Alberta’s government is putting a halt to new public-private partnerships (P3s) following a string of disastrous P3 school contracts, including one that ran hundreds of millions over budget and left communities without after-hours access to their schools.
P3 costs balloon
Alberta announced its decision to build 18 new schools as P3s in 2007. But by late 2008, the budget had more than doubled, from $200 million to $512 million. When economist Hugh Mackenzie examined the P3 school projects, he found that “for every two schools financed using the P3 model, an additional school could be built if they were all financed using conventional public sector financing.”
By the time the first contract was actually awarded, project costs had continued to balloon, reaching $634 million – more than triple the original budget. Opposition politicians repeatedly called for full transparency and public accountability but the government defended the projects and even announced an additional 14 P3 schools.
P3 deals shrouded in secrecy
In 2010, the auditor general released a report on P3 schools, concluding that P3 savings had been overstated by $20 million. The report also found that in addition to a lack of supporting evidence for claims about value for money, Albertans had not been kept informed about the process.
Contracts restrict after-school use
Public opposition to P3 schools mounted as a growing number of concerns came to light. Parents, community groups and sporting leagues complained that they couldn’t access school spaces for events, social programs and childcare because of restrictions on after-hours and weekend use that had been built into contracts. Critics also raised concerns that the proposed locations of schools had excluded low-income neighbourhoods.
Problems with maintenance and design
Teachers and staff cited maintenance and design problems. One school was told that it would take up to six weeks to repair a loose light in a ceiling. Local school boards ended up paying twice for repairs in cases where the contractor’s work failed inspection. And design flaws plagued the buildings. At least one school was prone to flooding while another reached interior temperatures over 28°C because no awnings or shades were included for south or west-facing parts of the building.
P3 cancellation saves taxpayers $14 million
While the provincial government couldn’t claw back money that had already been wasted on P3s, it saw an opportunity to stop further overspending in June 2014, when it announced a decision to abandon a new public-private partnership to build 19 more schools across Alberta. The government found it could save $14 million by taking on the project instead of out-sourcing. “The right choice for students, parents and taxpayers in this case is to use the government’s traditional procurement method to deliver these 19 schools,” said Infrastructure Minister Wayne Drysdale.
P3s put on pause
In April 2016, the Alberta government announced a freeze on any new public-private partnerships. “I think there are real questions about the overall benefit that is received by P3s,” said Infrastructure Minister Brian Mason. “Certainly the design-build and operate model is not something I want to proceed with at the present time.”
“Often P3s are a process which reduce cost at the front end and increase costs down the road and are more expensive to taxpayers,” added Premier Rachel Notley.