Executive Summary
Dr. Daniel J. Brown
BACKGROUND
The need for school construction is a pressing one throughout Canada but there are few public dollars to spare. Fortunately, a promising option for building schools has emerged. Public-private partnerships (P3s) are relationships in which the private and public sectors share the responsibilities, rewards, and risks for the success of a project. The limited experience with public-private partnerships for school construction suggests that they provide exciting prospects and notable pitfalls. Although relations between partners can be harmonious, savings can be realized, and schools provided more quickly, P3s could result in some loss of public control, role confusions, bureaucratic tieups, and financial losses. Before policy makers commit themselves to P3s, they need to know what works, what does not, and why.
The public-private partnership to build an elementary school for 250 students (2,330 square meters) in the Auguston housing development in Abbotsford, B.C. offered a special opportunity for Professor Daniel Brown to determine the elements that make P3s successful and what may be done to avoid difficulties in the future. It was a novel experiment sanctioned by the province and the district. An example of alternative procurement, this P3 was planned as a 'Design, Build, Lease, Transfer' model although it reverted to 'Design, Build'. Its most remarkable catalyst was the real estate developer's contribution of $500,000 toward the construction of the school and enhanced facilities for neighbourhood use.
RESEARCH METHODS
A UBC research team was assembled, consisting of a professor of education, three graduate students, and a leading educational consultant. The team members conducted 18 interviews with key individuals associated with the P3, including the major partners who were the B.C. Ministry of Finance, the Abbotsford School Board, Field and Marten Associates (the project managers), and Beautiworld Development Corporation. Other data for this case study were collected from newspapers, policy documents, financial records, and questionnaires sent to real estate agents and residents of the development.
RESULTS
Brown determined that the major motivations of the four partners were to construct a school less expensively, to achieve a lease which would permit the project to appear off-book (outside provincial debt statements), to demonstrate that a P3 could work well, and to accelerate real estate sales in the development.
This P3 was characterized by a high level of trust among the major players. All said that there was mutual respect and openness during the extensive meetings and other communications as they proceeded from the initial agreements to the final phase of construction. There were also many negotiations and compromises, including roof design, location of heating and ventilation systems, space allocation within the school, and the number of storeys (resolved at two to save land). Two champions were prominent: the Chairman of the School Board who was instrumental in facilitating the P3, particularly at its inception, and the project managers who worked in a determined fashion to minimize costs and deliver the school on time.
There was a redistribution of risks and rewards compared to the standard method of school construction.
For instance, control of the procurement process moved to the project managers, who assumed some financial risk. Although they were held to provincial specifications for design and materials, they varied the process of hiring and shared in the savings.
The designation of the new school as a school of choice (a 'Traditional School' with teacherdirected instruction, structured learning, a high level of student care, and extensive parental involvement) was an important factor in permitting construction to proceed as planned. That was because enrollment projections fell sharply when real estate sales slumped in the region. The developer found that the traditional school designation fit his marketing for a community based on traditional values. Responses from the homeowners and real estate agents supported that view.
This P3 had two main outcomes, according to Brown. One was that the school was constructed at about 10% less than by conventional procurement, a significant achievement. It was accomplished within standard building specifications and took only twelve months. The other outcome was that the plan for the lease was abandoned because of unresolved questions concerning insurance, maintenance, and a possible expansion, though none of these issues was considered to be a major impediment. Since an investor was not found and legal fees were mounting, the Ministry decided that an outright purchase was the better option even though the P3 would have qualified as off-book.
CONCLUSIONS
..Overall, the participants considered this P3 to be most successful. They showed that public schools can be built at lower cost, freeing public dollars for other uses. They demonstrated the viability of the Design, Build option and remain optimistic about leasing arrangements. Participants also acknowledged difficulties such as the extra time taken to work with the various partners and the need to compromise.
Brown recommends that provincial governments consider P3s for school construction, that they explore lease arrangements, that they contemplate the decentralization of school construction to districts, and that districts determine how P3s can be used to enhance community facilities.
Research Series 9, Published January 2001, ISBN # 0-9685144-5-6 ♦ Order ♦
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