the financial model

possible scenarios etc ndash rather this report is based on a review of the available information

regarding Infrastructure Ontariorsquos VFM process and the application of the process to the

Expressway Ameron has reviewed some project working documents provided on a

confidential basis A list of publicly available documents reviewed and referred to herein is

included in Appendix B of this report



22 FG Gardiner Expressway Rehabilitation Project Status

A procurement analysis of the FG Gardiner Expressway Strategic Rehabilitation Plan has

been performed by the City with input from consultants and with the input and advisory

support of Ontario Infrastructure and Lands Corporation (IO) in accordance with the IO

methodology and the public-private partnership (PPP) assessment requirements of the

federal government through P3 Canada The outcome of a VFM analyis led by the City and

IO utilizing IOrsquos updated 2015 methodology reported that a Design-Build-Finance-Operate-

Maintain (DBFOM) and life-cycle maintenance procurement and implementation

methodology would result in lower costs considering the risks than procurement of the

same under conventional procurement (meaning design bid and then build with no private

sector financing or operations maintenance or long-term rehabilitation scope)

The Expressway is anticipated to have the following characteristics (figures and timelines are

estimates available at the time of this report ndash and are subject to change)

A DBFOM delivery model consisting of design construction private sector financing

plus a public agency construction Substantial Completion payment operations

maintenance and lifecycle rehabilitation

Estimated total construction period cost of approximately $25 billion and total

concession period cost of approximately $15 billion2

The project consists of rehabilitating existing infrastructure in a live traffic area and

will require innovative planning construction maintenance and lifecycle

rehabilitation approach Rehabilitation of 11 kilometers of at-grade highway and 7

kilometers of elevated highway and interchange upgrades The highway is generally

three lanes per direction with some collector lanes No lane reconfiguration or

widening of the elevated sections is anticipated For the at-grade section widening

from Kipling to Park Lawn and interchange reconfigurations at Islington and Kipling

are anticipated Rehabilitation of elevated structures is expected to consist of

essentially elevated deck replacement some pier repairs and no foundation work ndash

pending confirmation and based on further studies

2 The dollar amounts indicated are estimates based on publicly available information including a

reference in the IOrsquos September 16 2015 letter to City of Toronto titled ldquoProcurement Options Analysis

ndash Executive Summaryrdquo



During construction two lanes in each direction are anticipated to remain open to

traffic at all times ndash this requirement could be modified during project-specific

documentation preparation

Design lifecycle of the elevated structures will likely be 75 years ndash although a 125-year

design life is being considered

The Expressway was originally constructed between 1955 and 1964

Routine operations maintenance and rehabilitation is currently undertaken by the

City with some private sector contracting

Project procurement is expected in 2016-2017 construction is estimated to last 6 years

utilizing the AFP model and take place 2018-2023 and commencement of operations

in 2024 It is noted that the private sector consortium (the consortium for the designshy

build-finance-operate-maintain) will likely take over the Expressway operations and

maintenance during construction ndash although not yet specified by the City or IO

Concession period is 30 years after construction substantial completion takes place

The City will pay the private consortium a substantial completion lump-sum

payment (anticipated at 85 of the construction costs) and will subsequently pay the

consortium monthly availability payments upon commencement of operations (after

the construction substantial completion)

A market sounding exercise has been undertaken by IO based on the current

anticipated scope of the project which included consulting with potential private

sector participants such as contractors lenders engineers and others regarding the

Expresswayrsquos anticipated scope and deal structure

The City will remain the Expressway owner and lead the project IO will be retained

by the City to be the Commercial Procurement Lead through Financial Close and will

manage the procurement process utilizing IO staff and external advisors IOrsquos

procurement methodology documentation and performance-based specifications

P3 Canada has performed a preliminary screening of the Expressway considering it

suitable for the next stage of business case development (by the City) and further

review by P3 Canada for federal funding based on 125 under P3 Canada Fund and

125 under New Build Canada Fund for a total of 25 of the eligible construction

costs City of Toronto has prepared through assistance from IO and consultants

construction costing risk analysis market sounding and a financial model as inputs

for the Value for Money analysis

The current Value for Money analysis has indicated ldquohellipthat the City can save at least

16 or an estimated $500 million over the life of a 30 year rehabilitation and

maintenance contract as compared to the costs that would be expected under a

traditional procurementrdquo3

3 City of Toronto Executive Committee consideration (EX812) on September 21 2015



It is anticipated that the City will submit a formal funding application (a business

case) to P3 Canada in early 2016 The City and Infrastructure Ontario are expected to

hire technical and other advisors to better define the project and to prepare the

technical and procurement documentation

The City has prepared for the Expressway VFM analysis with input from the following

City of Toronto staff ndash engineering construction operations maintenance and lifecycle

scope definition risks and financing input

Infrastructure Ontario ndash process risks technical market sounding costing financing

and Value for Money analysis and input

P3 Canada ndash attended the risk workshop and provided input has reviewed some

background information and conducted a preliminary project screening for federal

funding and is currently reviewing the project

Hanscomb ndash cost consultant value engineering (with assistance from HDR) and risk

workshop input

HDR ndash value engineering sub-consultant facilitator (with Hanscomb) engineering

and construction expertise risk workshop input

Ernst and Young ndash financial consultant (developed the financial model based on input

and data from others) conducted the risk workshop and provided input

Other studies and ancillary reports have been referred to by the City and

Infrastructure Ontario such as IOrsquos Value for Money Analysis and risks analysis

methodology and various other reports

A list of entities interviewed and publicly available documentation provided by the City and

Infrastructure Ontario is in Appendix B of this report



3 REPORT OF FINDINGS

31 Background ndash Value for Money (VFM) Analysis

Value for Money (VFM) analysis as performed by public agencies in exploring and

optimizing procurement of infrastructure projects is a tool for comparing the risk-adjusted

costs of different procurement models In general alternative procurement options such as

design-build-finance design-build-finance-maintain etc are compared against each other

and against the conventional model (a traditional procurement of design by an engineer and

construction under a separate contract by a contractor and with no private sector financing

or operations and maintenance role) ndash often called a public-sector comparator (PSC) A major

component of comparing PSC cost to the alternative procurement cost is the assessment and

pricing of the project risks what is retained by the public sector and what is transferred to

the private sector throughout the life of a project culminating in a risk-adjusted cost

As with any VFM analysis the quality of input data and analysis will determine the quality

of the outcome

Across all jurisdictions based on a review of practices in Canada the US and internationally

a VFM analysis does include substantial professional judgement and input however in a

mature market such as in Ontario considering current experience in the field and the data

available from past projects any analysis and input should have adequate substantiating and

supportive documentation ndash such as construction operations maintenance and

rehabilitation costs procurement costs risks allocated discount rates and past PPP project

experience regrading operations maintenance and rehabilitation costing and the schedule

In comparing the Alternative Financing and Procurement (AFP) model with the traditional

Public Sector Comparator (PSC) procurement a project-specific risk-adjusted VFM is

calculated utilizing the formula

(Total PSC present value cost ndash Total AFP present value cost) (Total PSC present value cost)

= Value for Money (stated as a percentage of the Total PSC present value cost)

A positive VFM indicates that the selected AFP option provides a better value over the

traditional procurement reflecting that the total risk-adjusted cost of the traditional

procurement is higher than the risk-adjusted cost of the selected AFP model

There is no ldquoindustryrdquo bench mark used by agencies that indicates what a positive VFM

range of values should be in order to consider a project viable as an AFP as any positive

VFM indicates a benefit of AFP procurement option over the traditional procurement

The outcome of a quantitative VFM analysis will vary based on the underlying subjective

assumptions ndash but the analysis can generally be substantiated based on the quality of the

inputs and expert opinion and any relevant historical data available

VFM analyses practiced by various agencies in Canada and internationally in concept include

the following input and process

Base Costs ndash Construction operations maintenance and lifecycle rehabilitation



Financing Costs ndash Costs of borrowing and financing

Risks (retained by owner and transferred to the private sector consortium) ndash A risk

analysis allocation of risks probability analysis and costing of the risks

Ancillary Costs ndash Costs associated with planning management and procurement

Analysis ndash Development of a financial model to analyze the above and conduct a

quantitative assessment of the alternative procurement model(s) against a traditional

procurement public sector comparator and presenting the VFM for the project

(comparing traditional model vs an AFP model)

Public agencies generally utilize the above-noted input to calculate VFM However there

are some differences in approach such as risk methodology development discount rate

application application of innovationefficiency factors and allocation of other factors (such

as insurance costs) In the following sections comparisons are made between IOrsquos VFM

methodology as applied to the Expressway and other agenciesrsquo practices

32 IO Methodology

Infrastructure Ontariorsquos AFP project assessment process includes a VFM analysis at various

stages of a project

Stage 1 ndash at the planning stage (current Expressway stage) and before issuing the project

request for proposal a positive VFM would indicate that a project would proceed as an

AFP (sometimes updated during the procurement should substantial changes occur)

Stage 2 ndash after a preferred bidder has been identified (and bid costs are available) and

before entering into a Project Agreement with the preferred proponent

Stage 3 ndash after the project procurement contract (Project Agreement) has been finalized

but not yet signed

IO like other agencies relies heavily on input from experts and past data and experience in

building up a VFM model and analysis

In 2015 IO updated its VFM analysis methodology which has better quantified allocation of

certain costs and efficiencies as well as refreshing its risk matrix analysis Significant changes

in IOrsquos refresh methodology as applied to the Expressway project include

Modified risk matrix ndash An updated risk matrix (components and valuations)

Introduction of an innovation factor and a lifecycle cost adjustment factor (as

discussed below)

Elimination of the Competitive Neutrality (application of an insurance cost to the

PSC) It is noted that some jurisdictions in Canada do apply this factor

Components of IO methodology VFM analysis include Base Cost Retained Risks Financing

Costs and Ancillary Costs which are consistent with practices elsewhere and as noted in the

previous section of this report



IOrsquos procurement process also includes utilizing as much as possible its template project

procurement documents (the request for proposal project agreement etc) but updating

them for each specific project such as the project-specific-output-specifications This step

will take place subsequent to the current VFM analysis ndash and after certain technical and legal

consultants are on board Referring to the above-noted stages it is expected that another

VFM analysis will take place before a request for proposal for the project is issued

The following sections comment of the specific terms of reference for the assignment with

elaboration on IOrsquos methodology and how it has been incorporated into the Expressway

VFM analysis

33 Commentary on IOrsquos VFM Methodology

ldquoComment on the methodology based on a review of IO VFM templates amp

supporting documentation scanning available studiescritiquesassessments of IO

methodology and conducting staff interviews

Compare the IO VFM methodology with methodologies employed by other

jurisdictions such as SaskBuilds Corporation Partnerships BC Alberta

Infrastructure US Federated (Federal) Highways PFI UK etc rdquo

In Canada the leading PPP (AFP) agencies are Infrastructure Ontario Partnerships British

Columbia (Partnerships BC ndash PBC) Alberta Infrastructure and P3 Canada (P3 Canada having

a project screening and review role as opposed to developing VFM analyses or implementing

projects) Other provinces and municipalities are generally in line with practices used by the

above-noted agencies or through consultants develop minor variations to the above

Various US states and the US Federal Highway Administration have developed and

published guidelines for PPP procurement ndash commenting on VFM analysis Internationally

there are agencies across the world (various US states UK Australia ndash to name a few

amongst many) that routinely screen and procure projects utilizing the PPP model Also the

