Delivering higher-value infrastructure through P3s

According to the American Society of Civil Engineers, the United States must invest a total of $3.3 trillion by 2025 to meet our nation’s infrastructure needs. The pipeline of projects is impressive, from road and bridge improvements and water-treatment plants, to a growing number of airport enhancements and the increasingly active higher-education sector. The quickest and most effective way to close this gap is with a combination of both public- and private-sector money.

Public-private partnerships (P3s) create opportunities for innovation and cost savings across the lifecycle of a project. With renewed support for infrastructure development from the incoming administration, the use of P3s in the U.S. is expected to grow significantly in the coming years. On February 7, 2017, Congress reintroduced the Public Buildings Renewal Act (H.R. 960/S. 326), which would open the U.S. buildings market to P3 by creating a tax-exempt bond that state and local governments can pair with private financing to fund public building projects, such as schools and hospitals. I’ll be speaking at an Infrastructure Week briefing on the bill Friday May 18.

I have been involved in advancing P3 projects over the past 12 years and have seen the P3 idea transform from a nascent, controversial concept to a widely accepted, proven U.S. model. No longer do we need to point to Canada and the United Kingdom for examples, we have signature projects in the U.S. across all sectors. Nearly every governor, mayor, state transportation department and transportation agency is considering how to leverage P3s to advance their most tricky, sticky, complicated and overdue projects. Since 2008, P3s have catalyzed more than $15 billion in U.S. projects while delivering at least $5 billion in cost savings to taxpayers (according to InfraAmericas). Successful projects that otherwise would never have moved forward, such as the Port of Miami Tunnel, were made possible due to the P3 approach.

Already, P3 projects of all types are helping project owners gain much needed confidence as they look to develop new assets and improve existing ones, as the P3 approach inherently results in faster project delivery and improved long-term performance.

For example, the Governor George Deukmejian Courthouse (pictured above) is the first civic building in the U.S. delivered through an availability-payment-based public-private partnership. Under this agreement, Long Beach Judicial Partners financed, designed and built the project and will operate and maintain it for a period of 35 years. The owner, the California Judicial Council’s Administrative Office of the Courts (AOC), pays for the building incrementally (though they owned it upon land acquisition).

The key to the availability-payment structure is that if the building is unavailable due to maintenance issues for any significant period of time, the AOC can deduct money from their payments. As the project designer, AECOM consequently prioritized durability along with a more convenient and less stressful experience for those on all sides of the justice system, an appropriate response to the varying heights of adjacent buildings, civic architecture that expresses the court’s purpose, and the provision of public space. The project was completed in August 2013 under budget and 11 days ahead of schedule.

As a participant in more than 650 P3 projects around the world, AECOM is positioned to help address the nation’s pent-up demand for infrastructure project delivery. Our integrated design, build, operate and maintain capabilities are backed by a finance entity, AECOM Capital, allowing us to provide assurance, certainty and longevity to public partners.

Our team recently received a Gold honor at the P3 Awards ceremony in the “Technical Advisor of the Year” category for helping to advance P3s in North America. Having served as a trusted advisor to government owners on the largest P3 projects in the U.S. — the LaGuardia Central Terminal Building program and the University of California Merced Campus expansion project — as well as having delivered projects on the private side brings a tremendous reservoir of experience and unique dual public and private perspective.

Accepting the Gold honor in the “Technical Advisor of the Year” category on behalf of AECOM were (from left) Tom Kness, Samara Barend, Kent Dussom, Peter Morris, David Weeks and Jim Stankiewicz.

With many transformational P3 projects in development, we are working to create and unlock new opportunities for our clients while increasing the return on investment not only for our clients but also the taxpaying public.