There’s too much confusion about public private partnership (P3) engagements. That really needs to change.
Unless something significant alters public funding for infrastructure projects in the next several years, P3 engagements will likely become one of America’s most common forms of project delivery for government.
Every jurisdiction has benefitted significantly over the last few years from a historic amount of federal funding that Congress made available for infrastructure projects. Unfortunately, that funding has an expiration date. The funds will disappear over the next few years and it is unlikely that this amount will be allocated again in the next decade.
Many critical infrastructure needs have been addressed, but thousands more are in dire need of attention. It’s important to remember that infrastructure covers every basic component of society – public facilities, networks, security and every system required for life as we know it in America. The term ‘infrastructure’ covers all modes of transportation, telecommunications, water, power, healthcare, education, public safety and more.
Public officials who have yet to launch a large project and deliver it through a P3 engagement are often extremely reluctant to do so. A P3 delivery model is something relatively new. Since it involves at least some level of private sector investment, it requires a different procurement process, a longer legal agreement and usually experienced advisors if it is the first P3 engagement.
Despite the thousands of conferences, seminars, training sessions and webinars about P3 delivery models, the delivery model is still new to many and with an alternative funding source, it remains daunting to many public leaders.
Many government executives have had no opportunity to attend conferences or seminars to learn more about P3 engagements. Some states have provided an abundance of assistance for public officials. Other states have offered nothing. Many taxpayers understand the need for private sector investment in public projects, but others fear the worst because they do not understand the basics of this type of collaborative initiative. Sadly, the media has done little to provide any knowledge-based information. As a result, states throughout the country are at different places when it comes to P3s… and many visionary leaders have passed on federal funding for critical projects rather than risk using a delivery model that is new to them.
Because of that, it seems timely to address why all citizens and public executives need to understand the basics of a P3 delivery model.
Much of America’s infrastructure is old, inefficient, unsafe and unable to meet current demands. The cost to address even the most critical components is more than public funding can cover. Yet, the responsibility of ensuring clean drinking water for citizens or providing safe bridge crossings for motorists throughout the country cannot be overlooked just because the remedies carry a considerable cost. The responsibility of public officials to provide safe schools with modern technology, healthcare clinics, reliable power grids, port upgrades and disaster relief when needed does not go away just because funding is inadequate. That’s the reason that Congress is now urging, incentivizing, and beginning to mandate private sector investment when federal funding is made available for infrastructure projects.
The need for a better understanding of the P3 model is not restricted to public officials. A majority of companies in America that contract with the government are also not prepared to compete when a P3 model is the preferred method of delivery. It is important for all companies to understand P3 engagements and identify private sector investment options.
Many regions of the country have benefitted from private sector investment in public projects. Universities have new student housing on hundreds of campuses because of collaborative initiatives and private sector investments. Cities have new public safety complexes and affordable housing for essential workers because of collaborative initiatives with private sector partners. There are thousands of examples of good P3 engagements. But, of course, there are failed initiatives as well.
There are reasons for public officials to seek advisors before launching their first P3 engagement. It is to ensure successful projects. In most cases, private sector partners assume much of the risk and in many cases, an unsuccessful project protects the governmental entity and only harms the private sector partner. Because of that, contracting firms may also need to seek advisors when a decision has been made to offer P3 project delivery proposals.
So, to take a look at ‘Best Practices for Successful P3 Engagements,’ here are some of the most critical steps that should be taken to ensure success. These tips are essential for both public and private sector executives to remember.
- Not all large projects are good targets for a P3 engagement. It is important to understand the components of a P3 project when planning begins. Feasibility plans are recommended and every aspect of a P3 engagement should be contemplated. Public officials with available funding may choose to select another delivery method. But when a project is large, complicated, or needs unique expertise and alternative funding, a P3 delivery model may be the best delivery option.
- Advisors are needed for the first P3 engagement a governmental entity launches. Advisors fall into three categories ꟷ technical, legal, and financial. There may not be a need for all three, but it all depends on the type and size of the project.
- An internal Project Champion for the governmental entity is recommended. Having a #2 Champion is also desirable because there are situations where a stand-by could be needed.
- A Civic Outreach Plan should be developed early in the planning phase and structured for internal and external communication. Many experienced P3 project developers will hesitate to engage without a clear plan for communication and transparencyꟷ two critical components of P3 success.
- An internal P3 Team is also recommended. The selected officials are responsible for working internally to ensure success, collaborate with advisors and project leaders, and be available to assist the selected private sector partner. The In-House Team should be qualified, experienced, capable, and committed to the project’s success.
Public sector visionary leaders who have not been able to learn everything they need to know about a P3 delivery model should seek assistance. It is readily available. And because the P3 trend is not destined to go away, private sector firms should also consider seeking guidance to ensure that all aspects of this delivery model are understood. Many firms have developed P3 plans and protocols to make sure they are prepared and equipped to compete well when a P3 engagement is the preferred delivery method for a project. There’s no doubt that 2024 will be a strong year for collaborative initiatives wrapped around infrastructure projects.