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The Hospital That Was Too “Bankable”
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By the answers of yesterday’s email, I see that people love Canada. I do. So here you are more meat. ​ Montreal… or as we say in Montreal… Montréal. Early 2010s. Project: McGill University Health Centre (MUHC) PPP Value: ~ CAD $1.3 billion Model: DBFM ​ Canada again. Sophisticated market. Experienced advisers. Polished risk matrices. I was there practising kung fu and delivering infrastructure. ​ The goal? Deliver one of the largest hospital redevelopments in North America through PPP. ​ And make it “bankable.” ​ Which, in PPP language, usually means: ​ “Let’s make the contract robust enough that lenders sleep at night.” ​ Perfectly reasonable. ​ Until robustness becomes rigidity… ​ Phase 1: Transfer Everything That Moves Construction risk? Transferred. Design integration? Transferred. Schedule certainty? Transferred. ​ Because that’s what PPPs do. ​ And once again: ​ “Allocate risk to the party best able to manage it.” ​ Ah… lawyers… ​ Yes. That sentence again. Still funding lawyers’ vacations. And Havard for their kids… ​ Phase 2: Complexity Meets Politics Hospitals are not highways. They evolve. Medical technology changes. Clinical requirements shift. ​ But PPP contracts love stability. Hospitals love change. ​ Guess who won that fight? ​ Phase 3: Trouble By 2015, the project was: Delayed Over budget Under political pressure ​ And then came the real twist. ​ A corruption scandal linked to the procurement process exploded. Executives investigated. Arrests made. Public trust shaken. As Spain… but the Canadian guys have less patience… ​ Suddenly the issue wasn’t just delivery. ​ It was legitimacy. ​ The Irony PPP was supposed to: Bring discipline Bring transparency Bring private-sector efficiency ​ Instead, the headlines were about: Political interference Procurement manipulation Governance failures ​ In Canada. ​ Yes. ​ In Canada. Not Spain. ​ Again. ​ The Lesson ​ PPP is not a shield against: Human incentives Political pressure Bad governance ​ It is a structure. ​ And structure without integrity is just expensive paperwork. ​ PPP doesn’t fail because the model is wrong. ​ It fails when: Risk is theoretical Governance is weak And everyone is in a hurry to announce success. ​ Even in the most mature markets… ​ You want more? For more PPPs and Kung Fu lessons, click below. ​Life is easier with an Ex-CEO on your ear. ​ ​ PD 1: If you liked this email, don't keep it in secret and forward it to a friend. They will thank you enormously one day. PD 2: If somebody has sent you this email and you want to receive emails like this yourself, visit vicentevalencia.com PD 3: If you want unsubscribe, click the link below. ​ ​ |
Vicente Valencia
I talk about Personal Growth, Management, Infrastructure and More | 👇JOIN +2k readers 👇
Toronto. 2015. Project: Eglinton Crosstown LRT. Value: CAD $5+ billion. Model: DBFM. Jurisdiction: Canada — the global gold standard of PPPs. The agency wanted efficiency. Faster procurement. Faster close. Cleaner risk transfer. Put a medal in the chest for opening the day before election day. So they did what PPP manuals love to say: “Allocate risk to the party best able to manage it.” That sentence has probably financed more claims for lawyers than any other in infrastructure history....
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