A Triple Threat?

To say P3s are a thorny issue in the building industry is putting it mildly, and architects are often caught right in the middle.

 

In 2011, Andrew King was working with Chicago-based CannonDesign as the lead architect within a consortium bidding to design, build and operate the Centre hospitalier de l’Université de Montréal (CHUM). The project was worth some $3-billion, making it the largest health care project on the continent and the largest in Canada ever. 14 months into the pursuit phase and just three months before the competition was to close, the team recognized there was a better design solution than specified in the performance criteria. Instead of a single massive building, the complex could be split into three connected structures: a standard office building, a more expensive but still cost-effective clinic building, and a typically pricey—but more compact and functional—hospital portion. Not only did the reconfiguration improve functionality and create the opportunity for a more appealing and site-appropriate form, it helped solve construction and phasing issues. “It made the project much more viable,” says King.

The client recognized the value of the suggestion, and not only changed the performance criteria but extended the competition to give bidders time to respond. Ultimately the project was awarded to Collectif Sante Montréal, which included King’s firm with partners NEUF architect(e)s. The first phase, which opened in 2017, has already been featured in numerous national and international magazines while winning a spate of awards.

CHUM was a public private partnership (P3 or PPP in Québec), and at first glance it would seem a glowing example of the kind of attributes associated with the entity and a refutation of some of the criticisms, especially as they relate to architects and design excellence. After all, there CHUM sits, gracefully occupying a difficult but prominent site, while providing patients and those who work inside with high-functioning spaces filled with both light and considerable delight. Moreover, the process that led to it proved sufficiently flexible that a building that might have proved to be sub-optimal was tidily avoided.

Occupying two full city blocks, CHUM is the largest healthcare construction project in North America. (Photo by: Adrien Williams)

Andrew King is now a partner at Montréal-based LemayLab, the 2018 Gerald Sheffer visiting professor at McGill University’s architecture school, and a frequent speaker on the subject of P3s. Perhaps unexpectedly, though, it’s to generally lambaste them, and especially their proclivity to produce mediocre architecture. “Except for two or three,” he says, “most diminish the environment.”

King is not a lone voice either. Chances are, when he refers to those two or three architecturally successful P3 projects, he’s including one or more of Bridgepoint Active Healthcare in Toronto or, outside of the healthcare field, the new Emily Carr University of Art and Design in Vancouver or Maison Symphonique in Montréal. All of those were led by Toronto-based Diamond Schmitt Architects, and, as it happens, partner Don Schmitt also offers a criticism of public private partnerships, even if more tempered. Too often, he says, “neither the quality of the design nor functionality become the focus.”

There are also architects who support P3s. David Thom is the Vancouver-based president of IBI Group, which with global operations employing some 850 architects ranks as the world’s sixth largest firm and likely the one with the most worldwide health care P3s under its belt, including the recently completed Women’s College Hospital redevelopment in Toronto. He notes that hospitals are inherently difficult and, with P3s, “design excellence can be retained if it is embedded in the process.” Moreover, with their emphasis on future performance, P3s can foster innovation and risk-taking as handily as more traditional arrangements, in part because an architect’s client becomes, not the government, but “the patients and people who work in the building.”

Meantime, Kirsten Reite, founder of 20-person Vancouver-based KRA, is the living rebuttal to another criticism, that because of their complexity and elevated front-end requirements, P3s are strictly the domain of the largest firms. When in 2013 she launched her own firm with the intention of focussing on the healthcare field, she saw P3s as inevitable and embraced them accordingly. Yes, she agrees, there may be more of a focus on functionality than some prefer, but architects may find that they enjoy more scope, not less, provided they are careful when aligning with construction and financing partners. “A bad team is like a bad client,” she says.

