ARCHIVE - 6. Conclusion

Overall it can be concluded that although a significant level of rigour has been applied to the development of several aspects of the cost estimates and this has been conducted in a manner consistent with CSC's methodologies and practices, it may be possible that the analysis is overly weighted towards "business as usual". That is that the capital, operating and lifecycle estimates have been developed in a manner consistent with CSC methodologies, but may not represent the most advanced thinking available, such as that available from other departments (for procurement timelines), jurisdictions or 3rd party advisors. The assumptions that underlie the analysis may be considered reasonable only to the extent that CSC baseline data and standards (such as resource indicators) are reasonable. In many respects, the complex may be considered a transformational business model, potentially requiring new operating approaches and standards.

Furthermore, greater care should be taken to develop a "real world" model in which the following elements are captured, and supported by best-in-class information from wherever it may be available:

• Inmate population growth and its effect on capacity at the status quo facilities;
• Direct linkages in population distribution and service levels between the status quo facilities and the complex;
• Detailed "critical path" approach to developing project implementation timelines;
• Incorporation of inflation to the status quo and complex scenarios;
• Projections for the full lifecycle of the asset;
• Risk quantification particularly regarding rehabilitation costs under status quo; and
• Potential efficiencies that exist from no longer needing to transport inmates or goods between institutions.

To that end, the key sensitivities in the estimates that should be considered for further exploration include:

• The size of footprint of the units in the complex. The assumed complex is nearly 1.6 million square feet. This large footprint drives the capital cost and lifecycle maintenance costs. To the extent that a smaller complex is possible, scenarios with a smaller footprint should be run.
• The FTE standards that are used to compile the operating cost assumptions. Current operating resource indicators have been used as the baseline for the complex. The appropriateness of these estimates is assumed given the similarities between the status quo and the complex assets. The number of FTE's required by the complex and the related salaries should be reviewed. Other jurisdictions that have undertaken these projects may be able to provide new perspectives on how efficiency and effectiveness may be improved.

Furthermore, it is believed that there may be opportunities to augment the analysis by including:

• Current estimates to real-world references such as those in the US. Despite the difference in operating models between the US and Canadian facilities, some comparative information may be gleaned from review the costs of other institutions. Co-location opportunities and security requirements are presumed to be two areas where comparative data may be useful.
• Considerations for the risks associated with each scenario. The risks inherent in undertaking the status quo and complex scenarios are not equivalent. A qualitative (or if warranted, quantitative) assessment of the risks between the two models can support the quantitative analysis.
• Considerations for other delivery model options. P3s provides a means through which risk (design, construction, maintenance and perhaps operating risk) can be transferred to the private sector. By amortizing the upfront capital payments to a long-term stream of payments linked to performance outcomes, governments have found public private partnerships an effective way to accelerate infrastructure implementation and improve asset performance.
• A third party review. Involve construction and service providers with recent experience with similar projects in a detailed review of cost estimates and operational efficiency assumptions. This will help correct bias, if any, in CSC estimates.

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Date modified:

2015-12-02