The Public-Private Partnership: A Design-Build-Finance Option

April 2, 2018

Traditionally used for infrastructure and revenue-generating projects, the public-private partnership (P3) delivery model is becoming more popular as a cost-effective delivery method for all types of public facilities, including social infrastructure projects.

At a time when few public agencies have millions in capital funds readily available to adequately address increasing program and facility needs, P3s present a viable alternative to meet constituent demands and the need to upgrade, expand or replace existing facilities. In some cases, the cost of a new facility may be less than the cost to maintain or upgrade aging facilities.

A P3 agreement calls for the private sector partner to design, build and finance a facility. In some instances, the private partner may also be responsible for operating and/or maintaining a facility.

Like integrated project delivery (IPD), in that early collaboration and mutual goals result in lower costs and greater budget and schedule certainty, the private partner is ultimately responsible for all aspects of delivery.

Financing can take several forms, from developer-financed projects to lease/leasebacks to tax-exempt bond issues. To ensure new facilities are maintained throughout the building life cycle, and especially during times of fiscal challenges, ongoing maintenance costs can be incorporated into the financing mechanism.

There is no one-size-fits-all contractual structure. P3 agreements are customized to meet community needs and budgets, making the delivery method a viable option for most agencies.





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