What I'm about to write doesn't answer your questions (I don't know enough to comment on the Spading subway specifically), but you may find it of interest nonetheless.

The issue of P3s came into the limelight again in Ontario when the province's auditor-general released a report condemning Infrastructure Ontario's (IO's) procedure for determining whether projects would be managed by the government or through a P3 structure. The disagreement was about whether IO's assumptions about how bad the government was at managing projects were accurate.

Good pieces were written on both sides of the question of whether the auditor-general or Infrastructure Ontario should be trusted more. On the side arguing that the auditor-general's report shows the need for more scrutiny of P3s and arguably less willingness to use them was Matt Elliott in Metro News. (His piece also happens to offer a great analogy to explain what a P3 is.)

On the other side, arguing for the status quo, were Paul Boothe in Maclean's, who argued that IO is in a better position than the auditor-general to know what's good value for money, and David Caplan in Canadian Business, who pointed to examples in other jurisdictions and in the past to argue that cost overruns in projects administered by the public sector have been ubiquitous.

There is a large and mostly boring literature in the field of "public administration" on the relative merits of running government services or orchestrating government projects through the public sector versus through the private sector. My understanding of the hasn't left me with any clear take-aways, probably because those kinds of questions simply aren't amenable to easy answers. If you want to familiarize yourself with the issues more generally involved in government vs. private sector delivery of services, this piece by a former head of the Ontario Public Service (i.e., the very top bureaucrat in Ontario) offers a relatively accessible discussion.