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.

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

Typical Uses Contracting with a private company to:  Renovate  Construct  Operate  Maintain  And/or Manage A facility or system .

SAFETEA-LU (2005)²SEP 15 . ISTEA (1991).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.

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

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

Benefits  Expedited project completion  Project cost savings  Improved quality  Use of private resources  Access to new sources of private capital .

all P3¶s include four basic characteristics:  Shared goals  Shared resources (time.Four Basic Dimensions of P3 Although each is unique. money. people)  Shared risks  Shared benefits . expertise.

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 CRAFT IMPLEMENTATION .


Genesis 2. Feasibility 3.Six Distinct Phases 1. Procure 5. Implement 6. Operations . Plan & Test 4.

Genesis 2. Operations . Procure 5. Plan & Test 4. Implement 6.1. Feasibility 3.

rationale  Facility non-compliance. budget deficit  Is there a need for a Public/Private Partnership?  Preliminary Project Definition .Genesis  What¶s the need  What¶s driving the need. natural disaster.

1. Operations . Implement 6. Feasibility 3. Procure 5. Plan & Test 4. Genesis 2.

but practically? Can it be done?  Market Research  Economic/Financial Analysis  Program.Feasibility  Is a Public/Private Partnership feasible. Budget and Schedule  Risk Analysis . not only financially.

Procure 5. Operations .1. Feasibility 3. Genesis 2. Plan & Test 4. Implement 6.

public and stakeholder feedback and economics? .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.

Plan and Test  Master Schedule/Budget  Political Climate  Any potential ³fatal flaws´ that could derail the project? .

Implement 6. Feasibility 3.1. Procure 5. Plan & Test 4. Genesis 2. 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 .

1. Genesis 2. Plan & Test 4. Feasibility 3. Procure 5. Operations . Implement 6.

Implement  Environmental  Design  Permitting  Construction  Commissioning and Administration .

Implement 6.1. Genesis 2. Feasibility 3. Operations . Procure 5. Plan & Test 4.

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 .

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