UBC Theses and Dissertations

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UBC Theses and Dissertations

Modeling senior government contribution strategies for funding public infrastructure projects Daliri, Hanieh


The poor state of public infrastructure in Canada has been a controversial issue for the past few years. Insufficient public transit, crumbling bridges, old water and sewage lines, and congested roads require major investments. The capital investment and the availability and quality of services provided by public infrastructure are critical in enhancing the Canadian quality of life and economic growth and productivity. Most public infrastructure in Canada is the responsibility of municipalities. Various funding sources are available for municipal governments to respond to the need for new investments in infrastructure. Transfer payments, including the grants and contribution agreements from senior levels of government, are one of the essential sources for funding public infrastructure. This thesis explores the terms of contribution agreements through which senior levels of government fund infrastructure projects and investigates the importance of these for satisfying objectives of the project participants including those of the client, the senior level of government, delivery team or private sector, and end users. Three terms in contribution agreements are examined, including the timing of payments, the cost-sharing ratio of contribution to total eligible project cost, and the eligibility ratio as a percentage of total capital cost. The sensitivity of a subset of the participants’ objectives to changes in the terms of the contribution agreement are measured in terms of total project cost incurred by the client and interest expenses during the design and construction phase from the viewpoints of the client, senior government, and contractor. A parametric deterministic cash flow model is developed to evaluate the impact of alternative senior government contribution strategies. The calculation of model performance metrics and related sensitivity analysis is carried out using MATLAB. Data gathered from the Lions Gate Secondary Waste Water Treatment Plant case study provide the opportunity for assessing cash flow model completeness and the sensitivity of performance metrics to contribution agreement parameters, for the three procurement modes examined, namely Design-Bid-Build (DBB), Design-Build-Finance (DBF), and Design-Build-Finance-Operate-Maintain (DBFOM).

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