Resolving disputes and preparing for the ‘next generation’ of P3 models remains the focus of revamped certificate

The coming-of-age process for P3 projects has proven turbulent. Many private sector players have struggled with getting the project done within the rigid structure and risk transfer profile of a traditional P3 model that typically throws up many of the same complex issues over the course of a 20- to 30-year project, forcing them to work in the shadow of hardship due to the realities of a rapidly changing environment.

While traditional P3s continue to be used, the risk is too much for many, leaving public owners with a dwindling number of private sector partners willing to bid on them. As a result, the public sector is increasingly open to new methods for delivering large and complex infrastructure projects, with innovative progressive models emerging to reflect the changing market conditions.

Last year, we caught up with Chris Bennett, a partner at Osler Hoskin and Harcourt LLP, and Rick Shaban, senior counsel at Borden Ladner Gervais LLP, for a behind-the-scenes look at the evolution of the Canadian P3 and infrastructure landscape, and how changing market conditions have influenced the new focus for OsgoodePD’s Certificate in Public-Private Partnership (P3) Law and Practice in Canada (the “P3 Certificate”). Bennett and Gervais serve as co-directors of the P3 Certificate, along with Divya Shah, the managing director of investments at the Canada Infrastructure Bank.

Bennett may have missed the birth of Canadian public-private partnerships in the 1990s, but he has been present for many of the sector’s major milestones in the years since.

Still in law school when projects like the Confederation Bridge linking Prince Edward Island to New Brunswick and Ontario’s Highway 407 introduced the P3 concept to Canada, Chris Bennett got his start as the sector was taking some its early baby steps into new areas of the economy, acting as counsel to the lenders on Canada’s first major healthcare P3 transaction – involving Brampton, Ont.’s William Osler Health Centre in 2004.

Almost two decades – and close to 100 deals – later, Chris Bennett remains intimately involved in the Canadian P3 space as it approaches the end of its difficult adolescence and as complex disputes and claims continue to plague numerous P3 projects during their decades-long lifecycles.

All that activity and tension has Bennett eagerly anticipating the next stage of P3 development.

“We’re entering a very evolutionary phase of P3 where different types of partnership are available, so we’re reassessing what risk allocation looks like, and testing new models,” Bennett says, adding that this makes the timing perfect for the revamped P3 Certificate.

Back for it’s second year, the intensive program is offered over five days in the Fall of 2024, exploring the latest trends in the market and providing participants with the latest knowledge and tools to develop legal risk management and dispute resolution skills and strategies, enhanced via a series of problem-solving exercises and group discussions focusing on real-world P3 examples.

“It’s going to be a great opportunity for all stakeholders involved in infrastructure projects, not only to learn from knowledgeable speakers with a broad spectrum of experience, but also to share their own ideas. It will be very interactive,” says Shaban, who was also introduced to the P3 field in the early 2000s as a progression from his construction procurement law practice, and draws his experience from an impressive list of past and current P3 projects.

He explains that this was a critical period for the P3 sector, as provincial governments signalled their embrace of this form of infrastructure delivery by incorporating their own agencies to handle the procurement of complex capital projects. Partnerships B.C. led the way in 2002, followed soon after by Infrastructure Ontario in 2005, helping establish Canada as a global P3 pioneer.

“It became very prevalent as a model to address the infrastructure deficit that existed at the time, because it allowed much larger projects to get delivered faster,” Shaban says.

More recently, he says the Covid-19 pandemic and subsequent supply chain crisis have contributed to a backlog of projects that he expects to keep the country’s P3 lawyers busy for the foreseeable future.

“As long as this environment of infrastructural need continues, it is likely to remain a vibrant area. There is still quite a bit of work to be done,” Shaban says.

According to Bennett, recent trends suggest that many of the future projects will be larger and more complex than many we have seen in the past, as public sector authorities expand their use of P3s into new asset classes, including major transit, wastewater and cross-border developments.

“The scale and diversity of P3s has really taken off in the last few years,” prompting many public agencies to split their projects up into smaller pieces, Bennett says.

“It’s getting to the point where projects are so big that no single builder or consortium is able to absorb the risk,” he adds. “The advantage of breaking things down is that each component is more digestible for private investors. The downside is that you have be careful about how you download interface risk.”

In addition, Bennett says public agencies have adapted their approach to partnerships – increasingly gravitating towards emerging progressive models of P3 procurement that allow them to have a greater say in the early phases of the project than the traditional “design-build-finance-maintain” method.

“A heavy focus of the certificate course will be on how we can get these new models right, and to what extent they represent an improvement over the old ones,” Bennett says. “It’s all about keeping Canada on the leading edge of infrastructure globally.”

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