Public-Private Partnerships - North America’s Next Top Model? Canada-U.S. Forum on Public-Private Partnerships (P3s)

“The Infrastructure Imperative”

The US-Canada Forum on Public Private Partnerships (P3) began with a panel that asked the question “what is the current state of infrastructure in the United States and Canada?” The panelists Mark Romoff, Todd Herberghs, and Brian Pallasch agreed that infrastructure in both countries is in dire need of improvement.  Mark Romoff cited that Canadian P3 projects tend to be on time and on budget more often than single-funded infrastructure projects. Part of the reason for this success is the support of the federal and provincial governments within Canada. Todd Herberghs noted that Canada has a federal role in P3s while the United States does not, which causes varied results within the United States. States such as Colorado and Virginia have led the way in P3 projects, while other states have yet to work within this framework. To get all states involved in P3s, Herberghs suggests starting with partnerships for smaller infrastructure projects to ease the transition for states. Panelist Brian Pallasch discussed the American Society of Civil Engineers Report Card on the United States infrastructure which received an overall grade of D+, and said while P3s in the United States have a place in transportation funding, it is not enough.

“Overcoming the Internal Barriers”

The second panel began with John McKendrick talking about his first-hand experience in the complicated process of building infrastructure. He emphasized that it is people who build infrastructure and the process of construction must be transparent. Also on the panel, Mike Cheroutes argued that P3 deals are about relationships with people and that deals are necessary for things to get done, not just planning. According to Jody Becker, a large part of why P3s are not more popular is a lack of education on the benefits and a fear of foreign investors. There are also procedural adjustments as the typical system is flipped, with designers reporting to construction in P3s instead of the other way around. Becker further argued that for P3s to spread, success stories need to be told. 

“Managing Political Risk”

In the panel on political risk, David Caplan suggested that one of the political realties in using P3s is that governments do not always do things because they are the right thing to do, but for other beneficial motives. Grey Lyle added that while P3s are not a big election issue, they are important for local communities. This is due to the fact that P3s are difficult to explain to the public. Lyle also emphasized that there will always be those that oppose public private partnerships; therefore, it is important to recognize the supporters, opponents, and those who are persuadable to create change. In terms of managing political risk, Damien Joy argued that governments cannot push or run away from a deal under financial hardship because they are afraid of risk. He said it is important for governments to understand and accept risks throughout P3 projects.

“Putting Together a Deal”

David Pennington, Stephen Mayer, and Doug Koelemay were members of the panel that discussed the financial issues of putting together P3 deals. According to David Pennington, there is money out there for investment in infrastructure. The problem is the United States generally struggles with starting projects. Also, Pennington said that any infrastructure project is a godsend, as a certain number of them will be P3 which will continue its spread.  Amongst other great points, Stephen Mayer made two important observations. First, investors and planners want local partners so they understand the issues on the ground. Second, surveys have shown people are okay with tolls as long as the revenue goes towards what they paid for (i.e. transportation). With greater integration of information, Doug Koelemay argued, everything about P3s could change. He talked about how Virginia’s public meetings on P3s could lead to both a better educated populace and more P3s projects within the state.

Keynote

In the Keynote panel, Elaine Buckberg and John McBride discussed the future of P3s. Buckberg discussed the Build American program which includes P3s and aims to provide information produce informed decisions. This is especially the case at the state and local level.  Further, she stated that the United States is underinvesting in infrastructure which negatively impacts the nation’s long term growth.  McBride pointed out there is a great deal of emphasis on P3s in Canada with the carrot being used to incentivize, and the stick being used to deter infrastructure projects when appropriate. However, McBride said unlike what is often believed, P3s are not a source of funding. Echoing what many had said throughout the event, both speakers emphasized “nothing works like success” to persuade skeptics.