June 17, 2009

Public Private Partnerships

Official disputes inflation on Montreal infrastructure projects

IRWIN RAPOPORT

correspondent

Concerns about rising costs on two Montreal construction projects — the new concert hall at Place des Arts and the Notre Dame Boulevard extension — stem from a communication gap over the P3 process, provincial officials say.

Questions about the concert hall, a ministry of culture project, were raised recently by the local media, suggesting that the public-private partnership project has increased from $106 million to about $266 million.

The project is expected to be complete by the summer of 2011.

Hugo Delaney, director of communications with Private-Public Partnership Quebec, said that the $105 million announced in 2006 was just for construction costs.

“The $266 million figure, which is the last figure circulated by the government, is the cost of the project over its lifetime,” he said. “The construction figure remains essentially the same.”

“We’ve now looked at the project in a different way, because as part of a P3, we are asking the private partner to overtake the conception, construction, maintenance of the building over 30 years, and to finance it.”

He also spoke about construction inflation.

“We got our technical and cost proposals last November, but we still had to get the financing plans in,” he said.

“We got the financing plans in March and we gave the consortium an opportunity to re-submit their cost proposals in as much as they were lower than the ones they submitted in November.”

He added that the $266 million figure is the most the government will spend on the concert hall and stressed that the final cost could be lower.

It is reported that the contract will be awarded to Groupe immobilier Ovation, a consortium consisting of SNC-Lavalin Inc., Toronto-based Diamond Schmitt Architects Inc., Montreal-based architectural firm Aedifica, Aecon, lighting supplier Solotech and Gala Systems, which specializes in theatrical infrastructure.

The contract, to be announced shortly, will see the consortium construct the building and lease it back to the government for 40 years.

Delaney said the P3 model will save the government money, a key element in the tender process.

The Notre Dame extension, originally estimated at $750 million by Transports Quebec in 2007, might end up costing between $1.2 and $1.5 billion.

It is expected to be complete in 2014.

“When this amount was issued, people forgot to specify that it was in dollars of that year. We have to take into account the inflation factor,” said Transports Quebec spokesman, Mario St-Pierre, “

Last February, Transports Quebec announced that the cost of the project had increased due to improvements to the design, which would re-configure much of the road network in the area as well as construction inflation.

“The project has been improved and expanded,” said St-Pierre. “The main goal is to have an efficient road network for pedestrians, cars and trucks, railways and industry.”

“It has to be understood that we are not building on an empty field,” said St-Pierre,

“We are building in a place where there are a lot of people living on the north side of Notre Dame and on the south side, we have the St. Lawrence River and the POM.”

The City of Montreal is a junior partner in the project.

While the minister of transport has asked for the project to be reviewed in order to cut costs and find efficiencies, some work is ongoing.

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