What constitutes a "true" P3?

[Pink Jazz]

Usually, when people think of public-private partnerships (P3s), toll roads are the first thing that comes to mind.  Such contracts are usually a design-build-finance-operate-maintain (DBFOM) contract, where the public entity retains the ownership of the facility but the private partner is responsible for the final design, construction, financing, operations, and maintenance of the facility.

Traditionally, the most common form of project delivery for highways is the design-bid-build (DBB) form, where a DOT procures one firm for the final design and a separate firm for the construction.  This is not a P3 because there is practically no risk transfer to private entities.

One form of project delivery that has gained popularity in recent years is design-build (DB).  This is arguably the simplest form of P3 since a single private entity or group is responsible for both the design and the construction of the highway.  However, it is debatable whether a design-build contract truly constitutes a P3 since there isn't as much risk transfer as a DBFOM contract.

In addition to DB and DBFOM, there are also some project delivery methods that are in between the two.  One that has stood out in recent years is design-build-maintain (DBM), which is similar to design-build except that the private partner is also responsible for the maintenance for a fixed period of time via a long-term lease.

So, I would like to know, what forms of project delivery truly constitute a P3 project?  Do you consider private maintenance or financing as a minimum?

[cappicard]

The Kansas Turnpike Authority is a quasi-private entity.

While the facilities and roadway is maintained by KDOT, it is wholly funded by Turnpike tolls. It receives no taxpayers monies.


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[wxfree]

The Kansas Turnpike Authority is a quasi-private entity.

While the facilities and roadway is maintained by KDOT, it is wholly funded by Turnpike tolls. It receives no taxpayers monies.


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The Kansas Turnpike Authority is a fully governmental organization, and is a department of Kansas state government.  This is just like KDOT is a department of the state government.  I've read a lot of things online suggesting that people assume that an entity that doesn't receive tax funds is either private or semi-private, but this is not necessarily the case.

The KTA board is made up of political appointees and elected officials, and all elements of the operation are controlled by law.  The easiest way to determine which organizations are probably private is to look at profit (non-profit organizations are an obvious exception).  KTA has no shareholders or owners who get rich by raising the tolls.  Their employees and bondholders all get paid an amount that's agreed upon in their contracts.  The use of the money is controlled by law, and is never a private profit.

KTA owes money to bondholders, but this no more makes them a private entity than a city or county that owes money to bondholders.  KTA charges tolls for use of the road, but again this no more makes them a private entity than a city that charges fees for permits or a state park that charges entrance fees.  The fact that they don't receive tax money also does not change the nature of the organization.

This is how the state law describes the authority: "The authority is hereby constituted a public instrumentality and the exercise by the authority of the powers conferred by this act in the construction, operation and maintenance of turnpike projects shall be deemed and held to be the performance of an essential governmental function."  This is a government agency providing a government function in exchange for a payment, just like a government-run water supply or ambulance service.

[tdindy88]

Section 5 of Interstate 69 between Bloomington and Martinsville I believe counts as one. The group in charge of converting existing SR 37 to I-69 are building the highway to slightly different standards than INDOT originally planned, (keeping all existing interchange, bridges and making the highway six lanes for a longer stretch of highway.) Upon completion of the highway the group will be in charge of maintaining it, even snow plowing, for a certain period of time (20 to 30 years I think,) meaning that INDOT will have absolutely nothing to do with this highway for a while.

[Pink Jazz]

Section 5 of Interstate 69 between Bloomington and Martinsville I believe counts as one. The group in charge of converting existing SR 37 to I-69 are building the highway to slightly different standards than INDOT originally planned, (keeping all existing interchange, bridges and making the highway six lanes for a longer stretch of highway.) Upon completion of the highway the group will be in charge of maintaining it, even snow plowing, for a certain period of time (20 to 30 years I think,) meaning that INDOT will have absolutely nothing to do with this highway for a while.

Looking at the details of the project, this is a design-build-operate-maintain (DBOM) contract, which is usually considered a form of P3 except without private financing.

[Rothman]

Section 5 of Interstate 69 between Bloomington and Martinsville I believe counts as one. The group in charge of converting existing SR 37 to I-69 are building the highway to slightly different standards than INDOT originally planned, (keeping all existing interchange, bridges and making the highway six lanes for a longer stretch of highway.) Upon completion of the highway the group will be in charge of maintaining it, even snow plowing, for a certain period of time (20 to 30 years I think,) meaning that INDOT will have absolutely nothing to do with this highway for a while.

Looking at the details of the project, this is a design-build-operate-maintain (DBOM) contract, which is usually considered a form of P3 except without private financing.

Right.  When I think of PPPs, there has to be some real private fiscal investment.

To be frank, I also think of them as mechanisms to simply pump more tax money into contractor's hands.  The term has fallen in its frequency of use around these parts.

(personal opinion emphasized)

(personal opinion expressed)

[Pink Jazz]

Section 5 of Interstate 69 between Bloomington and Martinsville I believe counts as one. The group in charge of converting existing SR 37 to I-69 are building the highway to slightly different standards than INDOT originally planned, (keeping all existing interchange, bridges and making the highway six lanes for a longer stretch of highway.) Upon completion of the highway the group will be in charge of maintaining it, even snow plowing, for a certain period of time (20 to 30 years I think,) meaning that INDOT will have absolutely nothing to do with this highway for a while.

Looking at the details of the project, this is a design-build-operate-maintain (DBOM) contract, which is usually considered a form of P3 except without private financing.

Right.  When I think of PPPs, there has to be some real private fiscal investment.

To be frank, I also think of them as mechanisms to simply pump more tax money into contractor's hands.  The term has fallen in its frequency of use around these parts.

(personal opinion emphasized)

(personal opinion expressed)

Arguably the simplest form of P3 is design-build (DB), although it is debatable whether that truly constitutes a P3.  DB has a bit more risk transfer than the traditional design-bid-build (DBB, which is not a P3) since the awarded firm is responsible for both the final design and the construction, but much less than than any contract that requires private maintenance, operations, and/or financing.

[Rothman]

Evidently, I really cared about it being my own opinion. Wonder how that happened.

[Pink Jazz]

Note that Arizona law does not recognize Design-Build projects as P3 projects, since there have been a few such projects prior to when the state's P3 bill was signed into law in 2009.  The Loop 202 South Mountain Freeway (a Design-Build-Maintain contract) is being promoted by ADOT as the state's first P3 project, so I assume at a minimum Arizona's definition of a P3 is for the private partner to have responsibility for more than only the design and construction, not necessarily with private financing.

[cbeach40]

My personal opinion (yes, also feel compelled to point that out) is that I wouldn't include DB or DBB - as the OP stated, the risk of the contractor is minimized. DB keeps the contractor more involved in it, but I find that to be more of an overlap between the contractor and the consultant, not anything overlapping the road authority there.
Maintenance isn't one I would include either - that the road authority simply contracting out the work, they set the standards. Regardless of whether the initial capital construction is included in the project.

So long story short, I think once you get finance or operate into the equation is the point at which it becomes P3.