Public Private Partnerships

Presented by Jerry Fay, PE

Public Private Partnership FHWA 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 P3s 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 entitys perspective of finding and contracting with the best private sector partner.

Two Major Steps Crafting the Partnership

Implementing the Partnership

CRAFT IMPLEMENTATION

P3 Project Management

CRAFT
GENESIS FEASIBILITY PLAN & TEST

IMPLEMENTATION
PROCURE IMPLEMENT OPERATE

Six Distinct Phases

1. Genesis 2. Feasibility 3. Plan & Test

4. Procure
5. Implement 6. Operations

1. Genesis 2. Feasibility

3. Plan & Test

4. Procure 5. Implement

6. Operations

Genesis Whats the need

Whats driving the need, rationale

Facility non-compliance, natural disaster, budget deficit Is there a need for a Public/Private Partnership? Preliminary Project Definition

1. Genesis 2. Feasibility

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

1. Genesis 2. Feasibility

3. Plan & Test

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?

1. Genesis 2. Feasibility

3. Plan & Test

4. Procure 5. Implement

6. Operations

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

1. Genesis 2. Feasibility

3. Plan & Test

4. Procure 5. Implement

6. Operations

Implement Environmental Design

Permitting
Construction Commissioning and Administration

1. Genesis 2. Feasibility 3. Plan & Test 4. Procure 5. Implement

6. Operations

Operate Startup Monitoring Assessment

Enhancement
Contract Modifications

Contract Renegotiations

P3 Program Management Summary

GENESIS
Prelim Project Definition Seed Funding

FEASIBILITY
Objectives Register Alternatives Index Prelim Schedule/ Budget Prelim Economic/ Financial Analysis Qualitative Analysis Fatal Flaw Analysis Process Map & Strategy Feasibility Report/ Project Approval

PLAN & TEST

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

PROCURE
Risk Assessment/ Allocation Delivery Methodology Commercial Terms /Contract Principles Deal Structuring Concept Design/ Performance Specs Procurement Documents Vendor PreQualification Vendor Proposal Evaluation Contract Negotiations

IMPLEMENT
Design Compliance Construction Oversight Commissioning Administration

OPERATE
Startup Monitoring Assessment Enhancement Contract Mods Contract Renegotiations

Conclusion

Questions
and

Discussion