PPP model is considered by International Funding Institutions (IFIs) such as the World Bank

and the Asian Development Bank ndash amongst others ndash for some of the projects they fund A

list of the background documents reviewed in preparation of this report is outlined in

Appendix B

In the Canadian market IO and Partnerships BC are the most experienced and published

agencies in regards to VFM analysis procedures ndash and respectively have implemented the

largest number of PPP projects No PPP project in Canada has achieved its end-of-term

meaning the end of the typically 30-year (or so) term of the PPP project contract with the

public agency However there are a number of PPP projects in operation including many

highways

Various international agencies acknowledge that a PPP procurement model may be

applicable even though a routine VFM analysis may not indicate that the PPP project has an

initial positive VFM This practice is mostly associated with developing markets where a

project may not be possible at all except through PPP procurement for a variety of political

(transparency commitment etc) practical (local capability quick delivery timeline a



window of opportunity etc) or funding reasons This generally would not be applicable to

projects in the developed markets such as Canada ndash and particularly to Ontario In Ontario

any project considered for AFP delivery would likely show on its own merit a positive VFM

As Ontario British Columbia Alberta Saskatchewan and Quebec are the provinces that have

delivered the majority of PPP procurements across Canada each has developed an approach

to VFM assessment The VFM methodologies of Partnerships BC Alberta Infrastructure

SaskBuilds and Socieacuteteacute queacutebeacutecoise des infrastructures (Quebec) are therefore compared with

the IO approach Comments are also provided with respect to international practices and

discussion with P3 Canada

British Columbia

As with the IO approach Partnerships BC undertakes a risk quantification exercise with risk

workshops and a Monte Carlo (statistical simulation) analysis to value project risks priced

from the perspective of the owner The principal difference from the IO methodology is the

approach to the discount rate and corresponding philosophy on risk quantification

Partnerships BC uses a cost of capital (more precisely the project Internal Rate of Return ndash

IRR) as the discount rate to undertake VFM assessments Each project uses a unique

discount rate to reflect the overall risks of the project

The Partnerships BC approach to risk begins with the premise that the risk quantification

only accounts for identifiable project specific risks and therefore using a risk-free discount

rate is therefore not considered to be appropriate This difference in theoretical justification is

a key differentiator between the IO and Partnerships BC approaches the IO approach asserts

that it is possible to fully address all risks in a separate risk quantification whereas the

Partnerships BCrsquos opinion is that this is not possible and consequently a risk-adjusted

discount rate is required in addition to the risk quantification A higher discount rate leads

to higher VFM in favour of the AFM model IOrsquos approach is pricing all project risks

through the risk quantification exercise and the Partnerships BCrsquos approach is addressing

part of the risk within the discount rate

Partnerships BC also discusses efficiencies in project costs under PPP procurement however

it does not quantify what those should be and addresses them on a project-by-project basis

Alberta

Alberta Infrastructurersquos approach has many similarities with the IO approach

It adopts a risk-free discount rate (approximated by the rate the Alberta government

will be required to pay for debt with a similar structure term and payment stream)

with risks separately quantified through risk workshops and statistical simulation

It has produced standardized risk matrix templates with a similar number of risks ndash

albeit with a different breakdown of risks

It implements efficiency factors to the base costs to reflect the perceived benefits of

competition design integration and innovation under a PPP model



The primary difference is that Alberta Infrastructure adds the quantified value of both the

retained risks and the transferred risks to the cost of the PSC and PPP IOrsquos approach

allocates the transferred risks as included in the cost consultantrsquos base costs for the project

Socieacuteteacute queacutebeacutecoise des infrastructures (Quebec Infrastructure)

Historically VFM assessments were undertaken according to the Politique-cadre sur la

gouvernance des grands projets drsquoinfrastructure publique (Framework Policy for the

Governance of Major Public Infrastructure Projects) Under this approach VFM assessments

were conducted in a similar manner to those in Ontario using PSC and AFP financial models

and a risk identification and quantification approach with Monte Carlo simulations

conducted to generate risk-adjusted cashflows for each procurement model The resulting

cashflows were discounted and compared to identify whether the PPP model offered value

for money Key features included

A long term (10 year provincial bond) historical and real risk-free discount rate but

with the addition of a prospective inflation premium (65 commonly used)

Risks retained by the owner under each procurement model were separately

quantified and added to the cost of the PSC and PPP models

Risks transferred to the private sector under each procurement model were

separately quantified and 50 of the quantified risks added to the PSC and PPP

models

Efficiency factors were sometimes applied to the base costs of the PPP

Quebec Infrastructure recently changed this approach under the Directive sur la gestion des

projets majeurs dinfrastructure publique (Directive on the Management of Major Public

Infrastructure) This removes the requirement for VFM analyses to be conducted during the

business case stage and projects will now typically be procured using traditional

procurement models PPP projects may still be permissible if there is a will from the owner

to go ahead with a PPP or any other form of alternative procurement but justification will be

required at business case stage to deviate from the lsquoDirectiversquo approach

Saskatchewan

In addition to the agencies listed above SaskBuilds has recently procured PPP projects As

part of this process SaskBuilds has experimented with the VFM methodologies of IO

Partnerships BC and Alberta Infrastructure More recently SaskBuilds has started to develop

its own approach to VFM assessments and published its ldquoPublic-Private Partnership ndash

Project Assessment and Procurement Guiderdquo in May 2014 This document is tailored

primarily on the Alberta Infrastructure methodology ndash with certain modifications ndash and sets

out its approach for VFM assessments highlighting key features such as the use of the

Government of Saskatchewanrsquos cost of debt as the discount rate with project risks assessed

separately as part of a risk quantification exercise Other salient features of the SaskBuilds

approach include adding the risk retained by the Owner to the cost of both the PSC and PPP

models and competitive neutrality adjustments for tax and insurance



United Kingdom

The UK is considered the most mature PPP market having first implemented the PPP

procurement model in the early 1990s and with many signed PPP contracts across multiple

sectors Its approach to VFM assessments has gone through several changes over this period

Historically the UK undertook a VFM assessment for every new project Initially this

required the development of PSC and shadow bid models but due to the cost associated

with the analysis and potential data limitations this was replaced with a simplified

spreadsheet issued by HM Treasury This spreadsheet was accompanied by standardized

guidance and a user guide to assist public sector authorities with developing a qualitative

and quantitative VFM assessment However this guidance was removed from the HM

Treasury website in December 2012 with no subsequent guidance issued to date The UK it

appears has therefore moved away from the formal requirement of VFM assessments for

new projects with procuring authorities instead being advised to ldquocontinue to undertake

appropriate quantitative assessment in accordance with the principles set out in the Green

Book (HM Treasury guidance) supported by in depth consideration of the qualitative factors

that influence the choice of contracting routerdquo It is speculated that instead it is left to

individual government departments to assess the merits of alternative procurement models

on a project-by-project basis

Australia

Australia like the UK and Canada is another mature PPP market with a range of closed PPP

projects across the country A PSC is developed for all new projects during the business case

stage to provide a whole life cost for the project and assist with budgetary approvals The

PSC is developed with reference to past projects ndash allowing for any expected efficiencies or

cost increases to be accounted for within the PSC It includes base costs retained risk

transferred risk and competitive neutrality adjustments However no shadow bid model is

developed at this stage Instead value for money is assessed by comparing the PSC to actual

bids when received at the Request for Proposals (RFP) stage Risks retained by the Owner are

added to the cost of the RFP bids to allow a like-for-like comparison with the PSC The

approach to discounting is unique amongst the comparators discussed in that it is common

for the PSC and RFP bids to be discounted using different discount rates The PSC is

discounted at a risk free rate However if systematic risk is transferred under the PPP Project

Agreement then a risk premium is added to the risk free rate to generate a PPP discount rate

that reflects the transfer of this systematic risk This will often result in the PPP discount rate

being higher than the PSC discount rate PPP discount rates therefore are derived for each

project In addition multiple PPP discount rates may be needed for a single project should

the level of systematic risk accepted by each bidder differ

United States

The US has historically relied on traditional procurement to deliver new infrastructure More

recently there has been an increasing recognition of the potential benefits of the whole life-

cycle approach of the PPP model and an increasing use of the model both federally and at

state level Over 30 states have now adopted P3-enabling legislation and some PPP projects



have achieved financial close across a range of states including Florida Indiana Colorado

Virginia and Texas While there has not been a consistent approach to VFM assessments

across the US there has been progress towards issuing guidance and resources in an attempt

to standardize the delivery of PPP projects This has been seen both at the state level with

states such as Virginia and Florida issuing publicly available resources and at the federal

level with the Federal Highway Administration (FHWA) launching a P3-VALUE toolkit in

2013 ndash including a proposed approach to VFM assessments With growing appetite for

encouraging private investment into infrastructure this trend towards increasing guidance

and standardization can be expected to continue

P3 Canada

P3 Canadarsquos role is generally to review applications submitted to it for federal funding

participation

In preparation for this report P3 Canada was contacted to discuss the project and their views

on various VFM methodologies and practices P3 Canada is well aware of practices across

Canada and Infrastructure Ontariorsquos VFM methodology and its application to the

Expressway

In particular to the Expressway P3 Canada has been monitoring the project and interacting

with the City and Infrastructure Ontario including with regards to the application of the

discount rate risks innovation factor lifecycle costing and the substantial completion

payment to the Expressway P3 Canada is currently reviewing the project and this review

will continue through to evaluation of Cityrsquos formal funding application (business case) in

2016

In summary Infrastructure Ontario has an established VFM methodology that has been

updated recently and is well published and is now being utilized Provincial PPP AFP

agencies develop and utilize their own VFM and procurement methodologies and apply

them based on their experiences and professional input on a project-by-project basis IOrsquos

AFP procurement including its VFM methodology is well published and is based on a large

number of AFP projects implemented

34 Commentary on Application of IOrsquos VFM Analysis and Risk Matrix to FG


ldquoReview the VFM Analysis and Risk Matrix for the Gardiner Project to determine

o Was the IO-VFM methodology applied to the Gardiner Project appropriately

o Was the process for amending the Base Civil Risk Matrix to reflect the risks on

the Gardiner project reasonable ldquo

341 Project-Specific Input

Interviews with City of Toronto staff Infrastructure Ontario staff project consultants as well

as review of available information indicate the following



IO has provided substantial amount of information through meetings

documentation and workshops regarding IOrsquos VFM methodology including its 2015

VFM methodology update and subsequent to Ontario Auditor Generalrsquos 2014 report

on IOrsquos procurement

City of Toronto staff have also informed themselves of PPP practices elsewhere by

undertaking some research on the subject as indicated during discussions and

interviews

The team of advisors assembled complemented with the City and Infrastructure

Ontario staff collectively have adequate expertise in their respective areas (PPP

implementation engineering construction costing project-specific risks

identification highway operations and maintenance utilities finance) and are able to

provide reasonable judgement regarding the VFM analysis and the input data

The City technical staff having maintained and operated the Expressway for some

time have first-hand knowledge of the highway condition traffic operations

maintenance past rehabilitation and the options and time requirements for

rehabilitating the Expressway through traditional procurement (separate contracts

durations traffic impacts continual funding available for lifecycle rehabilitation etc)

They have expressed that their views and comments have been generally

incorporated into the VFM analysis and have had active participation in various

workshops with IO and the consultants

The Expressway is being considered after recent updates in 2015 to Infrastructure

