Assessing Value for Money - An Updated Guide to Infrastructure Ontario's Methodology
The guide aims to provide information and insight about IO’s use of best practices, as well as to provide further transparency about VFM and the Alternative Financing and Procurement (AFP) model. The AFP model brings together private and public sector expertise in a unique structure that transfers, to the private sector partner, the risk of project cost increases and scheduling delays typically associated with traditional project delivery. IO uses several AFP models to deliver projects. These are the Build-Finance (BF), Design-Build-Finance (DBF), and Design-Build-FinanceMaintain (DBFM) models. The current list of projects assigned to IO fall under a variety of asset classes including transit, transportation, hospitals, courthouses, post-secondary institutions, detention centres etc. The methodology set out in this guide therefore relates to BF, DBF and DBFM projects, across all asset classes.
The updated VFM Guide is intended to provide greater information and insight about IO’s use of best practices, as well as to provide further transparency about VFM and the AFP model for our clients and stakeholders. The process to refresh our VFM methodology involved:
- A review and assessment of IO’s historical AFP project experience to ensure the methodology reflected actual project data;
- Consultations with key stakeholders and Ministry client groups, incorporating feedback and lessons learned;
- Engagement of external experts who brought their latest knowledge and expertise to bear; and
- A review of research and published reports on both traditional and P3 projects from comparable markets (e.g. UK, Australia).
The refinements reflected in this updated VFM Guide include:
- Simplified risk matrices;
- Introduction of an innovation factor;
- Lifecycle cost adjustment for traditional delivery;
- Removal of insurance premium from ‘Competitive Neutrality’; and
- Enhancements to the risk assessment process.
