SPI Insights

This trend will significantly impact public and private-sector leaders

Public officials in government are asking difficult questions about how to deliver critical infrastructure projects. Their concern is real, and their questions are valid because the trend of delivering large projects through public-private partnerships (P3s) is becoming more compelling every day. Government leaders are feeling pressure to consider P3s as a new delivery method for large projects.

The questions public officials are asking themselves include:

• Should we embrace this trend of collaborating with private-sector partners?
• Do we need private-sector capital for infrastructure projects?
• Can we trust the P3 model and is it better?
• What are the best practices for success?
• Are we ready to test the model? If so, how and where do we begin?

The questions are good because their dilemma is genuine. Public officials should definitely understand the P3 model for project delivery. They need to know exactly how a P3 model works, and where and how to get help before launching a project. Only when they have all the answers will government leaders be comfortable enough to step away from the norm and launch big initiatives in a new way.

Public-private partnerships and private-sector investments in public projects are common occurrences throughout the world. Collaboration between public and private partners is the new norm, and unless a majority of government leaders in the U.S. step up and get in the game, America could soon find its global competitiveness in decline.

Here are answers to the questions and concerns of public officials. They come from a former government official who has spent years researching, observing, and participating in public private collaborations. Hopefully the answers will be helpful:

• Yes, public officials should look long and hard at public-private partnerships because this delivery model is destined to become our future. While it won’t be the only delivery model, it will become a common way to launch large, public projects.
• Collaborative initiatives are here to stay because there simply is not enough public funding now, nor will there be in the future, to address the country’s most critical infrastructure needs.
• The category of infrastructure covers every critical component of a country’s basic foundation – roadways, bridges, airports, water systems, power grids, technology networks, public safety systems, health care, telecommunications, and more.
• The trillions of dollars made available through the pandemic recovery, stimulus, and infrastructure funding bills passed by Congress will disappear in a few short years.
• That kind of funding will not be available in the future, and the amount available now to government is not enough to rectify the thousands of critical infrastructures needs that exist today.
• More funding is already needed by cities, counties, states, health-care networks and educational institutions. That funding will have to come from the private sector.
• Population growth, the ravages of climate change, aging water systems, power upgrade needs, transit issues, and technology modernization will require huge new capital investments long after the current funding has disappeared.

Many public officials are already involved in using the P3 delivery model for projects. Others are educating themselves about the various ways a P3 can work. Information is available everywhere, and visionary leaders are preparing themselves to embrace the benefits of partnerships – benefits that include private investments, expertise, experience, and a way to immediately address critical infrastructure needs.

Along with that advice to public officials, private-sector leaders also have questions. Their questions are also related to the prevailing trend of public-private partnerships. The questions corporate leaders have fall into common categories.

• Should our company develop a P3 offering for the services we provide to government?
• Should we find ways to provide funding to public entities for our service offerings?
• How important is it for us to become experts in understanding public-private partnerships?
• How soon should we be ready to offer our services through a P3 model?

Companies interested in selling to the multi-trillion-dollar government marketplace should definitely be asking these questions. Not every firm will be able to develop a P3 delivery model for services, but most will be candidates for that.

Strange as it may seem, companies that are not yet offering a P3 model for the services they sell to government will risk a decline in their public-sector revenues. Here are answers to questions that private-sector firms may be pondering.

• Companies that have the ability to build out a P3 model and/or assist with funding should consider that option. It is likely that competitors will be considering this method as well.
• Corporate officers need to understand the numerous ways a P3 model can be structured. It is best not to be surprised by a competitor becoming a ‘first mover’. Business disruptions of all types are more common than ever, and this is a trend that deserves watching.
• Funding partners are abundant … they can be found everywhere. Private-sector firms can identity equity investors, nonprofit organizations, regional banks, public-sector investment systems, insurance firms, and even federal funding programs to provide the capital component of a P3 model.

Information about the P3 delivery model is abundant. Use web search engines as a way to get started. Don’t be slow to learn more. It is never good to ignore change that promises to have a lasting impact.