Magazine article University Business

'P3s' Put Key Projects in the Fast Lane: In Public-Private Development Partnerships, Taking Care of the Details Matters

Magazine article University Business

'P3s' Put Key Projects in the Fast Lane: In Public-Private Development Partnerships, Taking Care of the Details Matters

Article excerpt

The need for infrastructure such as classrooms, student housing, dining and wellness facilities has never been greater at colleges and universities. Teaming with the real estate development community through public-private partnerships--commonly known as P3s--continues to gain in popularity as a way to get projects built on or near campus.

Public-private partnerships are a form of contracting between the public sector and private industry that capitalizes on the potential for private investment in a project, while sharing risk between the public and private partners. P3s are relatively new in the United States, but have a long history in Europe, Australia and other countries where government-sponsored, tax-exempt debt is not available.

Benefits for both sides

In Florida alone, P3 projects have been done or are underway at Florida Polytechnic University, Florida State University, the University of South Florida, the University of Central Florida, Florida International University and Broward College. The advantage for universities is that P3s tend to accelerate project delivery, while shifting risk to the private sector.

As with any partnership, there must be benefits to both sides in order for a P3 to be successful.

For higher education institutions, benefits include increasing financial capacity for other projects, reducing the time spent on such projects, shedding some of the risk, and helping universities focus on their "core" capital projects.

For the private sector, the benefits of a P3 are the potential return on investment, fee generation, and the ability to leverage the borrowing power and credit worthiness of the higher ed user.

P3s tend to be complicated transactions, so it is important to have a clear set of goals that have been vetted at all levels of the institution before the procurement of a private partner begins. These goals are important in order to maintain focus through procurement and negotiation of agreements, while concentrating heavily on the allocation of risk. The goals will be helpful to audit the project results through its lifecycle.

Negotiation goals

In addition to setting clear goals, here are a few more tips for ensuring the best chance of a successful P3 agreement:

* Private partners should put money into a deal and keep it there, because those with no "skin in the game" have less motivation than partners who have something to lose. …

Search by... Author
Show... All Results Primary Sources Peer-reviewed

Oops!

An unknown error has occurred. Please click the button below to reload the page. If the problem persists, please try again in a little while.