compressed delivery schedules
mean projects can open and begin
generating revenue sooner, further
enhancing the value of the P3 model.
A typical P3 structure will involve
the following parties; see the chart
above for a graphic representation.
A public sector entity typically sponsors the project.
A private sector entity, typically a
consortium or concessionaire, is
responsible for contracting with all
the parties responsible for delivering
and operating the project, including:
• A design-build provider to con-
struct the project.
• An O&M provider to operate and
maintain the project over the
agreed term, pursuant to agreed-upon performance standards.
• Equity and debt providers to fund
Advisers on legal and ;nancial matters, government and community
relations, etc. typically help guide
all parties through the P3 process.
While concessionaires typically
retain best-in-class advisers for
these complex transactions, P3 projects tend to run better and provide
greater value for the public when
the public sector sponsor is equally
well advised and supported by subject matter experts.
Lack of sophistication on the public
sector side regarding complex
;nancing and P3 structures has at
times resulted in projects that didn’t
achieve the bene;ts the public sector thought it was getting, leading
some politicians and members of
the public to question the wisdom
of the P3 delivery model. Recent
trends have seen the formation of
“centers of excellence” to provide
the public sector expertise needed
to level the playing ;eld in this
Historically, most P3s have arisen
in the transportation industry to
provide so-called “horizontal infra-
structure”: roads, railways, bridges,
etc. Major transportation industry
contractors took on these contracts
and expanded the scope by adding
to their role capital investment and
a form of turnkey-plus arrangement.
In this expanded role, contractors,
through their concession arm, would
partner with ;nancial investors,
operators, designers and other necessary parties to form the project-based concessionaire entity.
By expanding their roles in the P3
context, contractors were able to
develop an assured pipeline for their
construction business by actually
taking on the ;nancial and related
operational risks over the long term.
Not unlike the movement from the
construction industry into the development business in the commercial
development world, these larger
contractors formed concessions or
development arms to expand their
businesses in the infrastructure
world through P3s.
A Typical P3 Organizational Structure
Special Purpose Entity
• Federal (TIFIA, Private
Operations & Maintenance
Center of Excellence