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Public-Private Partnerships FAQ

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Who Owns the Facilities Built with a P3?

By statute, ownership must transfer to the public entity in a Public-Private Partnership.

What are Public-Private Partnerships?

Simply put, a Public-Private Partnership (P3) is a contractual arrangement between the public and private sectors to deliver public infrastructure projects where there is an unmet need. While the public body and private sector entity share resources and expertise, both parties also jointly commit to an approach by which certain risks and rewards are shifted from the public body to the private entity.

What are the Benefits of a Public-Private Partnership?

In many cases, a P3 provides improved project cost certainty, improved schedule certainty, improved project quality, and a more efficient timetable. Typically, the private sector entity bears the lion’s share of the responsibility and risk for project cost, schedule, and project quality. All project team members are contractually connected with only one contract, which includes guaranteed on-time and on-budget project delivery via an integrated performance-based approach. When structured correctly, a P3 fosters unparalleled innovation, efficiency, and collaboration, while reducing time and cost associated with procurement.

How Do Public-Private Partnerships Work?

Under traditional procurement, private contractors construct school projects based on a public design with public financing. More recently, Design-Build procurement – under which the private sector is responsible for designing and building projects for a fixed price has been increasing.

Under P3 models, the private sector may also participate in design, finance, operations, and maintenance. Within the P3 delivery method contemplated in this Proposal, the private sector facilitates the land acquisition, as well as project design, construction and conveyance for the public entity.

How is Risk Transferred in a Public-Private Partnership?

The goal of a P3 is to align project risks with the party (public or private) that is best able to manage the risk. The major risk categories in building schools are land acquisition, financing, design, construction, operations, and maintenance. In a P3 arrangement, the public entity may opt to transfer the risk and responsibilities associated with any or all of these categories to the private entity. Public sector risk retention goes down as the risk and responsibilities associated with these categories are shifted to the private entity.
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