Decision Point: Are P3s Right for Your Construction Business?

By on May 16, 2017

From Procore Jobsite:  The talk of public private partnerships (P3s) for addressing the country’s infrastructure woes over the next few years is highly optimistic. In fact, most informed sources don’t expect wide scale roll out of P3s at any time. Even where they are aggressively used, they seldom reach more than 5% of a country’s public construction spend.

Nevertheless, 5% of a trillion dollar infrastructure plan is a lot of construction to put in place. No matter what size your contracting business, or what sector you operate in, the rise of P3s offers opportunities.

Here’s more about P3 opportunities and challenges for your construction business.

Defining an Acronym

A P3 is a way to structure a public project so that the public side doesn’t have to bear all the costs and risks up front. Think about water and sewer projects, or public transportation projects like terminals, tracks, and trains. All of these have an aspect that makes them attractive for P3s––they charge user fees.

A developer, or group of private entities, partner with a government entity to build and operate a public asset. The public entity transfers risks of designing, building, financing, operating, and maintaining to the private entity as needed. The private entity is paid back over time in user fees, or payments pegged to the availability of the asset.

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