Ontariorsquos VFM analysis and fresh reports from independent consultants on IOrsquos risk

matrix and certain assumptions regarding costing (the innovation factor) operations

and maintenance and asset residual value (discussed later in this report)

The Expressway would be implemented following three somewhat recent IO

highway AFP projects (Herb Gray [Windsor Essex] Parkway Highway 407 East

Phase 1 and Highway 407 East Phase 2) which has provided IO with updated data

on highway costing (from actual bids)

The Expressway is a ldquobrownfieldrdquo operating highway which includes existing

infrastructure (such as elevated sectionsrsquo foundation and substructure) that will likely

be retained This generally indicates elevated risk for any project but it is not

unusual as similar projects have been undertaken elsewhere such as in Alberta and

elsewhere and this is well recognized through specialized consultants and reflected

in the risk analysis and the feedback from the industry market sounding report

Infrastructure Ontariorsquos Project Agreement (project procurement documentation and

the project-specific-output-specifications) are well known to the industry and

Infrastructure Ontario and the City should be able to adapt the existing format to

meet the Expressway requirements It is noted that specialist advisors will be hired

to assist with the development of performance and procurement documentation for

the Expressway



There is appetite in the industry (contracting private sector sponsors lenders and

operators) for supporting the Expressway (as reflected in the market sounding report)

ndash this indicates that industry competitiveness will likely be in play during bidding for

the Expressway

342 IO Methodology Application to the Expressway

Considering the main inputs for the VFM analysis (AFP model project scope costs risks

application of an appropriate discount rate and financial modelling) each item is reviewed

and addressed below

(a) PSC and AFP Model Considerations ndash For the Expressway the PSC model has been

compared to the Design-Build-Finance-Operate-Maintain (DBFOM)4 AFP model

Generally for highway projects AFP options could include Design-Build-Finance (DBF

excluding operations and maintenance) Design-Build-Finance-Maintain (DBFM no

operations) It is recognized that tolling is not an option under consideration for the

Expressway Based on our review of the project scope characteristics and assumptions

and discussions with key participants (City IO and the project consultants) and review

of projects of similar characteristics in Canada and the US (Ontario British Columbia

Alberta Manitoba Indiana Virginia ndash as an example) it is reasonable to consider a

DBFOM as a viable option for the Expressway as opposed to DBFM or DBF The

reasons are as follows

i) Optimization of risk transfer between the public and private sectors

ii) Enabling the private sector to become creative in the design considering

maintenance operations and lifecycle rehabilitation (over the anticipated 30shy

year term of the project) ndash in effect bringing a team that combines engineering

construction finance operations maintenance and management expertise

iii) The incremental cost of DBFOM vs DBFM (excluding operations) is likely

negligible if contracted separately ndash and coordinating between DBFM contractor

and a separate operator is inefficient and open to unclear stranded risks

Consistent with practices elsewhere generally a VFM analysis considers a selected AFP

option against the PSC In advance of this exercise consideration is given to alternative

AFP options such as DBFM and DBF and a decision is made regarding which AFP

model may be best suitable for the specific project

The City may wish to consider comparing a DBF model with the current DBFOM approach

however under current scope and financial assumptions it is unlikely that this exercise would

change the AFP procurement option to anything other than DBFOM

(b) Costing ndash Base costs for a project include design and construction maintenance

operations and lifecycle rehabilitation To these are added financing costs risks and

4 Infrastructure Ontario literature references to DBFM imply to also include ldquooperationsrdquo ndash which is

the same as DBFOM as called by P3 Canada



ancillary costs An independent cost estimate was prepared by Hanscomb5 based on the

Strategic Plan for the Rehabilitation of FG Gardiner Expressway and as updated

following the Value Engineering Study of December 2014 and with input from the City

IO and HDR Hanscombrsquos cost estimate is a Class C estimate forming part of the total

project cost (with limits from Highway 427 to Jarvis Street) It is noted that for

approximately the most eastern 2 kilometers of the Expressway (from Jarvis Street to

Don Valley Parkway) a Class D cost estimate performed by Dillon Consulting6 was

incorporated and added to Hanscombrsquos costing for incorporation into the VFM analysis

and the Financial Model7 A Class C cost estimate has generally an accuracy of +-15

and a Class D cost estimate has an accuracy of +-20 At this stage of the project

utilizing a Class C or D cost estimate is appropriate and customary It is noted that the

Hanscombrsquos scope for preparing the cost estimate was to follow P3 Canadarsquos Schematic

Design Estimate Guideline The cost estimate allows for certain design and construction

contingencies

Hanscomb has also prepared an estimate for the costs of operations maintenance and

lifecycle rehabilitation during the operations period IO has reviewed this costing and

has applied the cost history data that they have accumulated over the years on highway

projects and have adjusted this cost to best suit the available information This costing

has been reviewed by the consultants and City staff who have experience in F G

Gardiner Expressway operations maintenance and lifecycle rehabilitation

It is prudent as also acknowledged by IO8 to update the Class D construction cost estimate to

Class C Also as the City is currently gathering further site information (geotechnical etc) it is

prudent that the construction maintenance operations and lifecycle rehabilitation costs are also

revisited The consultants once the project scope is better defined should also verify the project

schedule and the spend curve (what monies will be spent when during the construction and

during operations phase for rehabilitation) during the next VFM analysis The impact of

changes if any on the VFM analysis is not expected to be substantial enough to greatly change

the VFM outcome ndash especially since the same base construction cost is used for the AFP and the

PSC procurement models

(c) Innovation Factor ndash Infrastructure Ontariorsquos past experience has shown that the base

construction costs (before risk adjustment) under traditional PSC procurement have

been generally higher than the same cost under an AFP procurement model (whether

DBF DBFM etc) AFP procurement is based on performance-based requirements (as

5 Hanscomb FG Gardiner Expressway Rehabilitation Project Class C Estimate Executive Summary Draft Report February 27 2015 6 Referred in various documentation as the cost estimate per the Environmental Assessment adopted by City Council on June 10 2015 The Class D cost estimate (eastern portion as defined above) is approximately 25 of the Class C cost estimate for the remaining sections of the Expressway 7 The cost estimate utilized in the EampY Financial Model dated May 29 2015 refers to a Hanscomb Cost Report dated May 7 2015 to which is added the Dillonrsquos Class D cost estimate 8 IOrsquos letter titled Procurement Options Analysis ndash Executive Summary dated September 16 2015 to City of Toronto



opposed to prescriptive design criteria utilized in traditional PSC procurement) which

can provide flexibility and opportunities for innovation in AFP project lifecyle design

construction maintenance and rehabilitation This is also alluded9 to in other

jurisdictions that there is some level of innovation when the private sector is fully

responsible for the design and construction of a project based on given performance

standards that they will have to meet For example Partnerships BC acknowledges this

as ldquoefficiencyrdquo and does take this into consideration however it is considered on a

project-by-project basis10

Both SaskBuilds11 and Alberta12 alludes to ldquoefficienciesrdquo and ldquoinnovationrdquo as

consideration when costing PSC and the AFP approaches but do not elaborate

regarding what they should be

Tracking recent transport (and other projects) have provided additional information in

this regard as reflected in MMM Grouprsquos Quantifying the Value of Innovation with AFP

Project (February 27 2015 letter report to IO) The net effect of adding an innovation

factor to the price of PSC is that it increases the PSC construction costs and therefore

increase the VFM in favour of the AFM model There is no scientific method in

evaluating what the innovation factor should be for a specific project ndash especially since

one is projecting what that number could be on a project that has not yet been bid ndash

except for relying on past bids on similar projects market data and expert opinion

which is what Infrastructure Ontario has done The IO methodology supported by

MMM Grouprsquos report allocates for DBFOM projects an innovation factor (MMM

suggests 10-15) An innovation factor utilized by IO is based on evaluating 3 recent

highway DBFOM projects and comparing the average of the three bids for each project

to the winning bid (lowest compliant ndash the lowest bid being a certain percentage lower

than the average bid)13 which resulted in an innovation factor of 12 selected for the

Expressway which is consistent with MMM Grouprsquos findings Discussions with P3

Canada have indicated that they are in agreement in concept with the application of an

innovation factor when evaluating VFM for the Expressway but they have not indicated

what this factor should be

9 This is acknowledged in various publications but not always well quantified (such as in a percentage

of costs) Reference is made to a paper titled The Value for Money Analysis A Guide for More

Effective PSC and PPP Evaluation which is undertaken by American University for US National

Council for Public-Private Partnerships and compares various VFM practices (and criticisms) in the

UK Australia Canada and the US (httpwwwncppporgwp-contentuploads201303PSshy

051012ValueForMoney-paperpdf) 10 Partnerships BC Methodology for Quantitative Procurement Options Analysis Discussion Paper

(Updated April 2014) 11 SaskBuilds Corporation Public-Private Partnership Project Assessment and Procurement Guideline

May 13 2014 12 Alberta P3 Framework and Guideline March 31 2011 13 For confidentiality reasons the actual percentage is not revealed However the author has been

presented with the data



Therefore the question is whether an innovation factor is applicable to the Expressway

project and if so what that innovation factor should be The Expressway being

proposed to be procured as a DBFOM would very likely benefit from some innovation

as experienced with other highway projects where such approach is likely to have

innovative design and construction Consideration of undertaking the project through

conventional methods as previously considered by the City indicated that it will have a

longer procurement and implementation timeframe and would be undertaken through

multiple contracts Considering the above application of an innovation factor is

reasonable the number used by IO is somewhat substantiated through past experience

and independent expert opinion Even application of a lower innovation factor would

still provide a positive VFM Please refer to further discussions regarding financial

modelling and updating the VFM analysis in the following sections

(d) Lifecycle Cost Adjustment (also referred to as Deferred Maintenance Factor) ndash

Infrastructure Ontariorsquos updated methodology implemented in 2015 takes into account

the fact that traditional procurement excludes committed and allocated costs for

maintenance and lifecycle rehabilitation of a project which are implied in any DBFOM

project Under traditional procurement model assets are generally more susceptible to

encounter lack of funding for timely maintenance therefore diminishing asset quality

and life It is also noted that under AFP procurement there are predetermined asset

performance criteria and minimum asset condition requirements during the operations

period and also for when the assets are handed back to the government at the end of the

contract term (in most cases a 30-year operations period) This would also ensure that

when the assets are handed back no substantial capital investments would be required

for some time Based on these assumptions the updated refresh IO model applies a 40

lifecycle adjustment factor to the PSC procurement cost in effect allocating only 60 of

the DBFOM lifecycle cost to the PSC costs when performing a VFM analysis IOrsquos

application is based on its evaluation of the Ontariorsquos General Real Estate Portfolio

(GREP) over the past decade and reviewing what was spent vs the required budget

indicating roughly 60 of the required capital investment has been spent and another

40 deferred

Partnerships BC also acknowledges that there is ldquoefficiencyrdquo and does take this into

consideration and applies a deduction in life cycle cost to the PSC model on a project-

by-project basis14 Alberta also refers to ldquoresidual costsrdquo however does not indicate how

it is addressed15

There is little published on how other agencies deal with this in detail but based on

general literature it is likely that this is considered when costing a PSC model vs a

DBFOM model

14 Partnerships BC Methodology for Quantitative Procurement Options Analysis Discussion Paper (Updated April 2014) 15 Alberta P3 Framework and Guideline March 31 2011



