The Gordie Howe International Bridge project is being delivered through a public- private partnership (P3). A P3 is a long-term performance- based approach to procuring public infrastructure where the private sector assumes a major share of the risks in terms of financing and construction and ensuring effective performance of the infrastructure, from design and planning, to long-term maintenance.
The P3 Model
A P3 is a co-operative venture between a public-sector entity and a private-sector partner for the provision of infrastructure or services. The partnership is built on the expertise of each partner that best meets clearly defined public needs, through the most appropriate allocation of resources, risks, and rewards.
The private-sector partner is often a consortium of companies with different areas of expertise.
Benefits of a P3 Model
The benefits of a P3 include:
- Risks are appropriately shared between the government and the private sector. For instance, cost overruns and delays to projects are shifted from the taxpayer to the private sector.
- A ‘whole life’ approach is used in the delivery of the project with the private sector having responsibility for the design and delivery of the project and also the long-term operations and maintenance.
- The private sector’s expertise, efficiencies and innovation are utilized in delivering large-scale infrastructure projects as specified by the public sector.
- The private sector is paid only on performance, aligning financial incentives for on- time, on-budget delivery and for the achievement of performance standards during the useful life of the asset.
- Utilizing a P3 model is good value for taxpayers. An independent value for money analysis demonstrated that the P3 model for this project results in a savings of approximately $562.8 million. That is 10.7% as compared to delivery of the project using traditional procurement methods. Read the Value for Money Report.
WDBA’s private-sector partner, Bridging North America, is responsible for the design, build, finance, operation and maintenance of the Canadian and US Ports of Entry and the bridge and to design, build and finance the Michigan Interchange. Michigan will be responsible for the operations and maintenance of the Michigan Interchange.