IQ Spring 2013 - (Page 15)
By using private financing or a hybrid of private and public financing on P3 projects, public
agencies can leverage their infrastructure construction budgets over longer time periods and
cover more projects.
P3 and risk
P3 projects manage responsibilit y and risk
more efficiently. P3 project design is typically
performance-based rather than prescriptive,
giving the concessionaire the freedom to maximize
efficiencies and take advantage of its expertise in
design and construction.
A P3 project typically places the traditional
duties for construction of the project on the concessionaire, including greater responsibility and
risk for items such as systems testing and inspection, obtaining government permits and approvals,
testing and removal of hazardous materials, differing site conditions, indemnities, insurance and
extended warranties.
In payment responsibility and risk, P3 projects
typically involve availability payment schemes.
An availability payment concession keeps the payment responsibility with the public owner, but
often seeks to delay substantial payments to the
concessionaire until the construction is complete
enough to be placed in use and provide revenue to
the public owner.
In either case, a substantial portion of the
payment for construction is made to the concessionaire after the facility is substantially complete
and begins generating revenue. This can allow public owners to leverage infrastructure construction
budgets and spread financing over longer terms and
multiple projects, but the concessionaire typically
carries substantial risk and burden. P3 projects also
often involve a form of performance guarantee with
monetary incentives or penalties tied to asset availability and performance after completion.
P3 and PubliC Works
P3 projects are an appropriate choice for many kinds
of public works infrastructure projects. Typical P3
projects include traditional infrastructure such as
utilities, transportation and transit projects that
generate toll revenues, and social infrastructure
projects in healthcare, education and justice systems.
The driving force behind its increasing consideration by public agencies? P3 can deliver better value
for the money by focusing on the core competencies
of private sector enterprise focusing asset development goals on long-term “life cycle” costs including
extended operations and maintenance life, and allocating risk to the party best able to manage it.
While the P3 delivery method includes greater
and more extended risk for the concessionaire and
contractor, if the contract terms and price reflect the
risks fairly, P3 can offer them large projects, more
control, fewer competitors and often a best-value,
qualitative element to the bid selection process.
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Table of Contents for the Digital Edition of IQ Spring 2013
IQ Spring 2013
IQ Spring 2013 - (Page Cover1)
IQ Spring 2013 - (Page Cover2)
IQ Spring 2013 - (Page 1)
IQ Spring 2013 - (Page 2)
IQ Spring 2013 - (Page 3)
IQ Spring 2013 - (Page 4)
IQ Spring 2013 - (Page 5)
IQ Spring 2013 - (Page 6)
IQ Spring 2013 - (Page 7)
IQ Spring 2013 - (Page 8)
IQ Spring 2013 - (Page 9)
IQ Spring 2013 - (Page 10)
IQ Spring 2013 - (Page 11)
IQ Spring 2013 - (Page 12)
IQ Spring 2013 - (Page 13)
IQ Spring 2013 - (Page 14)
IQ Spring 2013 - (Page 15)
IQ Spring 2013 - (Page 16)
IQ Spring 2013 - (Page 17)
IQ Spring 2013 - (Page 18)
IQ Spring 2013 - (Page 19)
IQ Spring 2013 - (Page 20)
IQ Spring 2013 - (Page Cover3)
IQ Spring 2013 - (Page Cover4)
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