A Public-Private Partnership Primer

 The public-private partnership model

BRG Managing Director Ben Nolan has 40 years of experience in the construction industry and knows a thing or two about large-scale projects. In a recent episode of the ThinkSet Podcast, host Eddie Newland talked with Ben about public-private partnerships (P3s) and what they might mean for the future of infrastructure. Here’s an excerpt from their conversation, with minor edits for brevity and clarity.

Eddie Newland: Can you give us the broad strokes of public-private partnerships, or P3 programs?

Ben Nolan: The idea behind it is the government will allow a private company to come onto government property and build a project that they will then essentially lease to the government or operate for the government in exchange for some flow of funds. Traditionally, governments have funded and designed and built and operated government facilities, and now the government has decided that it might be a good idea to let private companies come in and design, build, finance and operate those same facilities under some long-term contract.

EN: What are a couple of examples—you mean like toll roads and bridges?—that can eventually see a profit?

BN: Yes, exactly—that type of infrastructure. Transportation would be the general nature of the projects that you mentioned. Now, whether the private company actually makes an actual profit is a big question, but it is an opportunity to make a profit.

EN: You’ve before noted that P3 adoption is a little slower in the US than in other parts of the world. Can you explain why that is?

BN: Traditionally, in the US, public procurement has been done pretty much the same way for many, many years. There were forms of contracting that were allowed by law—state law and federal law—and over time, particularly in Europe, the P3 model was used, so it migrated to the United States as a contracting strategy. The states had to pass laws to allow this type of strategy, and it’s taken some time to get the laws passed. And now, several states have done it successfully: Texas, Colorado, Florida, for example. It has taken a while just because of the nature of the legal structure that needed to be created to allow for these kinds of projects.

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