A heightened national discussion around the use of public-private partnerships or “P3s” for infrastructure projects may leave you wondering what P3s are and why your business should care about them.
What is a Public Private Partnership?
P3s exist in many shapes and forms and can be used for a wide array of projects ranging from interstate rest stops to large scale water infrastructure. By incorporating investment from the private sector, P3s can improve the quality of infrastructure and services as well as encourage efficiency throughout the project’s lifecycle. Deferred maintenance, project delays and rapid population growth can cause all levels of government to consider how they will best address the public’s needs now and in the future. P3s are a financing tool seen as a method of addressing these challenges, because they allow public entities to share some of the costs and risks of projects with a private stakeholder. Because these types of agreements can span longer time frames than a typical building process, there is a heavy emphasis on the whole life cost of the project, not just the initial construction.
Why Should Your Business Care About P3s?
According to 2015 study Utah faces an astounding $67.5 billion to both maintain and provide infrastructure at every level over the next twenty years. This does not include the increasing demands for state dollars for capital facilities. Ironically, revenue is no longer the single greatest limiting factor to infrastructure investment. Introducing the private-sector evaluation and financing components of P3s presents another tool for procuring or managing public infrastructure. Partnerships between the public and private sectors will allocate design, construction, financing and long-term maintenance risks to the party best equipped to address them.
In the upcoming legislative session, Utah legislators will discuss how we can enhance existing models for delivering P3s to make them accessible tools for all types of infrastructure. Here’s what you need to know:
- Utah has been an innovator in public-private partnerships. The State already uses these partnerships for project delivery in various means.
- P3s have significant potential to add value to Utah’s future infrastructure investments at all levels and sectors.
- P3s are able to tap into private sector expertise which has the potential to yield more innovative project outcomes and a better value to taxpayers.
Public-private partnerships can be very complex and must be evaluated carefully prior to implementation. P3s are no silver bullet for addressing the $67.5 billion infrastructure needs we’ll face over the next 20 years, but they are another tool to supplement ongoing efforts to address infrastructure challenges.
In the coming months, our policy blogs will continue to explore public-private partnerships, why we need them and different ways they can be used.