September 2014 SASKATCHEWAN P3 SUMMIT Strategic Partnerships Office, Alberta Infrastructure Bundling Projects - the Alberta School Experience. Public Sector Perspective

The Strategic Partnership Office (SPO) The SPO is a Division within Alberta Infrastructure The Office is the central authority within Government for P3s and other innovative infrastructure partnerships The SPO is being positioned to focus on four lines of business:  Non-conventional partnerships  Conventional P3s  Agreement Stewardship  Practice Management 2

Alberta’s P3 Schools Single contract for 32 years (2 year build and 30 year maintenance). Contractor:  Designs and builds  Provides some of the financing  Maintains (an “extended warranty”) and  Receives payments from the government over 30 years, subject to deductions for failing to meet contractually defined performance standards Operations and building ownership remains with School Board 3

Value Proposition Quality learning environment for growing neighbourhoods Schedule certainty and cost certainty Integrated life-cycle approach driving efficiencies Long term warranty (30-year) with payment on performance No deferred maintenance Added discipline in both public and private sectors Allocate risk appropriately Value-for-money (private financing costs offset by benefits and efficiencies) 4

Alberta School designs New schools built to provincial standards Core school/modular classroom approach (elementary/middle) Standard school designs common to new schools regardless of delivery method Modifications made to meet School Board program requirements LEED certified Add or remove modular classrooms to accommodate changes in student population 5

Alberta School designs 6

Why Bundle Schools? Fast track significant increase in school capacity Savings to the taxpayer Provides critical mass  Attractive to investors (equity and bond)  Construction economies of scale  Standardization of material and equipment  Volume of work for maintenance provider  Simplifies maintenance  Increased productivity Incents better long term partnerships Reduces long term procurement and administration costs 7

Alberta School Bundles – Risk Strategy Standard design  No ambiguity around Government requirements  Jurisdictional equity  Clarifies School Board expectations  Tight technical requirements to maintain standards  “Personalize” schools  Reduces opportunity for innovation Aggressive schedule  Government secures sites  Government secures development permits 8

Alberta School Bundles - Challenges Multiple School Boards and municipalities Creating timely community partnerships Simultaneous commissioning of multiple buildings Short period for School Board fit up Any sub-optimal design features reflected in multiple buildings Modular classroom supply capacity Sub-trade capacity in tight markets DB completion risk (1 project of many schools, not many projects of 1 school) Number of maintenance providers 9

Alberta School Bundles - Value Achieved PROJECTPSC NPVBID NPVVFM $VFM % ASAP I (2008 $) 18 Schools, Completed on-time 2010 $731 M$634 M$97 M13.3% ASAP II (2010 $) 10 Schools, Completed on-time 2012 $358 M$253 M$105 M29.5% ASAP III (2012 $) 12 Schools, Completed on-time 2014 $332 M$289 M$43 M13.0% BASCP-I (2014$) 19 Schools, Did not demonstrate VFM Not awarded June 2014 $557 M$571 M-$14 M-2.5% Total Savings$231 M11.7% 10

Alberta School Bundles - Outcomes Taxpayer savings (short and long term) Significant increase in neighbourhood student spaces High quality work Owner and user satisfaction Environmental and community responsibility Motivated employees Volume of work (designers and contractors) Business development and growth Well built, well maintained schools that exceed community expectations 11

Thank you