Public-Private Partnerships (P3s)

• Overview
• Consensus Building
• Deal Facilitator
• Project Facilitator
• Disputes Review Boards

Overview

There is a continuing funding crisis for the country’s infrastructure due to the shortfall in public funds and the aging condition of our assets. This crisis is fostering a new importance for collaboration in forming public-private partnerships (P3s) which can make a significant contribution to the problem.  P3s can attract new funding sources and improve project delivery, cost efficiency, performance and schedule by utilizing innovative contracting frameworks. This new framework can benefit by the use of neutrals in forming and implementing the P3 agreement.

“Collaboration” is the current trend in the engineering and construction industry with design-build, integrative project delivery and certainly P3s.  To support this emphasis on collaboration the role for neutrals should be expanded and formalized to assist in expanding and insuring the benefits of these new processes. This “collaboration imperative” is causing project participants to use innovative contracting frameworks that can attract new funding sources and improve project delivery, cost efficiency, schedule control, and long term performance. The long term delivery approach of P3s require long term relationships built on trust and commitments that span decades to accommodate the financing, operational and maintenance requirements of projects.  These more collaborative frameworks for management and contractual relationships can benefit from the use of neutrals in a variety of potential roles.

Neutrals can help foster collaboration in initiating, forming and planning the project, gaining necessary approvals, fashioning a contractual framework, and implementing a proactive project management plan. For the reasons set out above, “collaboration” is a strong trend in the engineering and construction industry, between designers and constructors, between constructors and owners, and between project participants and diverse stakeholders (such as funders and end-users).  Owners (and other stakeholders) are looking for designers and constructors to be “partners” to achieve larger and longer term goals than just “building the project”.  These additional goals include: expanding funding sources; improving life cycle cost effectiveness; creating sustainable relationships; maximizing asset performance; increasing “value for money”.  Expanded and formalized involvement of neutrals can assist in achieving the benefits of these new project delivery approaches, while still focusing on more conventional goals of reducing delays and claims in delivering projects.

This following is a summary of several collaborative methods of conflict prevention and resolution that should be considered for use through all phases of a P3 project life cycle. Beginning with the decision-making process of whether and how to move forward with an alternative delivery approach to a project, a consensus-building process can be utilized.  When the decision to move forward is made, the negotiation of the project agreements can benefit from a facilitator who can improve the efficiency of the “deal making”.  When the project is in the implementation phase and conflicts arise, again neutrals can add value in several ways: neutrals facilitate collaborative efforts among the parties to address unforeseen impacts to the project and to cooperatively mitigate adverse impacts; neutrals can help resolve disputes by assisting in the parties getting non-binding advisory opinions, or using dispute review boards or mediation to assist the parties in assessing risk and arriving at creative resolutions.  In longer term projects covering operational phases such as P3s, neutrals can be available in a “stand by” role in the event that conflicts or issues arise.