Presented by

Jerry Fay, PE

Presented by

Jerry Fay, PE

Public Private Partnerships

Public Private PartnershipFHWA Definition

A public-private partnership is a contractual agreement formed between public and private sector partners, which allows more private sector participation than is traditional.

Another Definition

A public-private partnership exists when public sector agencies (federal, state, or local) join with private sector entities (companies, foundations, academic institutions or citizens) and enter into a business relationship to attain a commonly shared goal that also achieves objectives of the individual partners.

Typical Uses

Contracting with a private company to:

Renovate

Construct

Operate

Maintain

And/or Manage

A facility or system

History

Goes back to the earliest construction in the United States

Used extensively in Europe and other countries

Significant renewed interest in the 1980s

FHWA Legislation, ISTEA (1991),

SAFETEA-LU (2005)—SEP 15

Why

Traditional funding sources are not keeping pace with infrastructure investment needs and the growing public demand for services.

Why

In short, P3 is a tool that can help governments meet demands for the development of modern and efficient facilities, infrastructure and services while providing value for taxpayers.

Benefits

Expedited project completion

Project cost savings

Improved quality

Use of private resources

Access to new sources of private capital

Four Basic Dimensions of P3

Although each is unique, all P3’s include four basic characteristics:

Shared goals

Shared resources (time, money, expertise, people)

Shared risks

Shared benefits

Typical Funding Sources

Tolls

Tax Increment Finance

Fees

Grants

Loans

Bonds

Other Revenue Streams

Getting Started

How do you create one?

How do you implement one?

A Public entity’s perspective of finding and contracting with the best private sector partner.

Two Major Steps

Crafting the Partnership

Implementing the Partnership

IMPLEMENTATIONCRAFT

P3 Project Management

IMPLEMENTATIONCRAFT

OPERATEIMPLEMENTPROCUREPLAN & TEST

FEASIBILITYGENESIS

1. Genesis

2. Feasibility

3. Plan & Test

4. Procure

5. Implement

6. Operations

Six Distinct Phases

1. Genesis

2. Feasibility

3. Plan & Test

4. Procure

5. Implement

6. Operations

Genesis

What’s the need

What’s driving the need, rationale

Facility non-compliance, natural disaster, budget deficit

Is there a need for a Public/Private Partnership?

Preliminary Project Definition

2. Feasibility

1. Genesis

3. Plan & Test

4. Procure

5. Implement

6. Operations

Feasibility

Is a Public/Private Partnership feasible, not only financially, but practically? Can it be done?

Market Research

Economic/Financial Analysis

Program, Budget and Schedule

Risk Analysis

3. Plan & Test

1. Genesis

2. Feasibility

4. Procure

5. Implement

6. Operations

Plan and Test

Final project definition

What is the best way to complete the project?

Has the plan been thoroughly tested to assess market demand, public and stakeholder feedback and economics?

Plan and Test

Master Schedule/Budget

Political Climate

Any potential “fatal flaws” that could derail the project?

4. Procure

1. Genesis

2. Feasibility

3. Plan & Test

5. Implement

6. Operations

Procurement and Contracting

How do you choose and contract with the best-value private partner?

What’s the best delivery method?

Design-Bid-Build

Design-Build

Finance-Design-Build

What do current statutes allow?

Procurement and Contracting

Procurement Approach

Sole Source, RFP, Low Bid

Risk Allocation between Public and private Partners

Structuring of Contract/Risks and Rewards

5. Implement

1. Genesis

2. Feasibility

3. Plan & Test

4. Procure

6. Operations

Implement

Environmental

Design

Permitting

Construction

Commissioning and Administration

5. Implement

1. Genesis

2. Feasibility

3. Plan & Test

4. Procure

6. Operations

Operate

Startup

Monitoring

Assessment

Enhancement

Contract Modifications

Contract Renegotiations

P3 Program Management Summary

• Risk Assessment/ Allocation

• Delivery Methodology• Commercial Terms

/Contract Principles• Deal Structuring • Concept Design/ Performance Specs • Procurement Documents• Vendor Pre-Qualification • Vendor Proposal Evaluation • Contract Negotiations

• Startup• Monitoring• Assessment• Enhancement• Contract Mods• Contract Renegotiations

• Objectives Register• Alternatives Index• Prelim Schedule/ Budget• Prelim Economic/

Financial Analysis• Qualitative Analysis• Fatal Flaw Analysis • Process Map & Strategy • Feasibility Report/

Project Approval

• Asset/System Evaluation • Site Selection/ Analysis• Environmental/ Permitting Analysis• Final Project Definition • Master Schedule/

Budget • Political Climate Assessment • Procurement Strategy• Prelim Business Plan• Public/Vendor Outreach & Stakeholder Consultation• Business Plan

• Design Compliance• Construction Oversight• Commissioning Administration

• Prelim Project Definition • Seed Funding

OPERATEOPERATEIMPLEMENTIMPLEMENTPROCUREPROCUREPLAN & TESTPLAN & TESTFEASIBILITYFEASIBILITYGENESISGENESIS

Conclusion

Questions

and

Discussion