How to Leverage the Power of Public-Private Partnerships
Public-private partnership construction, also known as P3 construction, is a relatively new way of handling public improvements and infrastructure projects. While private construction firms and contractors have always been involved in some capacity for public projects, P3 construction agreements put them in charge of the entire process rather than just following the orders of a governmental body. Not only does this arrangement benefit construction companies, it also offers numerous advantages to the municipal organizations and the general public who need infrastructure upgrades completed both on time and under budget.
To explore the various types of P3 agreements and contract styles, download our ebook, “Construction Technology and P3 Projects: How the Right P3 Construction Technology Paves the Way to Success.” It’s packed with tips on how to choose the right P3 projects and how to manage them for the lifespan of the project.
The Power of Public and Private Partnerships
P3 construction projects start out similar to that of other infrastructure projects with a governmental agency or body initiating a request for proposal (RFP). However, this is where the differences begin. When the RFP is for a P3 arrangement, the request is left general and open-ended. A request may specify the need for a highway extension or water treatment plant construction, but it’s up to the construction firm responding to determine the design, budget and other details. This combines many stages that are traditionally left to the public side of the partnership, transferring more of the risk and work to the private side of the arrangement.
Not all P3 contracts are made directly between a single construction firm and a public entity. Most are handled by a team of different development, design and construction companies working together to handle a complex infrastructure megaproject. A subcontractor or contractor may enter the P3 agreement at this point and only work with those running the project rather than making contact with the public side of the P3 group at all.
Benefits for the Public Entities
It’s pretty easy to see why public agencies and municipal bodies may prefer P3 construction agreements.
First, the ability to assign financing responsibilities to a private company can allow a contentious infrastructure project to move forward without having to garner more support from taxpayers and voters.
Second, the risk of building is largely assumed by the private companies handling the work, reducing the damage to public assets if something goes wrong during construction.
Third, working with a consortium of private companies is the best way to bring design and construction expertise to a public project without spending an outrageous amount on consulting fees.
Finally, many P3 construction contracts include coverage for long-term maintenance and operations, resulting in ongoing savings for the public agency usually responsible for these tasks.
Advantages for the Private Companies
The benefits of P3 construction also extend to the contractors, subcontractors, developers and other groups representing the private side of the partnership. Some of the many advantages to this kind of contract include:
- Fewer delays between phases of construction since the same team is used for the entire project, a benefit also known as early supplier involvement.
- Extended payment schedules from maintenance and operation contracts, resulting in long-term revenue for construction firms.
- Optimization of both construction and ongoing operations by using advanced P3 technology to model energy usage, maintenance needs and more.
- Higher returns on investment than traditional arrangements according to some studies, although this varies depending on the sector and country.
- Flexible financing options, especially in countries where low-cost municipal bonds are available for transportation expansion and other infrastructure projects.
Planning for Better P3 Construction
Even for companies with plenty of experience in fulfilling government procurement requests, expanding into P3 construction requires some additional training and new operating procedures. Increasing a firm’s use of public-private partnership construction technology before starting the bidding or proposal process raises the company’s chance of success from the beginning. There are plenty of opportunities for using P3 technology throughout the bidding, design, construction and maintenance phases of a contract.
The majority of P3 proposals are written in response to specific requests, but it’s also possible to submit unsolicited proposals in many countries allowing for these arrangements. Both types of proposals need to include dozens to hundreds of files to support a company’s claim to be able to satisfy the terms of the P3 contract. Using software like BuildingConnected that helps the team organize and submit this package of supporting data is essential for staying on top of the proposal process.
Once the project moves into the active design and build stages, ensure your software offers seamless communication and file storage capabilities. The best solutions will support separate companies working together in a controlled digital environment so everyone can see the latest updates to the designs in real time. PlanGrid is a great choice for this kind of P3 technology.
Even after construction ends, building plans and drawings are needed to make maintenance as easy as possible. Accurate records of the final placement of essential wiring, plumbing and other utility systems help pinpoint problems as soon as they occur. Data storage software used for P3 construction should offer long-term access to a project’s files so maintenance and renovation workers have the information available to utilize for years to come.
Growing Demand Across the Globe
Adoption of the P3 method of infrastructure construction is experiencing slow but steady growth in many countries. For example, Canada has steadily sourced over a third of each year’s infrastructure growth from P3 agreements since the mid-2000s and the U.S. is increasing the number of P3 projects with each passing year. As contracts for energy systems, wastewater treatment facilities, bridge and tunnel projects and other megaprojects come up for bidding, more and more of them will offer a P3 construction agreement. Commercial contractors that want to stay competitive and work on the world’s biggest infrastructure improvements should embrace P3 technology now rather than taking a conservative approach.
Ready to expand into the world of P3 construction projects? Before placing any bids, download and read our ebook, “Construction Technology and P3 Projects: How the Right P3 Construction Technology Paves the Way to Success.”.