Still, there are sufficient causes for concern that the American Institute of Architects (AIA) recently addressed P3s with a paper entitled Public-Private Partnerships: What Architects Need to Know. It identifies several issues and proposes potential solutions and work-arounds. Some of these advocate changes in public policy; others involve adaptations to standard architectural practice. Meanwhile, there remains the worry that P3s have not delivered on intended policy goals such as saving money, reducing risks to the public and ensuring long-term performance. Several European countries have shifted away from P3s in the wake of disputes and cost overruns, and there appears to be a similar mood developing in some Canadian provinces, especially Québec.

There, on the McGill University Health Centre project, the government reached a settlement to pay the P3 supplier an additional $108 million related to cost overruns and design changes. That was on top of post-opening electrical and sewage problems, and an initial contract that led to bribery charges against two former executives of the lead partner in the consortium, SNC-Lavalin. On another hospital project, the provincial government paid out an additional $125 million for similar reasons, bringing an end to a lawsuit. That second project was none other than CHUM.

How They Got Here

The beginning of public private partnerships as we know them is generally attributed to the John Major government at the turn of the 1990s, a period when the U.K. and several other countries were facing large budget deficits. Along with the U.K., some Australian states and some American states, Canadian provinces including Québec, Ontario, Alberta and B.C. have been among the most enthusiastic adopters, initiating several dozen P3s, especially for transportation and health care projects.

As they’ve evolved, P3s represent an extended and more complex version of the familiar design-build, adding financing, maintenance and sometimes operation to the responsibilities of the consortium involved, and leaving ownership of the asset in the hands of the consortium, rather than the government, for up to 30 years. “The original push was to get government capital spending off book,“ says Vancouver-based Marv Shaffer, an economist who has been critical of P3s. “Once auditors took that away (recognizing fixed P3 contract obligations were debt in a different form), proponents had to create other justifications.”

Once auditors recognized fixed P3 contract obligations were debt in a different form, proponents had to create other justifications.

In fact, numerous benefits to the public have been cited: P3s have a single point of responsibility for the design, building, financing, maintenance and sometimes operation of the asset, creating the potential for cost savings and reduced bureaucracy; the public pays only when the entity is delivered, and does this only if it is properly maintained and performing according to specifications, a combination that can reduce risk; there is a higher degree of cost certainty, with expenditures far into the future identified upfront, and delays, cost overruns and performance shortcomings insulated against; and governments do not have to raise money, through bond issues or other means, because the private entity provides the funding.

Whether or not these benefits accrue is a controversial topic. Shaffer points out that governments can raise money at lower interest rates than private concerns, and auditors-general and equivalent bodies have generally not been persuaded by P3s, instead finding that traditional modes of public investment are cheaper and more efficient.

From an architect’s point of view, the arguments for and against are no less complex and heated. However, since architects are not policy makers and thus have little control over whether P3s continue on, they have little choice but to adapt. Recognizing that, the AIA outlines numerous concerns related to public policy and architectural practice while noting that “several of these need to be addressed promptly.” Any architect contemplating involvement in a P3 would be well-advised to read the AIA document in full, but here in a nutshell are the issues it identifies.

Challenges and Implications

Perhaps foremost, P3s involve a shift in architect procurement and role. When public infrastructure is delivered through private processes, qualification-based selection is replaced by market forces and profit considerations. The architectural firm that wins a contract is less likely to be the best qualified and more likely to be the one that allies most successfully with builders, financiers and operators.

Beyond this, the architect’s role shifts from being the owner’s agent-advocate to a private entity’s sub-contractor. This is a fundamental shift (shared to some degree with design-builds) that raises ethical issues, as illustrated by a situation recently encountered by an architect who has requested anonymity. In his case the builder substituted a less expensive and potentially inferior lighting option than was specified. Traditionally his role would have been to alert the client, a government agency, but as part of a consortium he felt his only recourse was to object—unsuccessfully—that the substitution should not have been made. As the AIA notes, “best practices should govern but without a baseline safety net…there is potential for communication problems.” In most P3 situations, the agent-advocate role is taken over by a compliance entity, typically an architectural firm hired for the job, but the argument can be made that these lack hands-on involvement and, in any case, add additional complexity.