It is also possible to consider potentially different routine operations and maintenance

costs under AFP compared with a PSC The differences in favour of the AFP model or

the PSC model could be as a result of maintaining an isolated section of a highway

possibly higher performance standards under AFP than the current routine operations

and maintenance program scope of operations consideration for the lifecycle

management of assets when performing routine operations and maintenance etc

As a Lifecycle Cost Adjustment is applied to the Expressway VFM analysis comparing

the PSC to DBFOM procurement it is reasonable to assume that under traditional PSC

procurement some lifecycle maintenance would be deferred ndash as may be the experience

with the current Expressway condition It is not clear what the percentage should be

however the effect of reducing the PSC cost by applying a Lifecycle Adjustment would

be a lower VFM value for DBFOM procurement model the VFM would not be biased in

favour of DBFOM by applying the Lifecycle Adjustment Factor

(e) Risks ndash A main component of any VFM analysis as practiced internationally is the

assessment of project-specific risks and allocation of risks between the public sector and

the private sector ndash translated into dollar values that are used in the VFM financial

modelling Infrastructure Ontariorsquos risk model was developed in 2008 updated in 2011

and again updated in 2015 by MMM Group16 The 2015 updated risk matrix and

approach was applied to the Expressway Project risk assessments are universally based

on professional judgement and the quality is generally based on what is already known

about the project (background data such as geotechnical information rights of way

availability etc) and subject to expert input The methodology is that project risks are

assessed and allocated to the public sector to the private sector or noted as shared

probabilities and impact (10 typical and 90) of each risk item under AFM delivery

and under PSC is determined based on expert input and then a statistical analysis is

undertaken to assess the ranges of impact in dollar values (best case average and worst

case impacts) which in turn is used in the financial model ndash with the average impact

value from the statistical (Monte Carlo) analysis utilized as an input into the financial

model

Risk analysis approaches in various agencies (such as Partnerships BC and SaskBuilds

among others) are somewhat similar They include developing a risk register

identification of risks (based on expert input and past experience) allocation of a value

and probability of occurrence and a statistical model (Monte Carlo analysis)

Subsequently risks costs are allocated to the public sector private sector or designated

as shared

IOrsquos updated risk matrix considers various stages of the project planning design and

construction and maintenance and operations with each being further divide into

potential risk items The updated 2015 risk matrix has reduced the number of total risk

items from previous versions and has more clearly defined and categorized them The

16 MMM Group report titled Value for Money Civil Infrastructure Projects DBFM Highway Projects

Updated April 2015 and issued April 30 2015



updated 2015 risk matrix for highways as applied to the Expressway was prepared by a

team of experts who have had recent Ontario highway AFP experience and included

consulting with Ontario Ministry of Transportation (MTO) the construction and

engineering industries It is noted that the template risk matrix is customized for every

project which has been the case for the Expressway ndash meaning that risks can be added

or deleted and the probabilities and impacts updated based on project-specific input

Risk analysis is not an exact science and provides a snap-shot at the time of the

assessment and is based on experience and project knowledge of the experts analyzing

the risks It is noted that since each AFP project is generally unique past data can only

be utilized to some limited extend that forms the judgment of experts preparing the

project-specific risk matrix

In the Expressway risk analysis the dollar values of various risks are based on the

application of the probability and the impact of a particular risk item to the dollar value

impacted by that risk item And the risk items can impact the total project design and

construction operations and so forth This is consistent with the MMM Grouprsquos report

and IOrsquos basic risk matrix analysis Therefore the dollar value of a singular risk (and

therefor the cumulative value once all risks are added and then a statistical analysis is

performed) is also sensitive to the cost estimate provided for the applicable project item

In the Expressway risk matrix the net present values (such as the costs for the total

project design and construction operations etc) of the PSC model are utilized This

provides for further sensitivity if the project cost estimates are updated which is the case

for all projects and risk analyses and not particular to the Expressway

IOrsquos most current general Base Civil Risk Matrix17 which has been applied to the

Expressway has reduced the number of risks applicable to an AFP project from over 60

to 42 items This has been based on recent experience and feedback from IOrsquos

consultations and has resulted in streamlining certain risks For the Expressway IOrsquos

Base Civil Risk Matrix has been further modified based on expert input (determining the

applicable risk item its probability of occurrence and its impact should it occur)

resulting in a particular risk matrix for the Expressway and then distribution of risks

between the City (Retained Risks) the contractor (Transferred Risks) and shared

(Shared Risks) between the City and the contractor for the PSC and the AFP models

The dollar values from each procurement option are then added to the respective

procurement costs

The risk matrix is sensitive to the project procurement documents which set

performance standards and assign responsibility to various parties (City contractor

coordination with utilities etc) At the time the risk matrix for the VFM analysis has

been prepared the project-specific procurement documents for the Expressway have not

yet been developed Recognizing that the IO procurement template (RFP agreements

technical requirements etc) will be used and that IO staff participating in the VFM

17 Based on MMM Group report titled Value for Money Civil Infrastructure Projects DBFM Highway

Projects Updated April 2015 and issued April 30 2015



analysis have experience in highway AFP projects it is prudent to update the risk matrix

when the project technical legal and other consultants are on board ndash before the RFP is

issued ndash and better updated information regarding the status (technical permitting

scope etc) of the project is available This may result in shifting the responsibility for

some risks and also mitigating others before the project starts

It has not been the scope of this assignment to review the validity of the risks and the

probabilities and impacts of the risks assigned to the Expressway in the risk matrix

Even if it were that would have required participation in the risk workshops and

contribution as a member of the expert panel reviewing risks and building consensus

regarding the outcome as risk matrices are a result of consensus of the participants

within their areas of expertise The following provide our observations

IOrsquos 2015 Base Risk Matrix18 has been applied to the Expressway risk analysis

The Expressway risk matrix analysis has modified IOrsquos Base Civil Risk Matrix to

some extent for example further breaking down certain risks (such as latent defects)

and applying the relevant cost to them

The Expressway risk matrix utilized for the VFM analysis as with any risk matrix is

subject to the expert input provided at the time of the development of the matrix

The panel of experts who have provided input as discussed earlier collectively have

the expertise and have provided that expertise into the update of the risk matrix at

this stage of the project

The risk matrix ndash and its input into the VFM ndash will provide a more accurate reflection

of the project once a project is further developed and more information regarding the

project procurement documentation and background data is available

It is recommended that the risk matrix and analysis is updated before an RFP is issued which is

consistent with IO methodology

(f) Financial Model ndash A financial model has been prepared by Ernst amp Young based on the

information provided by the City and its consultants ndash such as the discount rate

construction operations and maintenance and lifecycle rehabilitation costing and

anticipated expenditures value of risks assigned a 85 substantial completion

payment duration of construction (6 years) a 30-year term for the operations and

maintenance and other factors

In addition to an estimation of the costs and when certain costs will occur an important

element of financial modelling is the application of a discount rate (discounting future

cash flows to present ndash net present cost) There is divergence amongst various agencies

as explained earlier in this report with IOrsquos methodology more in line with Alberta and

Saskatchewan19 in the application of discount rate SaskBuilds and Alberta use a

18 Based on MMM Group report titled Value for Money Civil Infrastructure Projects DBFM Highway Projects Updated April 2015 and issued April 30 2015 19 SaskBuilds Corporation Public-Private Partnership Project Assessment and Procurement Guideline May 3 2014



discount rate set by the provincial Ministry of Finance ndash and exclude the project risks ndash

similar to IO IOrsquos methodology relies on valuing project-specific risks separately and

not in the discount rate and the same discount rate is applied to the PSC as well as the

AFP model In the financial model the retained risk dollar values applied to the AFP

model and to the traditional PSC model are the average values of each

For the FG Gardiner Expressway the City provided a discount rate of 4 as their

anticipated cost of borrowing The financial model analysis reflects that a higher

discount rate results in a higher VFM value ndash as reflected in the sensitivity analysis to

various discount rates included in the financial model

As part of updates to the VFM the City should review the 4 discount rate used updating it as

may be appropriate and present the results in a range of sensitivity values with respect to the

rate and other inputs and assumptions



4 SUMMARY OF FINDINGS AND CONCLUSION

Infrastructure Ontariorsquos VFM Methodology is comparable to other mature jurisdictionsrsquo

general approach and has been updated in 2015 in response to external comments and

its recent project history data ndash including utilizing AFP for three highway projects in

recent years

IOrsquos VFM methodology and the background information provided is better published

than other jurisdictions in Canada and there is general confidence in the market that IO is

able to properly assess and deliver AFP projects in an efficient and transparent manner

with documentation that have been externally reviewed and commented on over the past

years

The IOrsquos 2015 VFM ldquorefreshrdquo methodology (post Auditor Generalrsquos 2014 report) has been

incorporated for the Expressway VFM analysis

The advisors (City IO and consultants) participating in the VFM analysis for the

Expressway have collectively project-specific (the Expressway) knowledge and the

experience necessary to have provided meaningful input into the VFM analysis

IO methodology for VFM analysis has been appropriately applied to the Expressway

however the following steps are recommended to be considered

The City to revisit the 4 discount rate used for the VFM analysis to confirm that this

is the current rate of borrowing for the City ndash it is recognized that rates vary from

time to time A lower discount rate would result in a lower VFM for the Expressway

It is noted that the current Financial Model has already considered as an option a

lower discount rate for the Expressway which still provides Value for Money for a

DBFOM procurement versus the tradition procurement

The City provides information regarding a Design-Build-Finance option and analysis

as such It is noted that for the Expressway it is highly unlikely that a DBF model

could be as beneficial as a DBFOM model under the current costs and financial

assumptions

The risk analysis and the costing (construction operations maintenance and lifecycle)

be updated once the technical advisors (retained to provide a more detailed

evaluation of the project in preparation for developing the request for proposal and

the project-specific performance requirements) are on board and the project scope has

been better defined This should ensure that the anticipated risks currently allocated

to the private sector are actually transferred and addressed in the project

procurement documentation ndash and therefor the costs of risks accounted for in the

VFM analysis This should take place before a request for proposal is issued

The VFM analysis is updated considering a sensitivity analysis to various inputs

(assumptions)



APPENDIX A ndash TERMS OF REFERENCE



ATTACHMENT

Peer Review of FG Gardiner Rehabilitation Project Value for Money Analysis Methodology

Scope of Work

Toronto City Council motion September 30 October 1 2 2015 Report entitled FG Gardiner Expressway Strategic Rehabilitation Plan Procurement Strategy

2 City Council authorize the Deputy City Manager Cluster B and the Deputy City Manager and Chief Financial Officer to proceed with an Alternative Financing and Procurement approach for the implementation of the Revised Strategic Plan including issuance of the RFP using a Design-Build-Finance-Operate-Maintain approach as described herein subject to the approval of Government of Canada funding of one-third of capital construction costs eligible for funding under the P3 Canada and Infrastructure Canada Programs and that City Council direct the Deputy City Manager and Chief Financial Officer to arrange for the completion of a peer review of the methodology of the Value For Money analysis conducted by a qualified third party and submit a report on the results to the December 1 2015 meeting of the Executive Committee

httpapptorontocatmmisviewAgendaItemHistorydoitem=2015EX812

Potential proponents who are being invited to bid for this peer review assignment are perceived (by City staff) to be unbiased in their views as to a preferred procurement delivery methodology for public sector infrastructure projects

