(06-25-2015, 09:43 AM)tomh009 Wrote: [ -> ] (06-24-2015, 11:45 PM)numberguy Wrote: [ -> ]I'm afraid as well. Â P3 is 2-3 times more expensive than going it alone.
This seems to say the costs of P3 are 2-3x those of non-P3.
(06-25-2015, 07:36 AM)numberguy Wrote: [ -> ]Built in escalation rates. Â Infrastructure Ontario is looking at a number of P3 agreements. Â A number of very large P3 projects are experiencing escalation rates 2-3 times more expensive than CPI. Â
So the private partner running the say, maintenance, experiences a 2% increase in a year. Â The escalation rate in the agreement turns that 2% increase into a 6% increase that is passed onto the public partner. Â Â This is real and has happened and is costing taxpayers on multiple levels huge.
But in fact the claim seems to be that the annual cost increases could be 2-3x those of a non-P3 arrangement. Total P3 costs will not be 2-3x total non-P3 costs, based on this. But I should think that every P3 contract would be different -- and no one was forced to sign one of these agreements.
I don't pretend to have any idea as to whether P3 is a good thing or not. But let's at least be precise when comparing costs.Â
Yes, every P3 contract is different. Â But based on empirical, actual costs experienced, P3 annual cost escalations far exceed non-P3 cost escalations. Â Â And yes, I am only referring to the annual cost escalations. Â Sorry for the lack of clarity, mea culpa. Â Most P3 will not be 2-3x non-P3 project costs.
One only has to look at RIM Park as an example of how the devil is in the details. Â Until city of Waterloo staff started actually paying bills, it was not apparent that the contract signed was a one-sided deal. Â Â The way cost escalations work in some existing P3 deals are having a similar (to a lesser scale) unintended consequence.
I want to see the deal between GrandLinq and the Region of Waterloo. Â Is this available? Â Â If not, why not?
I'll give a hypothetical example. Â Many of us know about the added costs incurred by the Region of Waterloo due to 2 workers deciding to sign union cards, technically backing the Region into having to use higher scale union labour for a trade. Say that happens with GrandLinq. Â Depending on how the labour escalation formula works, that increase could get passed onto the Region, 3, 4, 5 or more-fold. Â It's happened with P3s in Ontario.
Oh and the posted GrandLinq's annual operations and maintenance cost for 30 years includes:
•Operations ($4 million, plus HST and inflation);
•Maintenance ($4.5 million, plus HST and inflation);
•Lifecycle (average $8.7 million, plus HST and inflation);
•Financing ($11 million, plus HST);
•Insurance ($1.7 million, plus applicable taxes)
Those are just budgeted. Â Â Pending seeing the actual agreement between GrandLinq and the Region of Waterloo, I am thinking that those posted amounts are not final or binding.
What interest rate assumptions were used? Â Until recently, Ontario's auto insurers were allowed an 11 percent return on equity. Â Again, great alpha, with (except in the GTA, due to fraudulent claims) little beta. Â (Sorry, alpha is vig/juice/profit/return. Â Beta is risk) Â With ION, what was the interest rate used for assumptions?