P3s? Construction Association concerned about impact on Canadian firms

The Canadian Construction Association is lobbying the federal government to consider other methods of infrastructure development than the current public private partnership (P3) model.

A Vancouver construction industry report indicates that P3s "have worked only for a handful of very large Canadian construction firms. Ninety per cent of the Canadian construction industry, however, is made up of small and medium-sized firms."

"The problem is in the financing component of the P3s. Traditionally, Canadian general contractors have depended on bonds purchased from the bonding industy for financial backing for projects. P3s don’t use bonds in the same way. They require letters of credit – cash from recognized financial institutions.  Often P3s require 10% of the cost of a project covered by money in the bank. On a very large project, that can amount to hundreds of millions of dollars.  Most construction companies in Canada are not financially large enough to play in that arena.  The result is smaller Canadian construction companies are either shut out of P3 projects in favour of very large, often offshore, consortiums or, at best, they are reduced to being subcontractors working for those consortiums."

“As an industry we are lobbying for the government to consider other methods so Canadians aren’t left out of the P3 game,” says Dee Miller, the Chair of the Canadian Construction Association.
The Canadian Construction Association is reportedly asking government to look at performance and material bonds to back P3 projects just as they have always underpinned other construction projects, or that Ottawa launch a Canadian infrastructure government savings bond program that ordinary citizens could buy into.
“If governments plan to solve our infrastructure deficit by predominantly using the public-private partnership process as it is currently structured, they will literally hollow out the Canadian construction industry,” Miller warned.
The Canadian Construction Association has more than 17,000 member firms across Canada.

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