P3: Public-Private Partnerships for Transit Development

P3- A new way of thinking

Public-Private Partnership, also known as P3, refers to the contractual agreement between a public agency and a private sector. P3 allows for greater private sector participation in the delivery of transportation projects where traditionally, private sector participation has been limited to separate planning, design or construction projects on a fee service basis.
Essentially, P3 is a form of procurement. By expanding the private sector role, this allows public agencies to tap into private sector technical, management and financial resources in new ways. Unlike conventional methods of contracting for new construction, P3 contemplates a single private entity, typically a consortium of private companies, being responsible and financially liable for performing all or a significant number of functions in connection with a project.

P3 Benefits:
Expedited completion compared to conventional project delivery methods;
Project cost savings;
Improved quality and system performance from the use of innovative materials and management techniques;
Substitution of private resources and personnel for constrained public resources; and,
Access to new sources of private capital.

Typical P3 Activities
Public-private partnerships can be applied to a large range of transportation functions across all modes. These include:

  • Project conceptualization and origination;
  • Design;
  • Financial planning and finance;
  • Construction;
  • Operation;
  • Maintenance;
  • Toll Collection; and,
  • Program management

P3 Incentives
From the public agency’s perspective, expanding the role of the private sector to offer a range of advantages relevant to specific project needs, is a good benefit. Projects are likely to benefit from P3 when tight schedules, complex design and construction or innovative finance are involved. In such cases, P3 is beneficial because of their ability to provide:

  • Expedited project completion by grouping multiple responsibilities in a single contract (combined design and construction);
  • Access to specialized expertise (financial management or toll collection);
  • Access to proprietary technology (special pavement designs);
  • Relief from staff burden (maintenance);
  • Ability to apply special incentives and disincentives to improve project performance; and,
  • Access to private investment and innovative finance to augment scarce resources (finance/design/build).