Scope of Peer Review

The City of Toronto is seeking a qualified third-party to peer review the Infrastructure Ontario (IO) Value for Money (VFM) methodology and analysis which helped to inform the Citys decision to pursue an Alternative Financing and ProcurementPublic-Private-Partnership (P3) for the FG Gardiner Rehabilitation Project (Gardiner Project) The deliverable will be a report to the (Citys) Deputy City Manager amp Chief Financial Officer that will outline the analysis and key findings of the review

The successful proponent (individual or team) will demonstrate knowledge of P3 issues and practices including an understanding of VFM analysis

Going forward the successful proponent for this assignment may be considered to be not eligible to bid as part of a private P3 consortium for delivery of the Gardiner Project

The VFM methodology templates are comprised of

i) VFM Methodology- developed by IO ii) Base Civil Risk Matrix template - developed by MMM Group



1 General

bull Comment on the methodology based on a review of IO VFM templates amp supporting documentation scanning available studies critiquesassessments of IO methodology and conducting staff interviews bull Compare the IO VFM methodology with methodologies employed by other jurisdictions such as SaskBuilds Corporation Partnerships BC Alberta Infrastructure US Federated Highways PFI UK etc

2 Specific to the Gardiner Rehabilitation Project

Review the VFM Analysis and Risk Matrix for the Gardiner Project to determine bull Was the IO-VFM methodology applied to the Gardiner Project appropriately bull Was the process for amending the Base Civil Risk Matrix to reflect the risks on the Gardiner project reasonable

The outcome of the above-described scope of work will be reported to the (Citys) Deputy City Manager amp Chief Financial Officer The peer reviewer may also be requested by City staff to attend a meeting of the Citys Executive Committee to respond to questions on this reporting

Interview

As part of this exercise the peer reviewer should conduct interviews with

bull City staff from Corporate Finance and Engineering and Construction Services (participated in Gardiner Project exercise from outset) bull IO staff bull HDR- Value Engineering Facilitator bull Hanscomb- Cost Consultant bull Ernst amp Young- Financial Consultant

The peer reviewer may also wish to conduct interviews with

bull MMM in its capacity as Base Civil Risk Register developer bull P3 Canada staff bull Others as may be identified

Documentation to be provided will include

1 IO Documents



a) Publically available bull Assessing Value for Money An Updated Guide to Infrastructure Ontariorsquos Methodology (2015) and (original) Guide To Infrastructure Ontariorsquos Methodology (2007) bull Quantifying the Value of Innovation with AFP Project Delivery - MMM Group (2015) bull Assessment of Innovation through AFP Project Delivery ndash Altus Group (September 22 2015) bull Value for Money Civil Infrastructure Projects - MMM Group (2015) bull Auditor Generalrsquos Report on Infrastructure Ontariomdash Alternative Financing and Procurement including IO response to report bull IO Track Record III 2015 Hanscomb October 2015

b) Available on a Confidential basis

bull IO underlying empirical data which was used to validate VFM assumptions

2 Gardiner Project- Specific Documents- Available on a Confidential basis

bull VFM financial model and report bull Project-Specific Risk Register bull Ernst ampYoung Memo on Gardiner Risk Workshop (process and output) bull Market Sounding report

3 Third-party research and documents

bull Peer reviewer will want to research other AFPP3VFM publications City and IO staff will undertake to share other third-party research as they may have available



APPENDIX B ndash REFERENCES MEETINGS CONTACTS AND

DOCUMENTS



Activity Undertaking DateReference ActivityComments

Meetings and Contacts

M1 City of Toronto ndash Meetings telephone

conversations exchange of information

Robert Hatton PEng ndash Director Strategic

Initiatives amp Intergovernmental Finance

Karyn Spiegelman MBA ndash Senior Financial

Analyst

Frank Clarizio ndash Director Transportation

Infrastructure

Easton Gordon ndash Manager Bridges and

Structures

Nazzareno Capano PEng ndash Manager

Operational Planning and Policy

Transportation Services

Joanne Kehoe ndash Manager Purchasing and

Materials Management

Between

November 2015

and January 2016

Meetings with City staff and

telephone conversations

regrading various input data

and the project

Primary contacts have been

Robert Hatton and Karyn

Spiegelman

City staff provide project

background scope technical

risks and input regarding their

view of the project interactions

with Infrastructure Ontario and

their participation in the VFM

process

M2 Infrastructure Ontario ndash Meetings telephone

conversations exchange of data

Kalpesh Nansi ndash Director New Business

Divya Shah ndash Acting Senior Vice President

Transaction Finance

Vishen Maharaj ndash Manager Transaction

Finance

Kelvin Chu ndash Project Manager Civil

Infrastructure

Chris Gauer PEng ndash Executive Vice

President Civil Roads and Transit

Charl van Niekirk ndash Senior Vice President

Roads

Steve Rohacek ndash Senior Vice President

Municipal Business Development and

Lending

Between

November 2015

and January 2016

Meetings with Infrastructure

Ontario (IO) staff and


regrading IO processes

background information

various input data and the

project


Kalpesh Nansi and Divya Shah

IO staff provided project

background IO process

documentation consultant

contacts review and

discussions regarding the VFM

process

M3 Ernst and Young CFA ndash Meeting telephone


Edward Ng Senior Vice President

Transaction Advisory Services

December 2015 Discussions regarding the risk

analysis and workshop the

project financial model and

Ernst and Youngrsquos role

M4 HDR Inc ndash Meeting

Stephen Lipkus PEng Managing Director

December 2015 Discussions regarding the

project technical aspects risks

and value engineering

M5 Hanscomb ndash Telephone conversation

Art Maw President


project costing and risks

M6 MMM Group ndash Meeting

Bob Narin PEng

December 2015 Discussions regarding MMMrsquos

reports for IO risks and VFM



M7 P3 Canada ndash Telephone conversation and

email exchanges with Mr Robert Mackay

December 2015

January 2016

Discussions regarding P3

Canadarsquos role their

participation in the project and

the risk workshop

Input regarding their views on

the Expressway IO

methodology and VFM

practices in other jurisdictions

in Canada

Project-Specific and Relevant IO City Documentation

PS1 Assessment of Innovation Through AFP

Project Delivery ndash Altus Group

2015-Septembershy

22

Public document

PS2 Auditor Generalrsquos Report on Infrastructure

Ontariorsquos Alternative Financing and

Procurement (including IOrsquos response) ndash

Infrastructure Ontario ndash Alternative

Financing and Procurement

2014 (Annual

Report of the

Office of the

Auditor General

of Ontario ndash

Chapter 3 Section

305)

Public document

PS3 Assessing Value for Money ndash A Guide to

Infrastructure Ontariorsquos Methodology

(original IO Value for Money analysis)

2007 Public document

PS4 Infrastructure Ontario Track Record 2015

Report - Hanscomb


PS5 Quantifying the Value of Innovation with

PPP project Delivery ndash MMM Group

2015-February-27

(letter with an

attachment)

Public document

PS6 Value for Money Civil Infrastructure

Projects (Base Template Civil Risk Matrix)

2015-April-30 Public document

PS7 Confidential information regarding

Procurement Options Analysis

VFM financial modelling

Project-specific risks

Risk-related workshops

Market sounding

Costing

VFM analysis

PS8 Various ndash Various URL links to City of

Toronto staff reports and council meetings

General Industry Information (Regarding PPP AFP and VFM)

G1 Partnerships BC ndash Methodology for

Quantitative Procurement Options Analysis

Discussion Paper

2014-April PBC website



G2 Alberta Infrastructure ndash Introduction to

Albertarsquos Public-Private Partnership

Framework and Guideline

2011 Website and various references

therein (see below for a partial

list)

G3 SaskBuilds ndash Public Private Partnership

Project Assessment and Procurement

Guideline

2014-May-13 Website and various references

therein

G4 P3 Canada Various Website and various references


list)

G5 HM Treasury ndash VFM Assessment Guide 2006

G6 HM Treasury ndash Quantitative Assessment 2011

G7 US Department of Transportation (DoT)

Federal Highway Administration ndash P3 Value

Orientation Guide

2012

G8 CD Howe Institute ndash The Valuation of Public

Projects Risks Cost of Financing and Cost of

Capital

2013-September

G9 Center for Policy Alternatives ndash Cautionary

Lessons About P3s From British Columbia

2006-June

G10 Ivey ndash Lawrence National Centre for Policy

and Management ndash The Procurement of

Public Infrastructure Comparing P3 and

Traditional Approaches

2015 Follows 2014 Auditor General

of Ontariorsquos report on Ontario

P3 (AFP) procurement report

and comments on that report

G11 Deloitte ndash Trending P3 The evolving role of

value-for-money analysis in supporting

project delivery selection

2015-March-13

G12 US DoT Federal Highway Administration

Innovative Project Delivery ndash Value for

Money Analysis for Public-Private

Partnerships (P3s)

2013 P3 Toolkit

G13 OECD Journal on Budgeting (2011) ndash How to

Attain Value for Money Comparing PPP and

Traditional Infrastructure Public

Procurement

2011

G14 P3 Canada ndash Identifying P3 Potential A

Guide for Federal Departments and Agencies

P3 Canada website

G15 P3 Canada ndash Business Case Development

Guide

P3 Canada website

G16 P3 Canada ndash Procurement Options Analysis

Guide

P3 Canada website

G17 Conference Board of Canada ndash A Pan-

Canadian Assessment of Public-Private

Partnerships for Infrastructure Investments

2010- January

G18 Conference Board of Canada ndash Delivering

Value through Public-Private Partnerships at

Home and Abroad

2013-August




Innovative Project Delivery ndash Guidebook for

Value for Money Assessment

2013-December

G20 World Bank ndash Value for Money Analysis ndash

Practices and Challenges

2013-May-28 ldquoHow Governments Choose to

Use PPP to Deliver Public

Infrastructure and Servicesrdquo A

report based on input form

practitioners from across the

world including from Canada

and the US

G21 American University (US) ndash The value for

Money Analysis A Guide for More Effective

PSC and PPP Evaluation

Circa 2012-2015 A report prepared for the US

National Council on Public-

Private Partnerships Evaluates

and comments on various

practices and commentary (for

and against) from the Canada

Australia the UK the US and

elsewhere It includes an

annotated bibliography

referring to various other

international studies and

practices

G22 Other ndash

Reports on PPP projects and the value for money analyses as published by agencies consultants and

institutions

Review of various websites

Discussions with practitioners in engineering contracting finance and traditional procurement

models



AMERON

2016 January 14

City of Toronto ndash Corporate Finance Division

City Hall

5th Floor East Tower

100 Queen Street West

Toronto Ontario M5H 2N2

Sent by email jfaragtorontoca and rhattontorontoca

Attention Mr Joe Farag (cc Mr Rob Hatton)

Dear Mr Farag

Re FG Gardiner Expressway Rehabilitation Project

Peer Review of Methodology of Value for Money Analysis

The attached report is prepared and submitted in accordance with the terms of reference

(included in the attached report) for the above-referenced assignment

Please contact the undersigned should you have any questions or require further input

Yours truly

AMERON CONSULTING INC

Mehran Avini


CONTENTS


2 BACKGROUND 2






1 EXECUTIVE SUMMARY








and stakeholders




civil projects









judgement











meaning



2 BACKGROUND













practices elsewhere


































































































workshop input

























of the outcome








































32 IO Methodology


stages of a project







but not yet signed








discussed below)
















