The market for public-private partnerships (P3s, also known as PPPs) in the US is gaining ground. Investors are interested, capital is plentiful, and the federal government is increasingly involved.
Recent administrations – Republican and Democratic – have overseen legislation and programs that supported P3s. This support will likely continue given ongoing fiscal constraints and the increasing need to repair and expand the country’s infrastructure.
Already, more projects are entering the pipeline and reaching financial close. And it’s noteworthy that these projects are spreading to new sectors and states.
Other kinds of P3s are becoming more and more common.
Recent administrations – Republican and Democratic – have overseen legislation and programs that support Public-Private Partnerships.
In 2015, Congress passed the Fixing America’s Surface Transportation Act (FAST) with an overwhelming bipartisan majority.
The Department of Transportation unveiled also in 2015 the Build America Transportation Investment Center (BATIC) to helping P3s access federal credit and navigate federal permitting and procedural requirements.
And the potential for Federal credit assistance for water infrastructure P3s was realized at the end of 2014 when Congress passed the Water Infrastructure Finance and Innovation Act (WIFIA).
Given the ongoing need for infrastructure and fiscal constraints, we expect the government will likely continue to support P3 programs.
It is important to make sure that a project really makes sense as a public-private partnership. The bar is high in the US where, thanks to the tax-exempt bond market, most cities and states can raise money inexpensively. So, it is not enough to propose using a P3 merely as a financing mechanism.
Instead, there should be a detailed analysis of how a P3 can potentially generate both financial and non-financial benefits. This analysis should also look at how P3s can potentially generate cost and schedule efficiencies (otherwise unattainable by the government alone) by including multiple project elements—such as design, construction, maintenance, and operations—in a single contract. The analysis should also include how the P3 will manage the infrastructure asset throughout its lifecycle.