There is a strong and growing trend towards Public Private Partnerships (P3s) where government agencies are working with the private sector to fund, develop and maintain large public projects related to transportation, education and healthcare.
Public Officials are finding P3s an attractive option for funding large, critically needed public projects. These P3s are helping align public and private needs to move vital projects forward. They have the potential to significantly change the landscape of government contracting and create a new environment for collaboration.
Government is experiencing an historic transformation. Trillions of dollars are needed to maintain & rebuild America’s infrastructure networks and government agencies are facing gaps of billions of dollars to support public projects. Financing alternatives for funding big projects are necessary in order to ensure economic prosperity, meet public needs and create thousands of new jobs. As a result, the United States is moving aggressively into P3s and at least 31 states have passed statutes that encourage and regulate P3s.
Public private partnerships provide a well-tested funding option that makes funding available immediately while transferring the risk to the private sector partners. So what can companies do today to capture P3 business in the near future? Public officials are inclined to go with companies that have done their homework, understand the political environment, help with the planning and have established credibility. There are some comprehensive business practices that can help determine whether or not a P3 project suits your business solution.
- Early planning & preparation is critical to the process
- Make sure there is sound financial forecasting for any large civic project
- Has a solid business model been developed and does it have success indicators clearly stated?
- Are the objectives clear and are performance measures in place for the successful end result? Is there a defined decision-making process that allows flexibility to changing conditions?
- Does the agency have a committed internal team & executive-level champion? Will there be open communication, transparency and trust?
- Have key stakeholders approved, including elected officials & the public at large?
- Seek out areas with rapid growth and that lack or have limited bonding authority. Also, look for areas where bond elections have failed and where Infrastructure projects have long-term (25+ years) use.
- If necessary, use outside professionals/consultants to help in key areas like finance, engineering, feasibility studies and other professional services.
- Qualify the opportunities – is there real commitment from public entity to develop the partnership? Are the costs and revenues predictable over the life of the project? Has the agency has done due its diligence, including a detailed assessment & feasibility study? Is the agency providing clear guidelines regarding the procurement process & transparency?
- Look for RFPs that encourage innovation, outline projects of substantial size, demonstrate significant public need and have realistic response timelines. Also, be sure the projects have an acceptable revenue flow and that you have a relationship with the executive-level sponsor/advocate.
Present a strong competitive differentiation
- Understand history of the entity & project and establish your company as having the best subject matter expertise during planning.
- Share previous experiences, create trust and build relationships with decision makers & stakeholders
- Line up best local subcontractors and service providers
- Develop good financing strategy that maps to the project goals and lifespan.
Through collaborations with private sector firms, public officials throughout the country are engaging earlier and companies and subject matter experts are assisting with plans, specs, scoping of projects and financial modeling and forecasting. As a result of sound business planning, the projects provide an opportunity for both parties to benefit.
Learn more from our discussion with expert Mary Scott Nabers, President and CEO of Strategic Partnerships, LLC and author of Collaboration Nation; How Public-Private Ventures are Revolutionizing the Business of Government. P3 Revolution! Watch it Here