VFM analysis




















Appendix B






highways

















British Columbia




















Alberta





























models









Saskatchewan














United Kingdom


















Australia


















United States
















P3 Canada


participation




Expressway






2016
























interviews

































the Expressway






the Expressway




and addressed below














































contingencies




























































































40 deferred




it is addressed15



DBFOM model
































model






as shared









































procurement costs




































































recent years





years

















assumptions










(assumptions)






ATTACHMENT


Scope of Work













1 General





Interview






1 IO Documents













DOCUMENTS










Analyst


Infrastructure


Structures






Between

November 2015

and January 2016




and the project



Spiegelman







process





Transaction Finance


Finance


Infrastructure




Roads



Lending

Between

November 2015

and January 2016







project






contacts review and


process















Art Maw President




Bob Narin PEng







December 2015

January 2016




the risk workshop


the Expressway IO

methodology and VFM


in Canada




2015-Septembershy

22

Public document






2014 (Annual

Report of the

Office of the

Auditor General

of Ontario ndash

Chapter 3 Section

305)

Public document






Report - Hanscomb




2015-February-27

(letter with an

attachment)

Public document









Market sounding

Costing

VFM analysis






Discussion Paper









list)



Guideline


therein



list)





Orientation Guide

2012



Capital

2013-September



2006-June












2015-March-13




Partnerships (P3s)

2013 P3 Toolkit




Procurement

2011



P3 Canada website


Guide

P3 Canada website


Guide

P3 Canada website




2010- January



Home and Abroad

2013-August






2013-December









and the US















practices

G22 Other ndash


institutions



models



CONTENTS


2 BACKGROUND 2






1 EXECUTIVE SUMMARY








and stakeholders




civil projects









judgement











meaning



2 BACKGROUND













practices elsewhere


































































































workshop input

























of the outcome








































32 IO Methodology


stages of a project







but not yet signed








discussed below)
















VFM analysis




















Appendix B






highways

















British Columbia




















Alberta





























models









Saskatchewan














United Kingdom


















Australia


















United States
















P3 Canada


participation




Expressway






2016
























interviews

































the Expressway






the Expressway




and addressed below














































contingencies




























































































40 deferred




it is addressed15



DBFOM model
































model






as shared









































procurement costs




































































recent years





years

















assumptions










(assumptions)






ATTACHMENT


Scope of Work













1 General





Interview






1 IO Documents













DOCUMENTS










Analyst


Infrastructure


Structures






Between

November 2015

and January 2016




and the project



Spiegelman







process





Transaction Finance


Finance


Infrastructure




Roads



Lending

Between

November 2015

and January 2016







project






contacts review and


process















Art Maw President




Bob Narin PEng







December 2015

January 2016




the risk workshop


the Expressway IO

methodology and VFM


in Canada




2015-Septembershy

22

Public document






2014 (Annual

Report of the

Office of the

Auditor General

of Ontario ndash

Chapter 3 Section

305)

Public document






Report - Hanscomb




2015-February-27

(letter with an

attachment)

Public document









Market sounding

Costing

VFM analysis






Discussion Paper









list)



Guideline


therein



list)





Orientation Guide

2012



Capital

2013-September



2006-June












2015-March-13




Partnerships (P3s)

2013 P3 Toolkit




Procurement

2011



P3 Canada website


Guide

P3 Canada website


Guide

P3 Canada website




2010- January



Home and Abroad

2013-August






2013-December









and the US















practices

G22 Other ndash


institutions



models



1 EXECUTIVE SUMMARY








and stakeholders




civil projects









judgement











meaning



2 BACKGROUND













practices elsewhere


































































































workshop input

























of the outcome








































32 IO Methodology


stages of a project







but not yet signed








discussed below)
















VFM analysis




















Appendix B






highways

















British Columbia




















Alberta





























models









Saskatchewan














United Kingdom


















Australia


















United States
















P3 Canada


participation




Expressway






2016
























interviews

































the Expressway






the Expressway




and addressed below














































contingencies




























































































40 deferred




it is addressed15



DBFOM model
































model






as shared









































procurement costs




































































recent years





years

















assumptions










(assumptions)






ATTACHMENT


Scope of Work













1 General





Interview






1 IO Documents













DOCUMENTS










Analyst


Infrastructure


Structures






Between

November 2015

and January 2016




and the project



Spiegelman







process





Transaction Finance


Finance


Infrastructure




Roads



Lending

Between

November 2015

and January 2016







project






contacts review and


process















Art Maw President




Bob Narin PEng







December 2015

January 2016




the risk workshop


the Expressway IO

methodology and VFM


in Canada




2015-Septembershy

22

Public document






2014 (Annual

Report of the

Office of the

Auditor General

of Ontario ndash

Chapter 3 Section

305)

Public document






Report - Hanscomb




2015-February-27

(letter with an

attachment)

Public document









Market sounding

Costing

VFM analysis






Discussion Paper









list)



Guideline


therein



list)





Orientation Guide

2012



Capital

2013-September



2006-June












2015-March-13




Partnerships (P3s)

2013 P3 Toolkit




Procurement

2011



P3 Canada website


Guide

P3 Canada website


Guide

P3 Canada website




2010- January



Home and Abroad

2013-August






2013-December









and the US















practices

G22 Other ndash


institutions



models



2 BACKGROUND













practices elsewhere


































































































workshop input

























of the outcome








































32 IO Methodology


stages of a project







but not yet signed








discussed below)
















VFM analysis




















Appendix B






highways

















British Columbia




















Alberta





























models









Saskatchewan














United Kingdom


















Australia


















United States
















P3 Canada


participation




Expressway






2016
























interviews

































the Expressway






the Expressway




and addressed below














































contingencies




























































































40 deferred




it is addressed15



DBFOM model
































model






as shared









































procurement costs




































































recent years





years

















assumptions










(assumptions)






ATTACHMENT


Scope of Work













1 General





Interview






1 IO Documents













DOCUMENTS










Analyst


Infrastructure


Structures






Between

November 2015

and January 2016




and the project



Spiegelman







process





Transaction Finance


Finance


Infrastructure




Roads



Lending

Between

November 2015

and January 2016







project






contacts review and


process















Art Maw President




Bob Narin PEng







December 2015

January 2016




the risk workshop


the Expressway IO

methodology and VFM


in Canada




2015-Septembershy

22

Public document






2014 (Annual

Report of the

Office of the

Auditor General

of Ontario ndash

Chapter 3 Section

305)

Public document






Report - Hanscomb




2015-February-27

(letter with an

attachment)

Public document









Market sounding

Costing

VFM analysis






Discussion Paper









list)



Guideline


therein



list)





Orientation Guide

2012



Capital

2013-September



2006-June












2015-March-13




Partnerships (P3s)

2013 P3 Toolkit




Procurement

2011



P3 Canada website


Guide

P3 Canada website


Guide

P3 Canada website




2010- January



Home and Abroad

2013-August






2013-December









and the US















practices

G22 Other ndash


institutions



models

























































































workshop input

























of the outcome








































32 IO Methodology


stages of a project







but not yet signed








discussed below)
















VFM analysis




















Appendix B






highways

















British Columbia




















Alberta





























models









Saskatchewan














United Kingdom


















Australia


















United States
















P3 Canada


participation




Expressway






2016
























interviews

































the Expressway






the Expressway




and addressed below














































contingencies




























































































40 deferred




it is addressed15



DBFOM model
































model






as shared









































procurement costs




































































recent years





years

















assumptions










(assumptions)






ATTACHMENT


Scope of Work













1 General





Interview






1 IO Documents













DOCUMENTS










Analyst


Infrastructure


Structures






Between

November 2015

and January 2016




and the project



Spiegelman







process





Transaction Finance


Finance


Infrastructure




Roads



Lending

Between

November 2015

and January 2016







project






contacts review and


process















Art Maw President




Bob Narin PEng







December 2015

January 2016




the risk workshop


the Expressway IO

methodology and VFM


in Canada




2015-Septembershy

22

Public document






2014 (Annual

Report of the

Office of the

Auditor General

of Ontario ndash

Chapter 3 Section

305)

Public document






Report - Hanscomb




2015-February-27

(letter with an

attachment)

Public document









Market sounding

Costing

VFM analysis






Discussion Paper









list)



Guideline


therein



list)





Orientation Guide

2012



Capital

2013-September



2006-June












2015-March-13




Partnerships (P3s)

2013 P3 Toolkit




Procurement

2011



P3 Canada website


Guide

P3 Canada website


Guide

P3 Canada website




2010- January



Home and Abroad

2013-August






2013-December









and the US















practices

G22 Other ndash


institutions



models
















of the outcome








































32 IO Methodology


stages of a project







but not yet signed








discussed below)
















VFM analysis




















Appendix B






highways

















British Columbia




















Alberta





























models









Saskatchewan














United Kingdom


















Australia


















United States
















P3 Canada


participation




Expressway






2016
























interviews

































the Expressway






the Expressway




and addressed below














































contingencies




























































































40 deferred




it is addressed15



DBFOM model
































model






as shared









































procurement costs




































































recent years





years

















assumptions










(assumptions)






ATTACHMENT


Scope of Work













1 General





Interview






1 IO Documents













DOCUMENTS










Analyst


Infrastructure


Structures






Between

November 2015

and January 2016




and the project



Spiegelman







process





Transaction Finance


Finance


Infrastructure




Roads



Lending

Between

November 2015

and January 2016







project






contacts review and


process















Art Maw President




Bob Narin PEng







December 2015

January 2016




the risk workshop


the Expressway IO

methodology and VFM


in Canada




2015-Septembershy

22

Public document






2014 (Annual

Report of the

Office of the

Auditor General

of Ontario ndash

Chapter 3 Section

305)

Public document






Report - Hanscomb




2015-February-27

(letter with an

attachment)

Public document









Market sounding

Costing

VFM analysis






Discussion Paper









list)



Guideline


therein



list)





Orientation Guide

2012



Capital

2013-September



2006-June












2015-March-13




Partnerships (P3s)

2013 P3 Toolkit




Procurement

2011



P3 Canada website


Guide

P3 Canada website


Guide

P3 Canada website




2010- January



Home and Abroad

2013-August






2013-December









and the US















practices

G22 Other ndash


institutions



models
















32 IO Methodology


stages of a project







but not yet signed








discussed below)
















VFM analysis




















Appendix B






highways

















British Columbia




















Alberta





























models









Saskatchewan














United Kingdom


















Australia


















United States
















P3 Canada


participation




Expressway






2016
























interviews

































the Expressway






the Expressway




and addressed below














































contingencies




























































































40 deferred




it is addressed15



DBFOM model
































model






as shared









































procurement costs




































































recent years





years

















assumptions










(assumptions)






ATTACHMENT


Scope of Work













1 General





Interview






1 IO Documents













DOCUMENTS










Analyst


Infrastructure


Structures






Between

November 2015

and January 2016




and the project



Spiegelman







process





Transaction Finance


Finance


Infrastructure




Roads



Lending

Between

November 2015

and January 2016







project






contacts review and


process















Art Maw President




Bob Narin PEng







December 2015

January 2016




the risk workshop


the Expressway IO

methodology and VFM


in Canada




2015-Septembershy

22

Public document






2014 (Annual

Report of the

Office of the

Auditor General

of Ontario ndash

Chapter 3 Section

305)

