Alternative Capital Financing
Treasury Board is committed to pursuing new ways to undertake capital projects. Although Alberta spends three times the average of other provinces on capital construction, the province’s current Capital Plan does not accommodate all of the projected demand that is arising from rapid economic and population growth.
Treasury Board will explore with stakeholders opportunities to pursue alternative approaches to building and financing capital projects, such as public-private partnerships (P3) or working in partnership with municipalities, wherever it is cost-effective and feasible. Alternative arrangements may not be the best fit for all capital projects. They would only be considered where it makes sense from the taxpayers’ perspective.
A public-private partnership arrangement enables government to share the expense and risk of development with the private sector. It also ensures cost certainty for government since it is delivered at a fixed cost. This is particularly valuable at a time when construction costs are escalating up to 25 per cent per year.
P3 agreements also allow the province to spread the cost of a project out over a longer period of time by accessing private capital and paying for an asset as it is consumed, rather than expensing the asset when it is constructed, which is the current practice. This would enable government to address a greater number of infrastructure pressures sooner and accelerate the building of roads, hospitals, schools and other public facilities.
Examples of alternatively financed projects in Alberta
Anthony Henday Drive Southeast and North Edmonton Ring Road
Building the Anthony Henday Drive Southeast as a P3 was a cost effective alternative to the traditional approach to building roads. In this case, using a P3 ensured a fixed price and completion date at a time when construction costs soared 25 per cent a year. The 21-kilometre northwest leg of Edmonton’s ring road is also proceeding as a P3, with construction beginning August 1, 2008 to be completed by fall 2011. Read the news release on this next phase or see Edmonton Ring Road page for more information.
Northeast Calgary Ring Road
The northeast Calgary ring road project is another example of how the use of an alternative approach and save taxpayer dollars. Read the news release or view additional details on the Calgary Ring Roads page.
P3 New Schools Project
On June 14, 2007, the Alberta government announced that 18 new schools would be built in Calgary and Edmonton (nine in each city) using a P3 approach. Also known as the Alberta Schools Alternative Procurement (ASAP) Project, updates on the various project phases can be found on the Education ministry's P3 New Schools Project page.
On January 30, 2008, the Alberta government announced a second phase of schools to be built using a P3 approach. The project includes 14 new schools, including middle and high schools for the Calgary and Edmonton regions. Read the news release on this next phase.
