A major value-for-money report on the combined Saskatchewan Hospital/integrated correctional facility was released Thursday, indicating substantial cost-savings for the project.
The report was prepared by the accounting firm of Ernst & Young.
“The numbers in the value for money report have been substantiated by Ernst and Young … that we are saving $90 million with respect to the construction of this facility using a P3 over a traditional approach, which is 18 per cent of the construction cost,” said Gordon Wyant, minister for SaskBuilds, speaking to the News-OptimistThursday.
According to the report, the total investment under the P3 – public private partnership – is $407 million, which includes the cost of design, construction, finance and more than 30 years of maintenance to ensure it remains in like-new condition. Under a traditional approach, Ernst & Young states the cost would be $497 million for the same project if delivered through a traditional approach.
The new facility consists of 188 beds replacing the current 156-bed facility, and 96 secure beds for male and female offenders living with mental health issues.
Also released was the request for qualifications, request for proposals, the first and second fairness advisor reports, value for money assessment and project agreement. Those can be found online at www.saskbuilds.ca.
The opposition has hammered away at the P3 for Saskatchewan Hospital and at Access Prairies Partnership, the consortium awarded the P3, for not featuring enough Saskatchewan content. Wyant maintains there is significant local content.
“This project is going to create about 1,500 construction jobs,” said Wyant. “We already know there are 10 Saskatchewan businesses which are engaged on the project today. We know that there will be more as the project continues to be built out.”
He also pointed to other P3 projects such as the Regina bypass and the Swift Current long-term facility as having local content. While there were some complaints and some concern, Wyant acknowledged, “that hasn’t been our experience with respect to our other projects and we are not expecting that to be our experience with this particular project.”
The opposition has also been critical of going the P3 route by saying the traditional approach would save more money, but Wyant pointed out comparisons were made.
“We do what we call a public-sector [comparison], so we do a calculation as to what we believe the project will cost to build and maintain over a 30-year period if the government was to do it in a traditional approach.”
Wyant said they then “send the project out for tender and request for qualifications.” That is for construction and for the long-term maintenance over the 30 years, including the major life-cycle rehabilitation to keep it like new after that time.
So those bids are compared to public sector comparisons, said Wyant.
“The difference between those is what we refer to as value for money. That’s the $90 million.”
Wyant confirms the project is currently still on time and on schedule. A webcam has been set up at www.pnrha.ca to track the Saskatchewan Hospital construction progress.
Battlefords MLA and provincial Environment Minister Herb Cox indicated he was pleased with the Ernst & Young report’s findings.
“As the MLA, what’s most meaningful to me is that construction will finish on schedule,” Cox said in a news release.
“The report confirms one big reason we chose a P3 – to make sure project risks, whether it’s bad weather or material shortages – won’t delay the opening. Savings are important, but most of all, this project is about better care for patients.”
