Public-Private Partnerships (P3s) Overview

AGC members use every opportunity to educate public owners about the best ways to deliver construction improvements and P3s are a growing part of that conversation.  Public Private Partnerships (P3s or PPPs) are a way to finance and deliver public works projects at the federal, state and local levels.  AGC continues to advocate for increased public investment in infrastructure through a competitive process that ensures good use of taxpayer resources to deliver transportation, water and building infrastructure.

P3s present contractors with new opportunities. P3s also present significant new risks. Many risks typically held by the public entity are transferred to the private consortium in a PPP. Contractors have to be aware what new risks are being transferred by public entities and by concessionaires. Being involved early in the process (including the development of state enabling legislation), can help contractors ensure that the risks are most efficiently allocated and that contractors do not take on too much risk. Additionally, public entities should understand that not all risks in a PPP should be shifted to the private sector as some risks are more efficiently held by the public entity.

Communication is important in construction and can be even more important in P3s. Contractors need to work closely with other team members from the outset to develop the necessary contracts and Memorandums of Understanding (MOUs). Their team (including their insurer, bonding agent, and lender) also needs to be active early in the process so contractors can carefully evaluate the risks they are taking on and determine if the P3 project is a worthy opportunity.

It is important that contractors help shape the P3 environment from P3 enabling legislation to contracts between all parties involved in a P3.  As states continue to look to utilize PPPs as a tool to address our overwhelming infrastructure deficit, contractors should be key contributors to that debate. It is also vital that the federal, state, and local governments look to PPPs as a supplement to and not a replacement for public investment in U.S. infrastructure.

Learn More About P3's:

  1. P3 Basics
  2. Legislative Issues
  3. Considerations for Contractors