Public-Private Partnership Models
10 Different Types of P3
Due to limited funding and increasing constraints, many government agencies are looking into different models of public-private partnership (P3) as a means of maintaining updated infrastructures without having to make large investments. These type of projects can be very useful, but their costs must be closely controlled to make them cost-effective solutions.
Public-private partnerships are considered by many to be the future of infrastructure projects because they offer solutions to problems of financing, job completion, and investing in large projects without sacrificing government finances. There are many different types of public-private partnerships to fit various construction, operation, ownership, and revenue-generating scenarios.
In a traditional P3 agreement, the public component of the partnership acts as a contracting officer. It looks for funding and has overall control of the project and its assets. Almost any partnership between a private contractor and a government entity can be considered a P3, but some of the most common examples are public road projects, maintenance of parks, and construction of schools and other public buildings.
Operation and Maintenance P3s
With an operation and maintenance P3, the private component of the partnership operates and maintains the project, while the public agency acts as the owner of the project. Examples of these contracts include bridges and tollways. Ongoing maintenance may provide revenue for the private party through tolls or other fees paid through public use.
Design-build-operate P3s are similar to design-build P3s but include ongoing operation and maintenance of the property facility or project by the private party. The public partner acts as the owner of the installation and provides the funds for construction and operation.
If the private partner operates the project only for a limited time before the facility is transferred to the public partner, the arrangement is known as a design-build-operate-transfer agreement.
A variation of the design-build-operate P3 includes the component of general financing supplied by the private contractor. With a design-build-finance-operate arrangement, the private party provides financing and design, then builds, possesses, and operates the facility. The public partner provides funding only while the project is being used or is active.
With a concession P3, the private agency operates and maintains the facility for a specific period of time. The public partner has power over the ownership, but the private partner possesses owner rights over any addition incurred while the facility is being operated under its domain.