cap logo cap logo tagline
    Home ·  About ·  Services ·  Resources ·  FAQ's


What is a P3?

P3s are defined by the contractual relationship between a public-sector agency and private sector consortium to provide services required to: plan for and design, build and deliver, finance, operate, and/or maintain infrastructure assets needed to deliver a public facility or service.

What are the general roles of each participant?

In public private partnerships, the private sector assumes financial, technical, construction, and operational risk (or a combination thereof) while the public sector sets policy and retains ownership of the asset. In every case though, the risk is retained by the party best suited to manage it.

Is a public-private partnership only for the construction of an asset?

No, depending on the needs of the entity, the project can include a lifecycle procurement approach that guarantees optimal performance of the asset for years to come. By integrating delivery with operations and maintenance, the asset performance is optimized for the long term.

Does the public have a say in what goes into the contract?

Yes, P3s should always present a transparent relationship between the sponsoring agency, the private sector, and most importantly the stakeholders in a project. In a P3, general public stakeholders can expect to be regularly updated and informed throughout the life of the project.

Are these types of contracts considered privatization?

No, the public sector retains ownership and ultimate control of the public asset. Generally referred to as an alternative project delivery method for the procurement of public infrastructure, P3s are not privatization. An essential ingredient of P3s is that the ownership of the public asset remains with the responsible public entity.

My city doesn't have money to build the project; a P3 will get it built for me right?

P3s are not a funding solution. The public owner finances the project through the ability to leverage private capital not otherwise available through regular public procurement methods. The public sponsor funds the P3 contract through performance based payments, revenue concessions, revenue sharing, among other payment provisions defined in the contract.

Is a public-private partnership right for every project?

No, this type of alternative delivery method is not right for every project. A feasibility analysis that takes into account the specifics of the project needs to be performed prior to choosing its delivery method. A Value-for-Money analysis is performed by experienced advisors to determine if a P3 is right for your project.

What is a Value for Money Analysis?

It is an analysis used in P3 suitability/feasibility studies to determine the potential for value when considering the project's optimum combination of lifecycle costs, asset performance, and risk mitigation compared to a more traditional method of delivery such as Design-Bid-Build.

What is a Public-Sector Comparator?

A Public-Sector Comparator is an analytic tool that enables a governmental entity to make decisions by testing whether private investment proposals offer value for money compared to other forms of public procurement. A Public-Sector Comparator estimates hypothetical, risk-adjusted costs if a project were to be financed, owned and implemented by a responsible governmental entity, and provides a benchmark for estimating value for money from alternative bids.

For more information please contact:
Center for Alternative Finance and Procurement
1700 San Jacinto, Austin, TX, 78711

Sign up for our E-Newsletter