P3 Success: It’s All In the Partnership

Funding projects for public sector benefit can be challenging, especially when localities are cash-strapped and time is of the essence. A public-private partnership, often called a P3, is a potential solution. P3s leverage private sector expertise (and funds) to get projects built faster and more cost-effectively. With a P3, public facilities can often be designed, developed, and placed in service more quickly and efficiently — much as they would in the private sector.

What Is a P3?

The National Council for Public-Private Partnerships defines a public-private partnership (P3) simply as a “contractual agreement between a public agency and a private sector entity”.

In many states, including Virginia, West Virginia, and Maryland, public-private legislation provides a path for local governments and regional authorities to tap into private sector financing for needed but underfunded projects. Any facility for which there is a clear public benefit is a candidate for a P3 approach.

Through a P3 agreement, the skills and assets of each sector (public and private) are shared for the public good.

Tap Into the Private Sector for Funding

Local governments walk a fine line in best addressing community needs with the limited resources available to them. It’s tricky because first, funding for new capital improvements can be a challenge, and second, the timeline for a traditional project delivery can take years. So, P3s make good sense when a local government needs to quickly develop/build/renovate projects that might otherwise go unfinanced.

When K12 facilities are delivered as a P3, there’s a feeling of teamwork that just can’t be matched by alternative procurement models. It’s only through the success of all partners that any one entity can be successful, and that means great outcomes for kids.” – Jeff Boehm

A private sector developer team can submit unsolicited proposals to any agency, institution, or locality. The P3 agreement can authorize the development, design, construction, replacement, improvement (and even ownership) of a broad range of public-use buildings such as schools, hospitals, courthouses, universities, parking garages, police stations, recreation centers, and prisons. Using the P3 model, Shockey has delivered:

  • Schools
  • Civic and Cultural Buildings
  • Transit Centers
  • Judicial Complexes and Prisons
  • Police Training Academies
  • Parking Structures

P3s can be Complicated, so Trust (and Verify) Your Team

Public-private partnerships are complex deal structures. The process is complicated and not to be entered into lightly. P3s are often used in challenging situations where there is no easy solution.

Undertaking a P3 requires that members of the partnership have mutual goals and operate with fairness and transparency. Successful P3 team members must be:

  • True colleagues invested in shared success
  • Committed to transparency
  • Accountable
  • Honest and trustworthy
  • Financially secure

Are P3s a Panacea?

Not every project is a match for the P3 model. Each P3 agreement is unique, and there is no single formula for success.

Public-private partnerships won’t replace traditional procurement and delivery methods, but they can offer an alternative solution where the rewards can clearly outweigh the drawbacks. In the end, when compared to traditional methods of project delivery, P3s may offer more financing flexibility, lower overall costs, a quicker project schedule, and a more collaborative process.

The P3 can be faster to develop and build than a traditional design-bid-build project. It may also yield a higher quality product because the design and construction teams work together throughout the process to create a coordinated finished facility. Although this doesn’t always translate to the lowest price, it may provide the best long-term value (especially when projects deliver years ahead of target dates, eliminating inflationary expenses). Moreover, in an inflationary environment, the process allows for fair risk-sharing and the development of defensive procurement strategies that protect the team as a whole.

Financing the construction and renovation of public projects is challenging in any economy, but it’s even more so now – with supply chain complications, rising costs, and scarcity of available land. With the right team and the right project, a P3 model can be a promising alternative.” – Jeff Boehm

What to Look For in a P-P Partner

A successful partnership requires exemplary project management along with open communication, respect, and trust. Team members must have a clear understanding of roles, deliverables, and budget. Public entities must be sure to verify the proposer’s experience, stability, expertise, and financial capacity. The private partner should be financially strong and stable.

Shockey is committed to developing innovative P3 solutions and has been a longtime leader in public-private partnerships. Jeff Boehm, Shockey President, has served on the Virginia Legislature’s inaugural PPEA Model Guidelines Task Force and on the national ABC/NCPPP Joint Council for Public-Private Partnerships.

Is a P3 Model the Right Choice for my Project?

Potentially. P3s are complex deal structures, and there is no fast and easy checklist to determine if your project is a match.  When the P3 process demonstrates clear benefits for all involved parties, you’ll know you have a worthy project.

If you would like to learn more about how a public-private partnership might move forward in your locality, it’s best to talk with an expert. Please contact Jeff Boehm to see if an opportunity might exist in your community.