Editing Public–private partnership (section)

===Project costs===
[[File:Abbotsford Regional Hospital & Cancer Centre.jpg|thumb|A discredited 2001 report by [[PricewaterhouseCoopers]] predicted that building the [[Abbotsford Regional Hospital and Cancer Centre|Abbotsford Regional Hospital & Cancer Centre]] (pictured) through a PPP would lead to cost savings of 1% at best. This option was selected, and then the projected construction costs increased by 68% over the course of PPP contract negotiations that lasted two years.<ref name=":0" />]]
The effectiveness of PPPs as cost-saving venture has been refuted by numerous studies.<ref name=":3" /> Research has showed that on average, governments pay more for PPPs projects than for traditional publicly financed projects.<ref name="Siemiatycki 2012" /><ref name="UN OHCHR 2018" /> The higher cost of P3s is attributed to these systemic factors:
*'''The private sector's higher cost of capital:''' governments can typically borrow capital at an interest rate lower than any private company ever could. This is because governments have the power of [[tax]]ation, which guarantees that they will be able to repay their debts. Since lending to governments almost always come at a lower risk than lending to private entities, governments get better credit and cheaper financing costs for building large infrastructure projects than private finance.<ref>Mols, F. (2010). Harnessing market competition in PPP procurement: The importance of periodically taking a strategic view. Australian Journal of Public Administration, 69(2), 229-244</ref><ref>Germà Bel and Xavier Fageda, "What have we learned from the last three decades of empirical studies on factors driving local privatization? ", Local Government Studies, vol. 43, No. 4 (2017), pp. 503–511</ref><ref>Languille, "Public-private partnerships in education and health in the global South", p. 156</ref>
*'''Transaction costs''': P3 contracts are much more complex and extensive than contracts made in traditional publicly financed projects. The negotiation of these contracts require the presence of lawyers on all sides of the table and can take months or even years to finalize.<ref>European Court of Auditors, Public-Private Partnerships in the EU, p. 9</ref> Barrie Mckenna reports that "transaction costs for lawyers and consultants [in P3s] add about 3 percent to the final bill."<ref>{{Cite news|last=McKenna|first=Barrie|date=October 14, 2012|title=The hidden price of public-private partnerships|work=[[The Globe and Mail]]|url=https://www.theglobeandmail.com/report-on-business/economy/the-hidden-price-of-public-private-partnerships/article4611798/|access-date=2020-05-18}}</ref>
*'''Operating profits''':  Private companies that engage in P3s expect a return on investment after the completion of the project. By financing PPPs, they partner engages in low-risk speculation. Over the course of the contract, the private partner can charge the end-users and/or the government for more money than the cost of the initial investment.<ref name=":0" />{{rp|chapter 4}}

Sometimes, private partners manage to overcome these costs and provide a project cheaper for taxpayers. This can be done by cutting corners, designing the project so as to be more profitable in the operational phase, charging user fees, and/or monetizing aspects of the projects not covered by the contract. For P3 schools in [[Nova Scotia]], this latter aspect has included restricting the use of schools' fields and interior walls, and charging after-hours facility access to community groups at 10 times the rate of non-P3 schools.<ref name=":0" />{{rp|chapter 4}}

In Ontario, a 2012 review of 28 projects showed that the costs were on average 16% lower for traditional publicly procured projects than for PPPs.<ref name="Siemiatycki 2012" /> A 2014 report by the [[Auditor General of Ontario]] said that the province overpaid by $8 billion through PPPs.<ref name="CBC_">{{Cite web|date=December 10, 2014|title=Ontario AG reveals Public-Private Partnerships aren't a savings bonanza after all|url=https://www.cbc.ca/news/business/ontario-ag-reveals-public-private-partnerships-aren-t-a-savings-bonanza-after-all-1.2867645|access-date=August 10, 2020|work=CBC News}}</ref>