New York forum explores P3s for federal buildings
Members of the US House Transportation and Infrastructure hosted a forum in downtown New York on 16 December to explore opportunities and potential uses for P3s in federal real estate.
The forum, co-hosted by committee chairman Bill Shuster (R-PA) and Economic Development, Public Buildings and Emergency Management Subcommittee Chairman Lou Barletta (R-PA), was mostly an information gathering session with construction company and real estate executives, and there was no discussion of legislation regarding P3s that could soon be introduced.
Private sector participants told the panel that P3s can potentially deliver government buildings faster and at less cost than traditional delivery methods. John Dionisio, chairman and CEO of AECOM, told committee members that the Long Beach (CA) Courthouse P3 project, on which AECOM was a consortium member, was delivered 30 months ahead of schedule, and saved taxpayers 20%.
Greg Kelly, Parsons Global COO of Parsons Brinckerhoff, said P3s gain efficiency by having architects, engineers and contractors all working together at the beginning of the project, while the government can benefit by having a “single point of responsibility” to communicate with.
Rep. Jerrold Nadler (D-NY) asked why P3s are not used on all building projects, since they are so efficient. Procurement costs for P3s are higher than traditional procurement methods, Dionisio responded, so projects with a value of USD400m and above are best suited to a P3.
Big and complex
P3s work best on large and complex projects in which government tenants will occupy the space for an extended period of time, said Roberto Friedrich, Senior Director of Hochtief PPP Solutions North America.
One key to the private sector successfully working with the federal government, Friedrich said, is to have confidence that the government will follow through on a planned project, and not cancel it at the last minute.
Kelly said he sees three important ingredients to the federal government successfully using P3s: adopting a standardized procurement process; building flexibility into P3 agreements, as these agreements typically span a lengthy time horizon; and building up P3 expertise in the federal government.