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Summit Article |
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School's out
by Jim Meek Nova Scotia's ambitious P3 (public-private
partnership) school construction program has been turfed by a new
government as too expensive, too political and - in the words of Nova
Scotia's finance minister, Neil LeBlanc - "too out of
control." The Conservative government of Premier John Hamm came to
power in July 1999 after promising to review the province's controversial
P3 school construction program. The previous Liberal government had
pledged to build 55 P3 schools. The new government cut that number to 33
last summer - schools which were supposed to be completed at a cost of
$350 million. By July of last year, however, cost overruns on the program
had already hit $32 million. "The former government used P3 as a
blank cheque to build schools with costly extras taxpayers can't afford
and - quite frankly - students don't need," Education Minister Jane
Purves said at the time. "We have a responsibility to taxpayers …
to build schools at a reasonable cost. That absolutely rules out P3."
Those comments came after a series of P3 school flareups across the
province. P3 contracts were not standardized as turnkey operations, so
"so-called" off-site costs often became inflationary.
"The standards for the new schools were continuously raised. The
site selection process resulted in the purchase of land that was too
expensive," LeBlanc said. "Basically, the whole process just got
too out of control." Ironically, the P3 program was axed even though
the government had no hard evidence that it was inefficient or expensive.
Late in 1999, LeBlanc awarded KPMG an $89,000 contract to study P3 school
construction. In the end, though, the consulting firm said it couldn't
answer a central question - whether it was cheaper to build P3 schools or
government-funded and -built projects. "We are not in a position to
say definitively whether the P3 projects … did or did not achieve value
for money," the consultants concluded in a 31-page report.
"While the two projects we reviewed in detail did include financial
analysis and/or benchmarks as a basis for assessing the financial
implication, a formal public sector comparator had not been
prepared." In short, the consultant was not provided with the cost
data from "traditional" school construction projects to compare
to the P3 projects. Still, KPMG did recommend several steps to improve the
P3 procurement process in Nova Scotia. It called on the government
to: adopt common policies and procedures to guide and support P3
procurement across government departments; improve project
pre-qualification before utilizing P3 procurement across government
departments; clarify roles and define responsibilities within
government; improve project planning; establish a process for due
diligence review of P3; and emphasize the requirement for a clear and
precise paper trail to document the P3 procurement process and the
resulting decisions. LeBlanc is willing to concede that the government
dropped the ball on the P3 school program, which was neither carefully
planned nor carefully monitored by bureaucrats. "I don't blame the
developers or the school boards. It was the province that didn't grab
control of this," he said. "There weren't enough ground rules up
front for controlling costs." As a result, developers and local
school committees ended up agreeing to design changes, including bigger
classroom sizes and upgraded computer equipment. The minister said he
isn't against public-private partnerships in general, and the Hamm
government still plans to complete a combined jail and forensic unit on
the P3 model. But don't expect any P3 schools to be built in the near
future. "For schools, in the near term, we had to set a clear
direction," LeBlanc said. The government did just that last June,
announcing it will award non-P3 contracts for the construction of 17 new
schools by 2004. At a total cost of $200 million, the schools will cost
about $2 million less each to build than P3 schools. (They will also be
built to a smaller scale.) Meanwhile, officials with the three developers
that built Nova Scotia's P3 schools were reluctant to comment on the
cancellation of the project. But Kirk MacCulloch, president of
Halifax-based Nova Learning, said his company built nine "excellent
schools with the help of community input." "The point is not
whether the schools are owned by the operator or whether the schools are
owned by the government," said MacCulloch. "The schools are
owned by the community - that's the key." In the end, though,
MacCulloch said, it's not his job to set public policy, and he has no
quarrel with the government for deciding to abandon the P3
program. Instead of giving up on the P3 sector, Nova Learning has started
developing opportunities for school projects in the United States.
"We're taking our expertise to New England, where there is a need for
new schools," MacCulloch said. "We learned a lot from the
process here." Jim Meek, former columnist with the
Halifax
Chronicle-Herald and winner of the 1999 Hyman Solomon Award for Excellence
in Public Policy Journalism, now works as a freelance journalist in
Halifax, Nova Scotia. |
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