A third major issue relates to high pursuit costs and uncompensated design work. King notes that a strength of the CHUM project was a competition fee that encouraged his team to put in front-end work that contributed to its recognition of a superior design solution, but such fees are not always offered or are inadequate. In many cases, small and medium-sized firms are precluded by cost from competing, and even the largest firms will be stricken financially by an unsuccessful bid.

Finally, the AIA notes legal and jurisprudence issues that, in some cases, fail to guarantee the kind of performance-based work that is supposed to be one of P3’s strongest selling points, and in others, can lead to disputes. Not all of these concerns are relevant to the Canadian situation, but as recent cases in Québec and other jurisdictions demonstrate, P3s are no less likely than other kinds of commissions to pad the incomes of lawyers instead of architects.

That’s not quite it for the downsides either. The AIA’s list of problem areas is extensive and worrisome, but it does not even touch on the issue identified by many of the most vocal opponents of P3s as most crucial to them. Their biggest concern, bluntly stated, is that P3s produce bad architecture.

Too Many Parts?

From Kings’s perspective, the CHUM project had one major advantage contributing to its positive design outcome. Perhaps because the Québec government had begun to sour on P3s, his team enjoyed more flexibility and freedom than would have been the case elsewhere. “In Ontario there’s no way we would have been able to do this,” he says.

Among Canadian provinces, architects generally agree that Ontario has the most restrictive P3 process and Québec the least, with other provinces somewhere in the middle, but the more important point is that in all cases P3s involve too many actors, with too many overlapping roles. “The fundamental relationship is between a design team and the client,” King says. “With P3s, there’s a significant filter between those two entities—the compliance team.”

Beyond the compliance team, there’s typically also a government body charged with monitoring and administering P3s. In Ontario it’s Infrastructure Ontario; in British Columbia, Partnership BC. That means there are two entities standing between the ultimate client—a health ministry or hospital authority, say—and the architects. “There’s an enormous and complex bureaucracy between the specification teams and the build teams,” says Schmidt. “You’re struggling to get face time.” Sometimes this can be transcended, Schmitt allows. “There is a way to do it in the P3 model and that means devoting a lot of effort at the front end.”

In the case of the widely admired Bridgepoint, he extends a good deal of the credit to the close working relationship his firm enjoyed with the compliance team—a collaboration of Stantec and KPMB Architects—and the quality of work the first team was able to provide in terms of specifications. “The functional requirements were more developed from a design point of view than was normally the case,” he says. “More thoroughly conceptualized, more thoroughly understood.” As a result his team could dig more deeply, and pay more attention to details. “Normally the second team has to move very fast because time is money.”

This leads into a second critique offered by King and Schmitt. Time is always money, of course, but Schmitt suggests that architects’ traditional emphasis on design quality and building performance can by whittled away at when participating in a consortium. “The build team’s motivations are to move quickly,” he says. “To manage costs.” King is more forceful, suggesting that the splitting of practitioners’ allegiances contributes to a situation that is “kneecapping architecture.”

That’s a strong opinion, and far from a unanimous one. Thom thinks good and bad buildings are being built by both P3 consortiums and through traditional client-architect relationships. “I wouldn’t pin it on the process.” Reite suggests that, rather than the diminishment observed by King, architects may even see their professional roles expanded in a P3, finding themselves taking on a greater degree of project management, for example, due to their experience in managing disparate groups of people. Moreover, once the admittedly constrained pursuit phase is over, working within a P3 needn’t create communication obstacles with the client, and the process may actually enhance the flow of a job. “Instead of wondering how a contractor might phase some complicated thing, well, the contractor’s right there, you can ask him.” In her view, P3s are “just different.”

That P3s are different is an indisputable fact, and there are perhaps two questions that should be asked of them. One is for the public, and it has to do with whether good value is being received. If the answer is affirmative and P3s are to continue, then architects need to question how they can be rearranged or adapted so that more are comfortable with the process and results. Currently, too many practitioners believe the system is clunky, and the results mediocre, and that’s not good enough.

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