(06-25-2015, 11:59 AM)Canard Wrote: I feel bad asking (and please feel free to just say "no" and ignore me) but can someone explain what any of this "P3" discussion means? I really don't understand at all. I think I get the basic jist that "Private-Public Partnership" means the Government is going to pay a private company to "Design, Build, Finance, Operate and Maintain" the system. Basically saying "We give you money, you make it happen and operate as a company"... as opposed to them just doing it all themselves. I get that sort of. But like, what does this "concern" come from with regard to raising prices and all that jazz? I thought that Grandlinq was getting a fixed amount of money, that is a very-well known number, from the Government...
Again, I'm sorry but I just have no clue how business or this P3 thing works at all. I can tell you in great detail how any aspect of the trains work mechanically (please ask!), but when it comes to how the logistics of a project actually works from a financial perspective I have no idea.
There is never a need to feel bad about asking questions, IMHO.
The amount of money is only partially fixed. GrandLinq will operate the ION system, for 30 years. No one knows where interest rates, CPI, labour costs etc will go in 30 years. So, there will be some mechanism to adjust those costs, accordingly.
CPI is an often used benchmark. Labour rates can be used as well. Most of the P3 escalation clauses I've seen have a CPI portion and a labour portion for escalation factors. I am not an expert, I've only seen detail formula for 5 P3s.
It's important to do scenario/what-if analysis. Empirically, P3 annual cost increases in Ontario are tracking up far faster than non-P3 projects.
The issue I have is that P3 seems to be a way to get market alpha/return with government level beta/risk. It's a guaranteed win for the private partners.
Oh, and I saw this on Reddit tonight:
http://imgur.com/KWBF8Za
^ the sign that was put up for LRT related construction, apparently. By GrandLinq.
http://www.reddit.com/r/kitchener/commen...onal_they/
I want ION to work. I am just worried. Bombardier and P3 empirical cost escalations have me losing my optimism.