Dive Brief:  

• The Michigan Department of Transportation announced it will take on private-sector partners to finish a $1 billion state highway modernization project in Oakland County, MI.

• Using the public-private partnership (P3) model to design, build, finance and maintain the remainder of the project, rather than waiting on public funds to become available, could shorten the construction schedule by up to a decade, The Detroit News reported.

• MDOT will issue requests for qualifications from potential private partners before the end of the year, and it anticipates the selection process will wrap up in the summer and fall of 2018. The winning teams will be reimbursed via annual payments.

Dive Insight:

As of February 2017, just 28 U.S. highway P3s achieved financial close, according to the Federal Highway Administration. As in Michigan, P3s let DOTs shift the risk of virtually every aspect of a project to the private sector. That doesn't protect the public entity completely, however.    

This past summer, a Texas toll road emerged from Chapter 11 bankruptcy reorganization with new management after the original concessionaire allegedly experienced financial difficulties as a result of toll revenues failing to meet projections set prior to the Great Recession. The potential for failure is one reason why public agencies typically favor large companies when selecting a private partner.

A P3's private partners should do their due diligence to ensure the revenue projections, such as those from a toll road, are solid as this could represent the bulk, if not all, of their reimbursement, Lee Weintraub, chair of Fort Lauderdale, FL–based law firm Becker & Poliakoff's P3 group, told Construction Dive in August.

Yet stories of failed P3s are few and far between. Rather, they have consistently been promoted as a way to complete projects faster and with fewer taxpayer dollars. As a result, many supporters of the model were likely surprised at reports last week that President Donald Trump has soured on private investment as a strategy to help finance his $1 trillion infrastructure initiative.

During the 2016 presidential campaign and since the election, the Trump administration has consistently pushed private investment as a way to tackle the modernization and repair of the nation's aging bridges, tunnels, highways and other public assets.

Last week, however, the president told a bipartisan group of lawmakers that P3s are "more trouble than they're worth." One alternative is increased direct federal spending, which Republicans have vowed to fight.