There is a misperception that P3 is mostly for disaster-relief projects; but many types of building projects can benefit from a P3 system. Waste-to-energy projects are a great example. Anything that serves the public—such as transportation infrastructure, hospitals and schools—is ideal. With a P3, an asset can be built and used much sooner than with a traditional design-build-finance-maintain model, typically requiring bond approval before construction can begin. P3 projects provide a community with much-needed assets without an exorbitant tax increase.
In Canada, the trend is for government entities to borrow money for P3 projects. Because of the low interest rates, the government can typically get a lower rate than the P3 consortium. In some instances, especially larger projects, there are other cost-savings benefits. For example, rather than bidding on a series of bridges as one-off projects, the consortium can complete an entire series of bridges and leverage economy of scale.
When working on a P3 investment, it’s important to invest in long-term, quality construction and engineering. It’s much less expensive to invest in a quality asset from the beginning. In Canada, there are sometimes LEED requirements for P3 assets. When firms become more adept at meeting LEED standards, we should start to see more environmentally friendly building projects in all sectors.
The private sector investment can also help mitigate risk. Because of the long-term maintenance and infrastructure clauses in P3 projects, the trend is really toward getting the best value, not necessarily the lowest cost.
P3 projects benefit taxpayers. They are really an investment in long-term quality for both the government and the consortium.