P3 2023, Toronto: A few key takeaways
“I spent much of the rest of the conference thinking of Curshaw as visitors from the future, here to help avert the mistakes of the past,”
Adam Straker, Canadian Council of Public Private Partnerships
Curshaw Commercial were invited by President of the Canadian Council for Public-Private Partnerships Lisa Mitchell to attend the annual Canadian Council P3 Conference earlier in November. We were there to talk about handback preparedness, based on both our award winning management of the first UK PFI expiry (predicated on maintaining strong working relationships with our counterparty) and also our subsequent work on approximately 50 expiries. We shared our RPD (Review, Prepare and Deliver) approach and how it is essential to an E3 (efficient, effective and equitable) handback.
The Curshaw E3 model:
Review contracts together mid-life to ensure they are compliant, fit for purpose and crucially meeting evolving needs, which in the case of vertical infrastructure may have changed in the 15 to 20 years since they were mobilised.
Jointly prepare for the handback process having cleared any legacy issues. See two blog posts on how to do this if you have just the one project or a portfolio of projects.
Deliver handback to a joint plan.
We talked about a number of challenges that could lie in wait; what we call the sleeping giants of handback. We discussed some of the challenges on which we are advising our UK clients including:
Buy back of Furniture Fixtures and Equipment
Handback surveys - timing, scope and methodologies
Impracticalities of performance bonds
Migration of systems and data
TUPE
Public sector procurement and mobilisation of post-PFI operating models in parallel with PFI demobilisation, and how to keep the lights on so that there is no disruption to state critical infrastructure.
Here are a few key takeaways that we took from the event:
Conference Scale:
The scale of the conference was huge with around 1,000 delegates from far and wide. The event had been painstakingly organised by the Canadian Council so it was content rich with an appropriate mix of speeches, panel discussions and debate and plenty of opportunities for networking. You could tell that the PPP market is alive and well in Canada because the engagement in, and debate on, the topic was everywhere.
The prominence of dialogue and active participation:
The dialogue between parties was full and frank and there was good representation from all project stakeholders,something you rarely see in the UK. We were struck by the candour of discussion and the displays of leadership. Notable among them was Michael Lindsay - Chief Executive of Infrastructure Ontatio - a fantastic example of the kind of person we heard from across the conference; full of clear convictions and with a laser focus on building partnerships that deliver.
Notable also was Joey Comeau - Chief Operating Officer at EllisDon who drew the biggest laugh by comparing the Progressive Model to the charm offensive he deployed when he first met his wife.
The very active participation by all parties and the thriving debate feels like a reflection of the fact that PPPs are still current in Canada i.e. there is a pipeline of deals keeping people focused on how the approach and model can be improved. This is obviously not the case in England but to some degree is the case in Wales and certainly Scotland.An evolving PPP model
It is clear that the approach in Canada has evolved and continues to evolve, in very stark contrast to the UK where the programme was shut down by politicians in 2018. What’s not clear is whether the latest incarnation is the right solution to some of the widely accepted problems around market concentration risk and appropriate risk transfer.
Living and breathing contracts
We encountered a number of people who were keen to explain to us that their contracts were functioning well. There were great relationships and strong leadership up and down the supply chain because they had adopted a relational approach to contracting. This is something we at Curshaw have always advocated for and our advisors Barry White and Andrew Fraiser also back in their recent report on challenges and behaviours in the UK.
This is the opposite to the weaponising of the payment mechanism and managing to the letter of the contract that’s taken hold in the UK and thankfully, at least for taxpayers and service users in Canada, there is no indication they are heading down that path.Vague and imprecise provisions
In the UK the prevailing view is that uncertainty around any element of a contract equals risk. What we found when speaking to people at the event is that because of the level of trust built between the parties this vagueness is often a good thing. It can create the space in which innovation and collaboration happens and enables teams to flex where needed - keeping the ultimate goal, to deliver an asset that does the job you need it to - in sight.
We met an individual who worked on a significant horizontal infrastructure project who extolled the virtues of very simple drafting and explained that on his project there was the requirement to maintain the asset as a prudent owner would. This meant all parties got together frequently to discuss what this meant and how best to undertake maintenance.Trust and consistency
One of the reasons the collaboration efforts outlined in the example above had worked so well was that the same business entities and personnel had been involved the whole way though - not something that happens in the UK due to deals done in the market and the high rate of churn in the UK Civil Service.
This means there is little to no corporate memory in some parts of the public sector and relationships on the ground have to be started afresh every time someone new arrives. Were we to do things over again in the UK there is no doubt that this should feature in the procurement and design of the commercial construct.Data and a strong data culture
Ready access to high integrity data is a known challenge in the UK where much has been written about the generally very poor quality of reporting that is provided by Project Companies and the almost absent monitoring and oversight from some Contracting Authorities. In Canada it is pretty clear that as well as the general culture being better, the data culture is better. An example of this is when we were joined by Claudio Andreetta from JCI who told us about how they use the Facilities Condition Index to model lifecycle replacement and how this was driving better informed dialogue with contracting authorities around net zero pathways.
The event brought us into contact with some fascinating, insightful and committed people. We came away with the feeling that so many of the things put in place in Canada for the benefit of state infrastructure (and the service users that rely on it) were not in place in the UK. We also left with an understanding of how the UK model might have evolved (had there been appetite for it) instead of being retired in 2018.
Finally and most importantly we left with the firm belief that there was a lot to be learnt from the mistakes made in the UK. This can be achieved with:
A commitment to ensuring that taxpayer funds and resources are not leaked out the sides of the deals through unnecessary legal disputes.
Ensuring any interventions designed to improve contract performance and service delivery are done by those who truly believe in partnership, with maintenance of long term relationships very much in mind.
Reviews or mid-point interventions are undertaken with handback in mind on the basis that a contract that is performing well mid-life is best set up for eventual handback.