Public document






Report - Hanscomb




2015-February-27

(letter with an

attachment)

Public document









Market sounding

Costing

VFM analysis






Discussion Paper









list)



Guideline


therein



list)





Orientation Guide

2012



Capital

2013-September



2006-June












2015-March-13




Partnerships (P3s)

2013 P3 Toolkit




Procurement

2011



P3 Canada website


Guide

P3 Canada website


Guide

P3 Canada website




2010- January



Home and Abroad

2013-August






2013-December









and the US















practices

G22 Other ndash


institutions



models











VFM analysis




















Appendix B






highways

















British Columbia




















Alberta





























models









Saskatchewan














United Kingdom


















Australia


















United States
















P3 Canada


participation




Expressway






2016
























interviews

































the Expressway






the Expressway




and addressed below














































contingencies




























































































40 deferred




it is addressed15



DBFOM model
































model






as shared









































procurement costs




































































recent years





years

















assumptions










(assumptions)






ATTACHMENT


Scope of Work













1 General





Interview






1 IO Documents













DOCUMENTS










Analyst


Infrastructure


Structures






Between

November 2015

and January 2016




and the project



Spiegelman







process





Transaction Finance


Finance


Infrastructure




Roads



Lending

Between

November 2015

and January 2016







project






contacts review and


process















Art Maw President




Bob Narin PEng







December 2015

January 2016




the risk workshop


the Expressway IO

methodology and VFM


in Canada




2015-Septembershy

22

Public document






2014 (Annual

Report of the

Office of the

Auditor General

of Ontario ndash

Chapter 3 Section

305)

Public document






Report - Hanscomb




2015-February-27

(letter with an

attachment)

Public document









Market sounding

Costing

VFM analysis






Discussion Paper









list)



Guideline


therein



list)





Orientation Guide

2012



Capital

2013-September



2006-June












2015-March-13




Partnerships (P3s)

2013 P3 Toolkit




Procurement

2011



P3 Canada website


Guide

P3 Canada website


Guide

P3 Canada website




2010- January



Home and Abroad

2013-August






2013-December









and the US















practices

G22 Other ndash


institutions



models












British Columbia




















Alberta





























models









Saskatchewan














United Kingdom


















Australia


















United States
















P3 Canada


participation




Expressway






2016
























interviews

































the Expressway






the Expressway




and addressed below














































contingencies




























































































40 deferred




it is addressed15



DBFOM model
































model






as shared









































procurement costs




































































recent years





years

















assumptions










(assumptions)






ATTACHMENT


Scope of Work













1 General





Interview






1 IO Documents













DOCUMENTS










Analyst


Infrastructure


Structures






Between

November 2015

and January 2016




and the project



Spiegelman







process





Transaction Finance


Finance


Infrastructure




Roads



Lending

Between

November 2015

and January 2016







project






contacts review and


process















Art Maw President




Bob Narin PEng







December 2015

January 2016




the risk workshop


the Expressway IO

methodology and VFM


in Canada




2015-Septembershy

22

Public document






2014 (Annual

Report of the

Office of the

Auditor General

of Ontario ndash

Chapter 3 Section

305)

Public document






Report - Hanscomb




2015-February-27

(letter with an

attachment)

Public document









Market sounding

Costing

VFM analysis






Discussion Paper









list)



Guideline


therein



list)





Orientation Guide

2012



Capital

2013-September



2006-June












2015-March-13




Partnerships (P3s)

2013 P3 Toolkit




Procurement

2011



P3 Canada website


Guide

P3 Canada website


Guide

P3 Canada website




2010- January



Home and Abroad

2013-August






2013-December









and the US















practices

G22 Other ndash


institutions



models





















models









Saskatchewan














United Kingdom


















Australia


















United States
















P3 Canada


participation




Expressway






2016
























interviews

































the Expressway






the Expressway




and addressed below














































contingencies




























































































40 deferred




it is addressed15



DBFOM model
































model






as shared









































procurement costs




































































recent years





years

















assumptions










(assumptions)






ATTACHMENT


Scope of Work













1 General





Interview






1 IO Documents













DOCUMENTS










Analyst


Infrastructure


Structures






Between

November 2015

and January 2016




and the project



Spiegelman







process





Transaction Finance


Finance


Infrastructure




Roads



Lending

Between

November 2015

and January 2016







project






contacts review and


process















Art Maw President




Bob Narin PEng







December 2015

January 2016




the risk workshop


the Expressway IO

methodology and VFM


in Canada




2015-Septembershy

22

Public document






2014 (Annual

Report of the

Office of the

Auditor General

of Ontario ndash

Chapter 3 Section

305)

Public document






Report - Hanscomb




2015-February-27

(letter with an

attachment)

Public document









Market sounding

Costing

VFM analysis






Discussion Paper









list)



Guideline


therein



list)





Orientation Guide

2012



Capital

2013-September



2006-June












2015-March-13




Partnerships (P3s)

2013 P3 Toolkit




Procurement

2011



P3 Canada website


Guide

P3 Canada website


Guide

P3 Canada website




2010- January



Home and Abroad

2013-August






2013-December









and the US















practices

G22 Other ndash


institutions



models



United Kingdom


















Australia


















United States
















P3 Canada


participation




Expressway






2016
























interviews

































the Expressway






the Expressway




and addressed below














































contingencies




























































































40 deferred




it is addressed15



DBFOM model
































model






as shared









































procurement costs




































































recent years





years

















assumptions










(assumptions)






ATTACHMENT


Scope of Work













1 General





Interview






1 IO Documents













DOCUMENTS










Analyst


Infrastructure


Structures






Between

November 2015

and January 2016




and the project



Spiegelman







process





Transaction Finance


Finance


Infrastructure




Roads



Lending

Between

November 2015

and January 2016







project






contacts review and


process















Art Maw President




Bob Narin PEng







December 2015

January 2016




the risk workshop


the Expressway IO

methodology and VFM


in Canada




2015-Septembershy

22

Public document






2014 (Annual

Report of the

Office of the

Auditor General

of Ontario ndash

Chapter 3 Section

305)

Public document






Report - Hanscomb




2015-February-27

(letter with an

attachment)

Public document









Market sounding

Costing

VFM analysis






Discussion Paper









list)



Guideline


therein



list)





Orientation Guide

2012



Capital

2013-September



2006-June












2015-March-13




Partnerships (P3s)

2013 P3 Toolkit




Procurement

2011



P3 Canada website


Guide

P3 Canada website


Guide

P3 Canada website




2010- January



Home and Abroad

2013-August






2013-December









and the US















practices

G22 Other ndash


institutions



models












P3 Canada


participation




Expressway






2016
























interviews

































the Expressway






the Expressway




and addressed below














































contingencies




























































































40 deferred




it is addressed15



DBFOM model
































model






as shared









































procurement costs




































































recent years





years

















assumptions










(assumptions)






ATTACHMENT


Scope of Work













1 General





Interview






1 IO Documents













DOCUMENTS










Analyst


Infrastructure


Structures






Between

November 2015

and January 2016




and the project



Spiegelman







process





Transaction Finance


Finance


Infrastructure




Roads



Lending

Between

November 2015

and January 2016







project






contacts review and


process















Art Maw President




Bob Narin PEng







December 2015

January 2016




the risk workshop


the Expressway IO

methodology and VFM


in Canada




2015-Septembershy

22

Public document






2014 (Annual

Report of the

Office of the

Auditor General

of Ontario ndash

Chapter 3 Section

305)

Public document






Report - Hanscomb




2015-February-27

(letter with an

attachment)

Public document









Market sounding

Costing

VFM analysis






Discussion Paper









list)



Guideline


therein



list)





Orientation Guide

2012



Capital

2013-September



2006-June












2015-March-13




Partnerships (P3s)

2013 P3 Toolkit




Procurement

2011



P3 Canada website


Guide

P3 Canada website


Guide

P3 Canada website




2010- January



Home and Abroad

2013-August






2013-December









and the US















practices

G22 Other ndash


institutions



models









interviews

































the Expressway






the Expressway




and addressed below














































contingencies




























































































40 deferred




it is addressed15



DBFOM model
































model






as shared









































procurement costs




































































recent years





years

















assumptions










(assumptions)






ATTACHMENT


Scope of Work













1 General





Interview






1 IO Documents













DOCUMENTS










Analyst


Infrastructure


Structures






Between

November 2015

and January 2016




and the project



Spiegelman







process





Transaction Finance


Finance


Infrastructure




Roads



Lending

Between

November 2015

and January 2016







project






contacts review and


process















Art Maw President




Bob Narin PEng







December 2015

January 2016




the risk workshop


the Expressway IO

methodology and VFM


in Canada




2015-Septembershy

22

Public document






2014 (Annual

Report of the

Office of the

Auditor General

of Ontario ndash

Chapter 3 Section

305)

Public document






Report - Hanscomb




2015-February-27

(letter with an

attachment)

Public document









Market sounding

Costing

VFM analysis






Discussion Paper









list)



Guideline


therein



list)





Orientation Guide

2012



Capital

2013-September



2006-June












2015-March-13




Partnerships (P3s)

2013 P3 Toolkit




Procurement

2011



P3 Canada website


Guide

P3 Canada website


Guide

P3 Canada website




2010- January



Home and Abroad

2013-August






2013-December









and the US















practices

G22 Other ndash


institutions



models






the Expressway




and addressed below














































contingencies




























































































40 deferred




it is addressed15



DBFOM model
































model






as shared









































procurement costs




































































recent years





years

















assumptions










(assumptions)






ATTACHMENT


Scope of Work













1 General





Interview






1 IO Documents













DOCUMENTS










Analyst


Infrastructure


Structures






Between

November 2015

and January 2016




and the project



Spiegelman







process





Transaction Finance


Finance


Infrastructure




Roads



Lending

Between

November 2015

and January 2016







project






contacts review and


process















Art Maw President




Bob Narin PEng







December 2015

January 2016




the risk workshop


the Expressway IO

methodology and VFM


in Canada




2015-Septembershy

22

Public document






2014 (Annual

Report of the

Office of the

Auditor General

of Ontario ndash

Chapter 3 Section

305)

Public document






Report - Hanscomb




2015-February-27

(letter with an

attachment)

Public document









Market sounding

Costing

VFM analysis






Discussion Paper









list)



Guideline


therein



list)





Orientation Guide

2012



Capital

2013-September



2006-June












2015-March-13




Partnerships (P3s)

2013 P3 Toolkit




Procurement

2011



P3 Canada website


Guide

P3 Canada website


Guide

P3 Canada website




2010- January



Home and Abroad

2013-August






2013-December









and the US















practices

G22 Other ndash


institutions



models
















contingencies




























































































40 deferred




it is addressed15



DBFOM model
































model






as shared









































procurement costs




































































recent years





years

















assumptions










(assumptions)






ATTACHMENT


Scope of Work













1 General





Interview






1 IO Documents













DOCUMENTS










Analyst


Infrastructure


Structures






Between

November 2015

and January 2016




and the project



Spiegelman







process





Transaction Finance


Finance


Infrastructure




Roads



Lending

Between

November 2015

and January 2016







project






contacts review and


process















Art Maw President




Bob Narin PEng







December 2015

January 2016




the risk workshop


the Expressway IO

methodology and VFM


in Canada




2015-Septembershy

22

Public document






2014 (Annual

Report of the

Office of the

Auditor General

of Ontario ndash

Chapter 3 Section

305)

