Public-private partnerships (P3s) have long been used globally to finance, build and maintain large infrastructure projects. More recently, P3s have become a trend in the United States as federal, state, and local governments seek innovative solutions to address infrastructure needs amidst a challenging economic environment. If implemented and managed correctly, P3s can support needed infrastructure financing gaps, speed up projects and allocate risk. The model has helped reinvigorate capital improvements across the country in a broadening sector base, a trend expected to continue in the coming years. But with these opportunities are inherent, and in some cases, new risks, to identify, plan for and manage to realize the benefits of P3s and avoid disputes.

P3 Trends

P3s are contractual agreements between a public agency (federal, state or local) and the private sector (often a consortium of investors) that allow for greater private participation in the delivery of projects. Under these partnerships, public works such as highways, bridges and buildings are financed, designed, built, operated and/or maintained by private concessionaires. P3s are based on the premise that public projects can benefit from the private sector’s increased competition, expanded financing options, and more flexible personnel and procurement processes. In return, the private sector can access a market otherwise served by the public. It can be a mutually beneficial relationship where the skills and resources of each sector are shared, along with the risks and rewards, in delivering a project.