While some high-profile public projects using the public-private partnership delivery method have hit roadblocks in recent months, a presenter at last week’s Design-Build Conference 2019 in Las Vegas said that the approach is a natural fit for most transportation projects.
Darryl D. VanMeter, assistant P3 division director at the Georgia Department of Transportation, said the goals of a P3 align with his agency’s needs. The Georgia DOT is overseeing multiple P3s such as the $800 million improvement of Interstate 285 in Atlanta, expected to be complete next year.
“When you think about it, most DOTs across the country have as their charge to design, plan, construct and operate a transportation system and one of the key aspects of P3s is that they really consider lifecycle costs,” he told the audience at the conference sponsored by the Design-Build Institute of America (DBIA). “So working on a P3 is really about thinking like a DOT does.”
P3 arrangements pair public entities with private investors to create projects that range from toll roads and highways to airports, government buildings, schools and universities. They are seen as an innovative way for municipalities to get much-needed infrastructure upgrades without cutting corners or breaking public taxpayer-funded budgets. Most P3 contracts are for design-build, fixed budgets and fixed schedule work, according to a recent position paper from the Design-Build Institute of America.
In most P3s, long-term maintenance responsibilities on the project are handled by the contractor or other private entity, which incentivizes the design and construction team "to take a whole-of-life costing approach to deliver solutions that result in overall life-cycle cost efficiencies of the asset," the position paper explains.
VanMeter said that P3s are negatively impacted when contractors take on too much of the risk, but disparaged the notion that owners see P3s as a way to push their responsibilities on to designers and builders. In fact, his agency is looking into ways to make P3s more viable for contractors.
“From my experience at the Georgia DOT, we want to be a partner of choice when it comes to bringing good developers and good contractors to the state,” he said. “We’re trying to pay attention to the things we need to change or influence and realize that in some areas we’re best suited to manage certain risks.”
For instance, in Georgia, project owners can use public money to pay for relocation of utilities if it’s done in a certain amount of time, VanMeter said. Other areas that are best suited for the public owner include the use of eminent domain to acquire the project right of way, securing environmental approvals and major planning requirements.
Moving forward
From VanMeter's perspective, the delivery method is not going away. In fact, as America’s infrastructure continues to age, there will be a greater need for creative approaches to transportation projects.
“Across the nation in the transportation market, there are question marks about funding these projects so every state has to be more creative about how to fund them and get even more creative about how they deliver them," he said.
He noted that legislation differs on how P3s work in each state, and about 10 states — including Washington, Oregon and Arizona — do not authorize them.
Nevertheless, on the right projects with the right teams, P3s will “thrive” in coming years, VanMeter predicted.
“The environment I’m seeing now is that it’s ripe for people to be teaming in ways that folks have not even considered teaming before,” he said. “We’re looking to the industry to be creative in the ways they team up and those folks that are versed in design-build are going to be marketable in that arena, even if they are smaller firms."
