Monday, April 07, 2008

Municipal governments sporting arenas

Municipal governments love blowing cash out the door to build big fancy arenas. For some communities in B.C., such as Abbotsford, it may mean a property tax increase of 15% this year. Not all municipal politicians fall into the "if we build it they will come" fallacy. One B.C. municipality has shown how using P3's can keep project costs under control and bring a better product to the community.

Chilliwack's Prospera centre is a good example of a design-build P3. The City of Chilliwack tendered a fixed price project that would have the winning bidder design the facility. In a more traditional model, such as the Convention Centre in Vancouver, one architect will design the project then a city will put the design out to tender. The City of Chilliwack's strategy was to tender out a problem (what kind of arena can we build within a budget) to the private sector and have the private sector come back with a solution. That way, the City got to pick from a number of designs and was able to work through to an almost final project before the contract was signed.

As the massive cost overruns at the Convention Centre show, going with one design, to be built in the cheapest way possible, can be massively expensive at the end.

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