Contractor consortium chosen for $1.8B P3 Canadian light rail

Dive Brief:

Canadian consortium TransEd Partners has been selected to design, build, operate and maintain the first phase of Edmonton, Alberta’s $1.8 billion Valley Line LRT. TransEd will also finance the rail project, which will be built as a public-private partnership (P3), the first in Edmonton.
As the private sector partner of the P3, TransEd will bear the budget, scheduling and performance risks of Edmonton’s largest infrastructure project ever, as well as carry the future responsibility for maintenance and operations. City officials said TransEd is subject to heavy penalties if the rail system does not operate as expected.
Construction on the rail system will begin after the contract is finalized, sometime in February 2016, and is tentatively scheduled to begin service in December 2020, according to CBC News. Funding sources for the project include the City of Edmonton ($800 million), the Province of Alberta ($600 million) and the Government of Canada ($400 million). TransEd member companies include Fengate Capital Management, Bechtel, Ellis-Don, Bombardier, Transdev, ARUP and IBI Group.

Dive Insight:

A P3 involves a partnership between a public entity and a private company, or group of companies, who will perform the actual work and assume most of the risk of the project. P3s are increasingly being viewed as a more efficient way to tackle large public projects, such as transportation and other infrastructure programs, which require the funding and progress often bogged down by government bureaucracy and red tape.

Canada has already seen positive results with P3s, particularly with a light rail project in Toronto that came in $2 billion under budget. In the U.S., Texas officials credited a P3 for the early opening of the renovated LBJ Express highway. And this week, Brendan Bechtel, president of the Bechtel Group — a member of the TransEd team — advocated in USA Today for the use of P3s as a way to combat deteriorating infrastructure in the U.S., using Canada’s Infrastructure Ontario as a model.

"We feel confident that TransEd Partners shares Edmonton's vision for its future, and is the right partner to bring this vision to life," Linda Cochrane, acting city manager, said. "The procurement process on this project has been very robust and the final deal is one that offers strong value for taxpayers."