States continue to have a need for new infrastructure and buildings—courthouses, prisons, bridges, roads, water and wastewater treatment plants, and even hospitals. But in many instances, they don’t have the internal resources to match such needs.
Enter P3 (public-private partnership)—a combination of the public and private sectors where risks and responsibilities between the two are allocated based on what they do best. Many in the construction industry might point to toll roads as an example in the United States where P3 agreements have flourished, but these type of partnerships can be applicable on a wide range of construction projects.
Rick Ciullo, chief operating officer, Chubb Surety, www.chubb.com/surety/chubb1315.html, Warren, N.J., a group of insurance companies that specializes in construction and commercial surety bond solutions, says, “From my perspective, it is just another way for the public to develop assets other than investing public money.” He describes it as a contractual agreement between a public entity—such as a department of transportation or a water district—and a private company that will design and build, finance, operate, and maintain the asset.
He is quick to mention the concept is not necessarily new. Countries in South America, Europe, and Asia have been using this model for years, while in Canada P3 has become more popular in the past decade. Even in the 1970s, in the United States, multiple post office buildings were built using a P3 model, according to Ciullo. But the partnership is seeing renewed life now with the tighter economic conditions and the need to develop better and more efficient ways to do things. Today, many states have created legislations in support of P3, while others are trying to enact similar legislation.
Ciullo says BIM (building information modeling) is an important tool in the movement. Technology to enable BIM can help all project participants deliver an asset that is tailored to the intention of use that the owner has in mind, according to Ciullo.
Beyond aligning the interests of project participants, technology can also provide the transparency and accountability needed in public projects. This summer, Gafcon, www.gafcon.com, San Diego, Calif., a construction-management firm, announced new services for P3. The company plans to be a liaison between property owners and contractors, ensuring projects are completed on time and on budget.
Charles Black, managing director of the new P3 services, Gafcon, says, “There are a lot of transparency requirements built into public-funding mechanisms. It really becomes a tension between trying to gain the efficiency of construction by the private sector and then maintaining the transparency that the public wants as a policy matter when public fund or public resources are involved.”
Another consideration is as property values have become stagnate public agencies don’t have the tax increments to finance projects. This puts more stress on the system, causing public agencies to turn to P3 agreements to solve the funding problems. Still, the public needs to know how the resources and funds are being spent. This is where technology comes into play.
Gafcon’s tech-enabled services, which are powered by SharePoint360, provide the transparency and accountability that is needed in P3. “That level of transparency will give the public agencies the confidence to be able to invest in P3s knowing that there will be full accountability on public resources,” says Black.
SharePoint360 not only provides transparency, but it also allows teams to have access to data in realtime. Speaking specifically to SharePoint360, Yehudi Gaffen, CEO, Gafcon, says, “The basic goal of our technology initiative is really to turn data into useful information and to make the information accessible realtime so that it can kind of act as a rider on the boat to know which direction you are going.
“What we tend to find is there is a lot of data out there that is very confusing and very often it is really out of data and late … What we have used our technology to do is provide applications that really take that data and turn it into useful information through dashboards, through trending of the data to find forecasts where things are headed … and then be able to provide the management guidelines to make those corrections,” says Gaffen.
In the past, the company has offered these technology services to outside companies and even other industries, but has recently restructured to make SharePoint360 a company that enables the Gafcon services. The combination of P3 services and tech-enabled services can provide added value to projects using public-private partnerships.
Some say market conditions make now a great time for P3 to flourish. Owners in the construction industry are looking for effective ways to develop new assets for the public. Technology will be at the center of the movement, providing the transparency and collaboration needed to enable these agreements.
As Gaffen says, “This recession has really created a shakeout and people are coming up with better ways to do things … P3 is one of those areas that has come out of that.”