Trans-Canada Highway (New Brunswick)

operational

Opportunity Stretching from Quebec through New Brunswick to Nova Scotia, this portion of the Trans-Canada Highway is a critical component of the Atlantic region’s economy. The highway provides a major east-west link between the Atlantic Provinces and the rest of Canada, as well as a north-south link with the United States. International and interprovincial exports make up nearly three quarters of New Brunswick’s GDP each year, including $4 billion worth of goods which pass along the province’s highways each year. The old two-lane highway was not adequately moving goods and people, and posed numerous safety concerns, such as high collision rates.  From 1997 to 2001 there were 807 collisions resulting in 34 fatalities and 432 injuries. A study conducted by the Department of Transportation indicated that fatal accidents on high-speed, two-lane highways occur three times more often than on four-lane divided highways. Upgrading the Trans-Canada Highway by 2007 was a top infrastructure priority the Government of New Brunswick. At the time the project was one of the largest P3 road projects in the country. Innovations Traditionally, construction financing for this kind of project would have been provided by Canadian banks, however SNC-Lavalin Capital foresaw it could substantially lower the financing cost – by attracting new types of investors through a unique financing structure with equity-like features but no direct equity investment, minimizing the cost to the province. The project was the first highway infrastructure project in Canada to require its private-sector partner to finance construction of the project, with payment made by the government only once the highway opened to traffic. The province entered into two Project Agreements with the Brun-Way Group—a Design Build Agreement and an Operation Maintenance Rehabilitation Agreement. Results The project included the design and construction of 98 kilometres of four-lane highway between Grand Falls, NB and Woodstock, NB, as well as the selected upgrade of 128 kilometres of existing four-lane highway. The Project Agreement also included the operation, maintenance and rehabilitation of the entire 275-kilometre of highway until 2033. Using a P3 resulted in the project being completed faster (three construction seasons) than using a traditional procurement method. The upgrade resulted in reduced transportation costs and travel time, since a controlled access highway with a 110 kilometre per hour speed limit provides safer and more efficient motoring from the Quebec to Nova Scotia borders. A 2002 cost-benefit study indicated that completion of the four-lane highway in New Brunswick would result in $504.4 million in savings to users including reduced travel time ($35 million), vehicle operations ($281 million) and collision reduction savings ($188 million). The project has served as a model for other highway infrastructure financing in Canada. The project opened the short-term financing market to Canadian institutional investors, will provide better terms and conditions for future P3 projects in Canada, and will  provide a new class of investors as the Canadian Banks react positively to new competition. The project created 4,000 person years of work and an additional 4,000 person years in spin-off benefits. The Brun-Way Group was committed to achieving more than 75 per cent support from residents of New Brunswick for the design and construction, and during the life of the project. The project provided over one million dollars in benefit to Aboriginal communities through its local content, design and construction requirements. Using a P3 resulted in cost savings of approximately 15 per cent compared with traditional procurement.

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