Views

8 crucial factors to consider before embarking on a public private partnership (P3)

Institutions across the nation are struggling with how to repair, expand and modernize their core infrastructure and critical facilities. On the other hand, through an infusion of private capital and management, a P3 can ease fiscal restraints and boost efficiency in the provision of public infrastructure and facilities, and thereby services.

To bridge the gap between available public resources and the cost of needed infrastructure and facilities, public institutions across the United States are turning to public private partnership (P3) transaction structures. P3s are designed to combine the strengths of both the public and private sectors.

P3 involves the public sector partnering with the private sector to provide the capital and expertise to develop and/or operate and maintain infrastructure and facilities on publicly owned land. The key element of a P3 is the contractual arrangement between the public and private sector partners, which allows the private sector partner a greater level of participation in a public project than traditional structures.

However, P3s are highly complex policy instruments, and institutional challenges must be managed, mitigated, and overcome to move from a traditional model of delivery to one where public and private sectors work together.

Like what you read?