P3s - Delivering Critical Infrastructure for America
America’s infrastructure, crowded roads, crumbling bridges, and inadequate rail systems are all testimony to the inability of government to keep up with the growing needs of our nation. This is harming America’s competitiveness, impacting our economy, and is readily apparent in the homes of Americans as they endure long commutes and loss of jobs as companies move out of regions due to the lack of modern, sustainable and reliable infrastructure.
This is creating long term challenges that will continue to adversely impact future generations – we must address them now. The private sector has the funds, innovation and ability to work with our government to make a stronger America through investment into our infrastructure. This is ultimately what a Public-Private-Partnership (P3) is: private enterprise investing in the long term needs of our country, and making it happen sooner than if Government continued to provide these services on their own; conducting business as usual.
P3s are an evolving model in the US and still somewhat of a mystery; it’s not surprising therefore that there are misperceptions surrounding the idea of P3s and what they really represent. Partnerships between the public and private sectors represent mutually beneficial opportunity. These relationships enable growth through access to leveraged financing, transfer of risk away from the public, and optimization of resources and capabilities in the furtherance of public good.
A Public Private Partnership, or P3 as it is more often referred to, is a contractual relationship between a private organization and a public sector entity; a state agency, a local government or a regional authority. The private organization is given responsibility by the public entity–who represents the people–to provide a public good in the form of critical infrastructure improvements such as bridges, roads and tunnels. The goal of the partnership is to provide benefits to the public much faster than normal through greater private sector participation. P3 procurement, as a tool for the financing and delivery of public services and facilities, has proven to be a very effective and much more sustainable alternative to traditional methods of procurement.
Investing in local economies
P3 Legislation enables a municipality, state, or even the Federal government to tap into the private sector’s willingness to engage and participate in shared and mutually beneficial outcomes. P3s can allow projects to receive funding through traditional means and methods, as well as being able to draw upon this innovative stream of capital from investors who hope to realize reasonable returns, while investing in local economies. The Eagle RTD Project in Colorado has injected $5 Billion into the local economy with 10,300 jobs created while delivering a significant increase in opportunities for transit oriented communities.
The partnerships between the public and private sector relate to all types of infrastructure needs, including mass transit, surface and highway transportation, freight rail, air and maritime ports, education (elementary, secondary and community college) facilities, water and sewer, and other facilities.
In short, P3 is a mechanism to deliver much needed American infrastructure sooner. It’s “a tool in a state's procurement toolkit” that typically brings in critical infrastructure projects on-time and budget certain. Pennsylvania demonstrated this in their endeavor to deliver significant improvements to their constituency through the Rapid Bridges Replacement project. This procurement bundles the replacement of 558 bridges in a three year timeframe implemented under the direction of Bryan Kendro who was then P3 Director at PennDot. This innovation accelerated the delivery of necessary capital improvements that would not otherwise have been of sufficient priority on their own. The bundled assets project is expected to be completed in 2017.
P3s are designed to allow for private enterprise to bring not only equity, but the best of breed ideas and solutions through innovation to the proposed project, providing the public with infrastructure that will serve their growing needs well into the future.