Public document






Report - Hanscomb




2015-February-27

(letter with an

attachment)

Public document









Market sounding

Costing

VFM analysis






Discussion Paper









list)



Guideline


therein



list)





Orientation Guide

2012



Capital

2013-September



2006-June












2015-March-13




Partnerships (P3s)

2013 P3 Toolkit




Procurement

2011



P3 Canada website


Guide

P3 Canada website


Guide

P3 Canada website




2010- January



Home and Abroad

2013-August






2013-December









and the US















practices

G22 Other ndash


institutions



models








































































40 deferred




it is addressed15



DBFOM model
































model






as shared









































procurement costs




































































recent years





years

















assumptions










(assumptions)






ATTACHMENT


Scope of Work













1 General





Interview






1 IO Documents













DOCUMENTS










Analyst


Infrastructure


Structures






Between

November 2015

and January 2016




and the project



Spiegelman







process





Transaction Finance


Finance


Infrastructure




Roads



Lending

Between

November 2015

and January 2016







project






contacts review and


process















Art Maw President




Bob Narin PEng







December 2015

January 2016




the risk workshop


the Expressway IO

methodology and VFM


in Canada




2015-Septembershy

22

Public document






2014 (Annual

Report of the

Office of the

Auditor General

of Ontario ndash

Chapter 3 Section

305)

Public document






Report - Hanscomb




2015-February-27

(letter with an

attachment)

Public document









Market sounding

Costing

VFM analysis






Discussion Paper









list)



Guideline


therein



list)





Orientation Guide

2012



Capital

2013-September



2006-June












2015-March-13




Partnerships (P3s)

2013 P3 Toolkit




Procurement

2011



P3 Canada website


Guide

P3 Canada website


Guide

P3 Canada website




2010- January



Home and Abroad

2013-August






2013-December









and the US















practices

G22 Other ndash


institutions



models































model






as shared









































procurement costs




































































recent years





years

















assumptions










(assumptions)






ATTACHMENT


Scope of Work













1 General





Interview






1 IO Documents













DOCUMENTS










Analyst


Infrastructure


Structures






Between

November 2015

and January 2016




and the project



Spiegelman







process





Transaction Finance


Finance


Infrastructure




Roads



Lending

Between

November 2015

and January 2016







project






contacts review and


process















Art Maw President




Bob Narin PEng







December 2015

January 2016




the risk workshop


the Expressway IO

methodology and VFM


in Canada




2015-Septembershy

22

Public document






2014 (Annual

Report of the

Office of the

Auditor General

of Ontario ndash

Chapter 3 Section

305)

Public document






Report - Hanscomb




2015-February-27

(letter with an

attachment)

Public document









Market sounding

Costing

VFM analysis






Discussion Paper









list)



Guideline


therein



list)





Orientation Guide

2012



Capital

2013-September



2006-June












2015-March-13




Partnerships (P3s)

2013 P3 Toolkit




Procurement

2011



P3 Canada website


Guide

P3 Canada website


Guide

P3 Canada website




2010- January



Home and Abroad

2013-August






2013-December









and the US















practices

G22 Other ndash


institutions



models



































procurement costs




































































recent years





years

















assumptions










(assumptions)






ATTACHMENT


Scope of Work













1 General





Interview






1 IO Documents













DOCUMENTS










Analyst


Infrastructure


Structures






Between

November 2015

and January 2016




and the project



Spiegelman







process





Transaction Finance


Finance


Infrastructure




Roads



Lending

Between

November 2015

and January 2016







project






contacts review and


process















Art Maw President




Bob Narin PEng







December 2015

January 2016




the risk workshop


the Expressway IO

methodology and VFM


in Canada




2015-Septembershy

22

Public document






2014 (Annual

Report of the

Office of the

Auditor General

of Ontario ndash

Chapter 3 Section

305)

Public document






Report - Hanscomb




2015-February-27

(letter with an

attachment)

Public document









Market sounding

Costing

VFM analysis






Discussion Paper









list)



Guideline


therein



list)





Orientation Guide

2012



Capital

2013-September



2006-June












2015-March-13




Partnerships (P3s)

2013 P3 Toolkit




Procurement

2011



P3 Canada website


Guide

P3 Canada website


Guide

P3 Canada website




2010- January



Home and Abroad

2013-August






2013-December









and the US















practices

G22 Other ndash


institutions



models




























































recent years





years

















assumptions










(assumptions)






ATTACHMENT


Scope of Work













1 General





Interview






1 IO Documents













DOCUMENTS










Analyst


Infrastructure


Structures






Between

November 2015

and January 2016




and the project



Spiegelman







process





Transaction Finance


Finance


Infrastructure




Roads



Lending

Between

November 2015

and January 2016







project






contacts review and


process















Art Maw President




Bob Narin PEng







December 2015

January 2016




the risk workshop


the Expressway IO

methodology and VFM


in Canada




2015-Septembershy

22

Public document






2014 (Annual

Report of the

Office of the

Auditor General

of Ontario ndash

Chapter 3 Section

305)

Public document






Report - Hanscomb




2015-February-27

(letter with an

attachment)

Public document









Market sounding

Costing

VFM analysis






Discussion Paper









list)



Guideline


therein



list)





Orientation Guide

2012



Capital

2013-September



2006-June












2015-March-13




Partnerships (P3s)

2013 P3 Toolkit




Procurement

2011



P3 Canada website


Guide

P3 Canada website


Guide

P3 Canada website




2010- January



Home and Abroad

2013-August






2013-December









and the US















practices

G22 Other ndash


institutions



models






ATTACHMENT


Scope of Work













1 General





Interview






1 IO Documents













DOCUMENTS










Analyst


Infrastructure


Structures






Between

November 2015

and January 2016




and the project



Spiegelman







process





Transaction Finance


Finance


Infrastructure




Roads



Lending

Between

November 2015

and January 2016







project






contacts review and


process















Art Maw President




Bob Narin PEng







December 2015

January 2016




the risk workshop


the Expressway IO

methodology and VFM


in Canada




2015-Septembershy

22

Public document






2014 (Annual

Report of the

Office of the

Auditor General

of Ontario ndash

Chapter 3 Section

305)

Public document






Report - Hanscomb




2015-February-27

(letter with an

attachment)

Public document









Market sounding

Costing

VFM analysis






Discussion Paper









list)



Guideline


therein



list)





Orientation Guide

2012



Capital

2013-September



2006-June












2015-March-13




Partnerships (P3s)

2013 P3 Toolkit




Procurement

2011



P3 Canada website


Guide

P3 Canada website


Guide

P3 Canada website




2010- January



Home and Abroad

2013-August






2013-December









and the US















practices

G22 Other ndash


institutions



models



1 General





Interview






1 IO Documents













DOCUMENTS










Analyst


Infrastructure


Structures






Between

November 2015

and January 2016




and the project



Spiegelman







process





Transaction Finance


Finance


Infrastructure




Roads



Lending

Between

November 2015

and January 2016







project






contacts review and


process















Art Maw President




Bob Narin PEng







December 2015

January 2016




the risk workshop


the Expressway IO

methodology and VFM


in Canada




2015-Septembershy

22

Public document






2014 (Annual

Report of the

Office of the

Auditor General

of Ontario ndash

Chapter 3 Section

305)

Public document






Report - Hanscomb




2015-February-27

(letter with an

attachment)

Public document









Market sounding

Costing

VFM analysis






Discussion Paper









list)



Guideline


therein



list)





Orientation Guide

2012



Capital

2013-September



2006-June












2015-March-13




Partnerships (P3s)

2013 P3 Toolkit




Procurement

2011



P3 Canada website


Guide

P3 Canada website


Guide

P3 Canada website




2010- January



Home and Abroad

2013-August






2013-December









and the US















practices

G22 Other ndash


institutions



models













DOCUMENTS










Analyst


Infrastructure


Structures






Between

November 2015

and January 2016




and the project



Spiegelman







process





Transaction Finance


Finance


Infrastructure




Roads



Lending

Between

November 2015

and January 2016







project






contacts review and


process















Art Maw President




Bob Narin PEng







December 2015

January 2016




the risk workshop


the Expressway IO

methodology and VFM


in Canada




2015-Septembershy

22

Public document






2014 (Annual

Report of the

Office of the

Auditor General

of Ontario ndash

Chapter 3 Section

305)

Public document






Report - Hanscomb




2015-February-27

(letter with an

attachment)

Public document









Market sounding

Costing

VFM analysis






Discussion Paper









list)



Guideline


therein



list)





Orientation Guide

2012



Capital

2013-September



2006-June












2015-March-13




Partnerships (P3s)

2013 P3 Toolkit




Procurement

2011



P3 Canada website


Guide

P3 Canada website


Guide

P3 Canada website




2010- January



Home and Abroad

2013-August






2013-December









and the US















practices

G22 Other ndash


institutions



models










Analyst


Infrastructure


Structures






Between

November 2015

and January 2016




and the project



Spiegelman







process





Transaction Finance


Finance


Infrastructure




Roads



Lending

Between

November 2015

and January 2016







project






contacts review and


process















Art Maw President




Bob Narin PEng







December 2015

January 2016




the risk workshop


the Expressway IO

methodology and VFM


in Canada




2015-Septembershy

22

Public document






2014 (Annual

Report of the

Office of the

Auditor General

of Ontario ndash

Chapter 3 Section

305)

Public document






Report - Hanscomb




2015-February-27

(letter with an

attachment)

Public document









Market sounding

Costing

VFM analysis






Discussion Paper









list)



Guideline


therein



list)





Orientation Guide

2012



Capital

2013-September



2006-June












2015-March-13




Partnerships (P3s)

2013 P3 Toolkit




Procurement

2011



P3 Canada website


Guide

P3 Canada website


Guide

P3 Canada website




2010- January



Home and Abroad

2013-August






2013-December









and the US















practices

G22 Other ndash


institutions



models





December 2015

January 2016




the risk workshop


the Expressway IO

methodology and VFM


in Canada




2015-Septembershy

22

Public document






2014 (Annual

Report of the

Office of the

Auditor General

of Ontario ndash

Chapter 3 Section

305)

Public document






Report - Hanscomb




2015-February-27

(letter with an

attachment)

Public document









Market sounding

Costing

VFM analysis






Discussion Paper









list)



Guideline


therein



list)





Orientation Guide

2012



Capital

2013-September



2006-June












2015-March-13




Partnerships (P3s)

2013 P3 Toolkit




Procurement

2011



P3 Canada website


Guide

P3 Canada website


Guide

P3 Canada website




2010- January



Home and Abroad

2013-August






2013-December









and the US















practices

G22 Other ndash


institutions



models








list)



Guideline


therein



list)





Orientation Guide

2012



Capital

2013-September



2006-June












2015-March-13




Partnerships (P3s)

2013 P3 Toolkit




Procurement

2011



P3 Canada website


Guide

P3 Canada website


Guide

P3 Canada website




2010- January



Home and Abroad

2013-August






2013-December









and the US















practices

G22 Other ndash


institutions



models






2013-December









and the US















practices

G22 Other ndash


institutions



models



REPORT TO: City of Toronto · · 2016-01-21REPORT TO: City of Toronto . REPORT FOR: F.G. Gardiner...

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Transcript of REPORT TO: City of Toronto · · 2016-01-21REPORT TO: City of Toronto . REPORT FOR: F.G. Gardiner...