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Stave Lake Water Supply and Treatment Project Business Case for P3 Canada Fund Funding Request

Stave Lake Water Supply and Treatment Project Business Case for P3 Canada Fund Funding Request. AMWSC April 04 2011. Purpose of business case. Determine if the Project may qualify for financial support from the P3 Canada Fund

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Stave Lake Water Supply and Treatment Project Business Case for P3 Canada Fund Funding Request

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  1. Stave Lake Water Supply and Treatment ProjectBusiness Case for P3 Canada Fund Funding Request AMWSC April 04 2011

  2. Purpose of business case • Determine if the Project may qualify for financial support from the P3 Canada Fund • Must be a P3 delivery model including design & construction plus one or more of operations, maintenance, financing • Must provide public benefit • Must provide “value for money” according to accepted CDN practice • Project structure and procurement process must follow best practice • Level of support: up to 25% of eligible costs • Form of support: repayable, non-repayable, interest-free loan, other • Business case contents guided by P3 Canada Fund submission guide • Methodology guided by Partnerships BC practices

  3. Recommended procurement option: Hybrid DBFO+DBO DBFO for “Bundle A” • Intake & Pump Station • Water Treatment Plant • Reservoir Expansion • Partial public, partial private financing • Long term warranty benefit from the private financing DBO for “Bundle B” • Transmission Mains • No private financing

  4. Recommended procurement option: Hybrid DBFO+DBO Basis for recommendation: • Maximizes construction time and cost certainty (on-time, on-budget) • Maximizes long term cost certainty • Reduces AMWSC’s retained risk and transfers considerable risk to the contractor • Provides long term performance guarantee appropriate for each Bundle • Estimated project “value for money1” of $33.2 M or 10.6% • Estimated “value for money” to AMWSC of up to: • $83.5 M or 26.7% … depending on level of P3 Canada Fund contribution 1 Net present value of cost savings over the design, construction, and operating period (approx 29 years in total), as compared to traditional design-bid-build procurement.

  5. Recommended procurement option: Hybrid DBFO+DBO Key Features • AMWSC sets water quality standards and capacity of the system • One contractor is selected through a competitive process for the combined DBFO+DBO • The contractor designs and builds, and then operates and maintains, Bundle A and Bundle B for 25 years – for a fixed price • AMWSC pays for approximately 35% of the construction costs of Bundle A during construction, the balance is financed by the contractor • AMWSC pays for 100% of the construction costs of Bundle B during construction • AMWSC makes annual payments for operations and maintenance • AMWSC makes annual payments to repay the contractor’s financing on Bundle A • Payments to the contractor are at risk: penalties are applied if the contractor does meet the terms of the contract

  6. Comparison of procurement models CONFIDENTIAL

  7. Risk allocation

  8. Funding request from P3 Canada Fund • Funding request for 25% of eligible costs in the form of a non-refundable contribution • Contribution would be received during the construction period and used to offset the AMWSC’s milestone payments to the contractor • P3 Canada Fund investment offers incremental value for money and a resultant incremental reduction in AMWSC’s costs of water provision

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