Tag Archives: P3 procurement

Kingston hospital project to cost $164.9 million more under privatized deal

Ontarians are paying a premium of $164.9 million to replace Kingston’s mental health and rehab hospitals with a public private partnership. That’s nearly 38 per cent more than the public alternative.

The figures come from Infrastructure Ontario’s own Value for Money (VFM) document recently posted on-line.

The VFM notes the basic costs of the new hospital would have been $435.9 million had the province pursued the more traditional public procurement processes. Instead contracts were signed to build the same hospital for $600.8 million under a scheme that bundles 30-year financing and maintenance with the project’s design-and-build contract. When inflation and ongoing maintenance costs are applied to the contract, that amount rises to $901 million over the life of the agreement.

Infrastructure Ontario justifies the higher price tag by arguing the P3 actually saves $152.5 million by transferring the risk of cost overruns to the private sector. They calculate that risk at a staggering 88 per cent of the cost of the publicly-procured model – or $383.6 million on the $435.9 million price tag.
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