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PPP Models
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Presented by
Jerry Fay, PE
Presented by
Jerry Fay, PE
Public Private Partnerships
Public Private PartnershipFHWA 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 P3’s 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 entity’s perspective of finding and contracting with the best private sector partner.
Two Major Steps
Crafting the Partnership
Implementing the Partnership
IMPLEMENTATIONCRAFT
P3 Project Management
IMPLEMENTATIONCRAFT
OPERATEIMPLEMENTPROCUREPLAN & TEST
FEASIBILITYGENESIS
1. Genesis
2. Feasibility
3. Plan & Test
4. Procure
5. Implement
6. Operations
Six Distinct Phases
1. Genesis
2. Feasibility
3. Plan & Test
4. Procure
5. Implement
6. Operations
Genesis
What’s the need
What’s driving the need, rationale
Facility non-compliance, natural disaster, budget deficit
Is there a need for a Public/Private Partnership?
Preliminary Project Definition
2. Feasibility
1. Genesis
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
3. Plan & Test
1. Genesis
2. Feasibility
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?
4. Procure
1. Genesis
2. Feasibility
3. Plan & Test
5. Implement
6. 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
5. Implement
1. Genesis
2. Feasibility
3. Plan & Test
4. Procure
6. Operations
Implement
Environmental
Design
Permitting
Construction
Commissioning and Administration
5. Implement
1. Genesis
2. Feasibility
3. Plan & Test
4. Procure
6. Operations
Operate
Startup
Monitoring
Assessment
Enhancement
Contract Modifications
Contract Renegotiations
P3 Program Management Summary
• Risk Assessment/ Allocation
• Delivery Methodology• Commercial Terms
/Contract Principles• Deal Structuring • Concept Design/ Performance Specs • Procurement Documents• Vendor Pre-Qualification • Vendor Proposal Evaluation • Contract Negotiations
• Startup• Monitoring• Assessment• Enhancement• Contract Mods• Contract Renegotiations
• Objectives Register• Alternatives Index• Prelim Schedule/ Budget• Prelim Economic/
Financial Analysis• Qualitative Analysis• Fatal Flaw Analysis • Process Map & Strategy • Feasibility Report/
Project Approval
• 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
• Design Compliance• Construction Oversight• Commissioning Administration
• Prelim Project Definition • Seed Funding
OPERATEOPERATEIMPLEMENTIMPLEMENTPROCUREPROCUREPLAN & TESTPLAN & TESTFEASIBILITYFEASIBILITYGENESISGENESIS
Conclusion
Questions
and
Discussion