ACCIONA Infrastructures Canada

ACCIONA brings expertise in public-private partnerships to Canada. Infrastructure improvement projects have gained attention in the United States and Canada as other construction work has slowed. In the U.S., allocations from the American Recovery and Reinvestment Act (ARRA) have funded or closed funding gaps in infrastructure projects. In Canada, public-private partnerships (P3s) are an alternative procurement model that welcomes other sources of funds to deliver projects in addition to traditional procurement methods, increasing construction activity and creating local jobs.

ACCIONA Infrastructures Canada has become a major player in the P3 arena. It is one of a group of companies organized around its parent company’s three main international divisions: infrastructure, energy and water. ACCIONA S.A. is a sector leader in the Dow Jones Sustainability Index and has a work force of 35,000. It is quoted on the IBEX 35 blue chip index (ANA.MC).

“It’s just purely driven through need,” maintains Roger Howarth, executive vice president, regarding the rise of P3s. “Much of the infrastructure built over the last 50 years was poorly maintained and needs to be replaced. A lot of development and building came during the post-war period in the 1950s and ‘60s, and there’s only so much public money available that can finance projects in the traditional manner. The P3 model has proved successful in Europe, and that’s where ACCIONA has concentrated its efforts in Canada over last few years.”

President Robert Park asserts that P3s are a way of controlling risk. “From our perspective, P3s are important because they provide a method of procurement which secures the risk for the public sector,” he says. “It passes certain risks to companies like us who have experience in managing and dealing with those risks.

“It provides the public sector and the public in general with very clear fixed pricing and a fixed schedule,” Park emphasizes. “They know with confidence that a project will be delivered on the schedule and budget that is set, which is not the case in many of the more traditional forms of procurement.”

How It Works

In the P3 model, a company or a consortium of companies develop a project, build it, and once a project is complete, operates the facility for a fixed period time – 25 to 30 years or however long the government entity requires. The company or companies may also arrange the financing, debt and equity financing for the project.

Within ACCIONA, all this can be delivered as part of a unified team in a proposed package. “The P3 process brings in development, finance, construction and operation and maintenance,” Park notes. “All these elements are almost always there for a P3.”

At the end of the period, the facility is returned to the government or provincial authority, which continues to own the facility. “They pay the developer, generally speaking, on the basis of availability,” Park explains. “It depends on the type of project that we’re dealing with. On a hospital or social infrastructure project, they pay based on availability. So as long as we make the facility available and we meet certain standards, then the payment is made in full on a monthly or quarterly or yearly basis. If we fail to meet the requirements, a deduction in payment occurs.”

Added Advantages

One of the reasons ACCIONA is enthused about P3s is that ACCIONA can provide all three of a P3s elements, as well as arranging financing. ACCIONA is one of Spain’s leading business corporations. The company operates in infrastructure, energy, water treatment and services in more than 30 countries.

“ACCIONA, through our ultimate parent, is the equity provider and financier of the project,” Park relates. “ACCIONA Infrastructures, which is our construction division, is the designer and builder of the project. And in many cases, ACCIONA Facilities Services, which is another division of the company, would manage the facility services through the term of the concession. It allows us to be a part of each phase of the project.”

Howarth emphasizes the advantages to the public of this project integration. “They are getting a fully integrated team and effectively ensuring that each risk is managed by us, ACCIONA, as opposed to a less integrated consortium, where each individual member – be it the contractor, concessionaire, or facilities manager – has its own agenda and is pushing risk to somebody else,” Howarth declares.

“We’re quite comfortable in managing risk so it is sitting where it needs to sit and transferred to the party best able to manage it,” he continues. “We believe that brings value to the public, and public authorities have said it is a model they like. It’s not a very common model in North America, and that is one of the reasons there are opportunities here for ACCIONA.”

Currently, ACCIONA Infrastructures Canada is working on a toll road in Quebec and two hospitals in British Columbia.

Autoroute 30 Toll Road

The 42-kilometer, dual two-lane Autoroute 30 toll road, which runs along Montreal’s south shore, was started in September 2008 and is scheduled for completion by the end of 2012. ACCIONA and its partners will design, finance, build, operate and maintain it.

It includes two large bridges crossing the St. Lawrence River and the St Lawrence Seaway/ Beauharnois Canal. Additionally, 30 other bridge structures will be built over rivers, existing roads and railways, and a short tunnel constructed under a canal. It will use transponders with open-road tolling systems to keep traffic moving, thereby reducing auto emissions.

Work on Fort St. John

Located in Fort St. John, British Columbia, the Fort St. John Hospital and Residential Care Facility will consist of a 161,000-square-foot, 55-bed hospital and a 123-bed residential care facility for seniors with a total project value of $297.9 million. Construction started in July 2009 and is scheduled for completion in early summer 2012. It will include an integrated services building for centralized food, laundry and material services.

The building will use locally produced timber and local labor and products. “That was a big plus in us being awarded the job,” Park declares. LEED gold features of the building include the use of recycled materials, erosion/sedimentation control and smaller staging areas, controlling storm water runoff, a high-performance building envelope and mechanical and electrical systems, earth-sheltering of portions of the building, day lighting and improved indoor air quality.

First in Canada

Located in Victoria, British Columbia, on Vancouver Island, the 320,000-square-foot Royal Jubilee Hospital Patient Care Center will be completed by December 2010. Construction of the $350 million facility began in July 2008. It will have 500 beds with more than 80 percent located in single-occupancy rooms, which helps prevent the spread of infection.

Certified as a LEED-gold structure, the center features the first sedimentation tank automatic wheel wash system in Victoria to be used during the construction phase, which prevents construction debris from being washed off-site. Additionally, cisterns in the foundation of the building will allow rainwater from the roof to be collected for irrigating the green roof and other landscaped areas that will deflect solar heat gain.

“We can claim we’re the first contractor in Canada that is utilizing prefabricated bathroom pods for the hospital itself,” Park maintains. “The pods are being manufactured in Boston and shipped to the site, then dropped into place and connected. That obviously gives us advantages in terms of quality control, which is much better off-site. We can nail all the issues down in a controlled environment, and it reduces the need for labor onsite, which always is an issue when fast-tracking a building.

“We used these prefabricated bathroom pods in Europe in a very large hospital in Spain,” Park adds. “It was extremely successful there, and we brought that over with us as a piece of learning from a past project. It’s not unusual in the hotel industry, but this is the first time we’ve fully utilized it in a hospital in North America. You would not notice it in the finished hospital. It would look like a conventional stick-built bathroom.”

Hiring Local Labor

Since coming to Canada 10 years ago and being involved in P3 projects for the last three-and–a-half years, ACCIONA has carefully selected its partners in design and construction.

ACCIONA’s corporate motto, “Pioneers in Sustainable Development,” reflects the company’s commitment to contributing to economic growth, social progress and environmental balance, the company says.

“For example, although we are a European contractor, the physical work is done by local Canadian trades and contractors, so we are not importing people from outside Canada,” Park points out. “We are bringing a management team, skills, expertise and innovation, but the physical construction remains in the hands of Canadian trades and contractors.”

“We operate as a general contractor, but the subcontractors are all from the local market,” Howarth adds. “We do not self-perform the work. We package it and we manage it through our local trade partners.

“As a business model, this has worked for us,” he continues. “We are actually ensuring that these are long-term partners. We’re not here just to cherry-pick projects. We believe we’ve got good roots here in Canada, and we intend to be here for a long time.”

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