By Andrew D. Mendelson, FAIA, Chief Risk Management Officer,
Berkley Design Professional
April 11, 2019
Adapted from an
article authored by Suzanne H. Harness, J.D., AIA for Berkley Design
Professional
Recognizing that traditional public funding will not always
be available, governmental agencies are using innovative public-private
partnership (P3) models to incentivize their private-sector partners to deliver
much needed local projects. For many engineers, P3 is already a familiar method
of project delivery for infrastructure such as roads, bridges, tunnels, and
transit. Architects are now finding that local communities are also considering
P3 for other types of building projects, including athletic facilities,
museums, convention centers, parking garages, courthouses, libraries, and
affordable housing.
Simply stated, a P3 exists when a public entity retains a private entity to finance, design, and build a project that will deliver a benefit to the public. Often, the P3 consortium will be responsible for maintenance and operations over an extended period of time, up to 30 years. One thing is certain: private entities—and their investors and lenders—will only support P3 projects when they have confidence that the revenue stream will deliver an acceptable return on investment. The developer is then under tremendous pressure to deliver the promised financial return to investors.
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