the newsletter of tbd consultants - 2nd qtr 2012

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Windows 8 is Coming!
PPP - Public-Private Partnerships
When Blah is Best

Construction Management Specialists

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Geoff’s IT Gems
Windows 8 is Coming!

Another version of Windows is coming soon, and this one is not only designed for PCs but also for tablets with their touch-screen capabilities. Here we take a sneak peak at Windows 8.


PPP – Public-Private Partnership


Hear mention of P3 and you might think of a well-known piece of scheduling software, but it is also, along with PPP, an abbreviation for Public-Private Partnership. PPP is often talked about as something that happens in Europe or Canada, but it has a long history in the US as well. For instance, at the commencement of the Transbay Transit Center project in San Francisco, then California Governor, Arnold Schwartzenegger, said the project was ‘an example of harnessing the power of public-private partnerships to build and improve infrastructure in the state’. The fact that that is a transportation-related project is appropriate, because, although PPP is certainly not limited to them, in the US that is the place where you are most likely to find PPP utilized. Indeed, what may have been the first example of PPP in the US occurred in 1654 with a contract for building and operating a bridge for the General Court of Massachusetts, again transport related, and the FHWA (Federal Highway Administration) actively encourages the use of PPP.

Certainly PPP has been used far more commonly in some other areas of the world than in the US. For instance, in the UK the government of John Major in 1992 introduced the private finance initiative that encouraged the use of PPP, and a year later the Canadian Council for Public-Private Partnerships was established to promote PPP north of the 49th parallel. In the European Union as a whole it is estimated that over 1,400 PPP projects have been carried out over the past two decades. Of course, PPP has had many successes, but also some spectacular failures, such as the PPP contracts to maintain and upgrade the London Underground system.

The name is fairly self explanatory, but what does PPP actually mean? With PPP you have a contractual arrangement involving a public authority and a private party, where the private party assumes a greater financial, technical and/or operational involvement and risk. The private party is often a consortium involving a building contractor, a bank or other financial institution, and perhaps a maintenance company.

Design-Build can be one form of PPP, where the design-builder assumes greater responsibility for design work, along with the construction work, within an approved fee. There is also DBOM (design-build-operate/maintain) where the private partner also takes responsibility for operation and maintenance.

With both of the above options, the public-sector entity provides the funding, but finance is often viewed as an important consideration in PPP, with the private partner providing some, or maybe all, of it. That financing aspect is something that has public authorities viewing PPP with interest these days, because of the adverse financial situation for public authorities. If the private partner is providing financing, they obviously need an opportunity to make money, so Design-Build-Finance-Operate is another PPP option with the private partner having the right to operate the system/building/bridge/etc. and keep a specified percentage of the income from the project for a specific period to recoup their investment, hopefully with profit.

PPP options for use with existing buildings include:

  • Operations and maintenance (O&M) concessions where the private partner takes responsibility for operation and maintenance of the facility.
  • Long term lease, often of toll facilities, where the private party keeps a specified percentage of the tolls and takes on responsibility for operating, maintaining, and maybe improving the facility.

Life Cycle Costing is important for assessing the value of public-private projects, especially where maintenance is involved in the project. The allocation of risk has often been a contentious issue, and responsibility is something that is tied to risk, but public authorities are often reluctant to give up responsibility.


When Blah is Best
Geoff Canham, Editor

The markets seem to be muddling along, with nothing substantial happening. In this market report we look at why that could be a good thing, and examine some of the potential events that would make big news, but which we might prefer to avoid.



Design consultant: Katie Levine of Vallance, Inc.