The first thing local governments should know when exploring a P3 is that it entails a different way of doing things, Herberghs says. “Initially, it could be a little jarring.”

A major characteristic of a successful P3 project is that it addresses a “specific and critical need,” as Parkinson explains. “These are not wish list projects,” he says. “If there’s a criticality to the project, to the need — that’s the first check in the box.”

While traditional contracts can be procured with a specific design in mind, a P3 is best procured with a less prescriptive design, says Jennifer Hara, manager of P3s for the Institute for Public-Private Partnerships, a P3 advisor for both sectors. 

“You know what it is that you want to be delivered, in terms of the service and perhaps by when,” she says. “But you leave that flexibility in the procurement process for the private sector to be innovative and to come up with a better way to build that project and then deliver that service.”  

However, certain aspects of the project should be clearly defined, like clearly allocated risks, Jamieson notes. The idea must be clearly defined (i.e. building a road) versus voicing general concepts like “recreation.” An identified and dedicated revenue stream should be present as well, whether from concession payments or availability payments. Measurable outputs like achievements should also be defined.

Geoff Stricker, managing director of frequent private partner Edgemoor Infrastructure & Real Estate, recommends that governments issue an RFQ before an RFP to properly review a potential private partner’s qualifications and experience before more complications get introduced in proposals. Doing so, he says, often yields a better project than a one-stage RFP would.

“We’ve seen examples of projects where perhaps unqualified firms have made a shortlist in one and run into problems,” Stricker says. 

Experts agree that the best P3s come from public entities that are prepared for such projects. Just as P3 projects must be procured a certain way, so too must the public sector team behind it be organized and properly versed in P3s. 

The first step for a local government interested in a P3 is ensuring that the government’s state allows P3s for the type of project in question and what restraints (if any) exist, Herberghs explains. A government should then find any state-level guidance on P3s. “Very few states have that, so sometimes it can be daunting for a local government professional.”

As such, getting educated on P3s becomes paramount. Parkinson recommends contacting public officials who have handled P3s before, contacting P3 associations and attending industry conferences. 

A key corollary to education and an important step is involving experienced third-party advisors and consultants throughout the planning and ultimate execution of a P3. The reason is two-fold: it helps a government feel empowered and avoid pitfalls. But having advisors on hand is also more attractive to the private sector.

“Especially if you haven’t done P3s before, people are going to look around and they’re going to say, ‘who’s advising this organization?’ And if it’s a group of advisors who have never done a P3, they’re going to be a little more reluctant to get heavily engaged than if it’s a group of advisors who have,” Ziglar explains. “It’s the lawyers, it’s the financial advisors, it’s the technical advisors, all three of them.”

Having those advisers work with an interdisciplinary internal team that handles the P3 is also critical, Hara and Ziglar note. Because P3s simultaneously involve so many work strengths like engineering, law, procurement and finance, having all of those officials work in unison makes the process much more efficient and easier to navigate.  

Most experts agree that a key part of each P3 project is a “political champion” —  someone with significant government power (like a mayor, city manager, county chair, etc.) who is willing to do what it takes to see a P3 project through. Sometimes, that may entail a change in legislation or regulations, but “if you don’t have political support for a project, then there’s really no point in doing it,” Miller Gabriel notes.

“I’ve been doing this for 30-something years and every project that has been successful had the right political champion behind it, who was not only the champion but was empowered to go forward,” Jamieson says. 

For Long Beach and its new civic center, those champions were the the city manager and the mayors in office throughout the project. Because of the champions’ combined efforts with other city officials and outside advisors, Public Works Director Beck knows his city will be getting a great civic center in two years, as well as in about 40 years, once ownership reverts to the city.

“I now have a 40-year partner,” he says. “It’s not just design it, build it and walk away. They are coming up with a design and they are constructing a building that they need to make sure is efficient and, I’ll say profitable for them, but that operates in a profitable environment for 40 years.”

 

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