Author: Amani Tatum
AIAI releases its First Principles of Risk Reference Guide
New York, NY – April 9, 2024 – The Board of Directors of the Association for the Improvement of American Infrastructure (AIAI) today approved the release of the First Principles of Risk Reference Guide to the United States infrastructure industry, marking a pivotal moment in the advancement of Public Private Partnership (P3) procurement practices. The P3 Risk Guide is designed to provide a comprehensive, plain English, first principles understanding on how key contractual terms and concepts related to P3 project risk are generally approached in the United States P3 market. By establishing a broadly accepted market position on key issues, the document is intended to assist in facilitating clear, direct and productive communication between all parties involved in P3 projects. The expectation is that by having such a widely accepted market document, it can serve as a tool at managing proposer expectations of where a P3 project is relative to the guide at the earliest stages of a procurement and therefore should assist in streamlining negotiations and encourage more productive collaboration among agencies, developers, and other stakeholders at the earliest stages of a transaction. “The P3 Risk Guide serves as a starting point for meaningful conversations by fostering consensus on key areas of risk allocation and effectively managing that process, so we can create a more conducive environment for negotiations and the expedition of successful project delivery.” said Lisa Buglione, Executive Director at AIAI. AIAI’s Board of Directors collectively applauds the work of the association’s members and P3 Direct participants who each assisted in the document’s development and comments phase, which yielded hundreds of comments and hours invested by public sector financial, legal, technical advisors, infrastructure investors, lenders, developers, contractors, sureties and operations / maintenance providers and most importantly, public sector owners from various State and local agencies across the United States for their extraordinary diligence and efforts. William A. Marino, AIAI Board Chairman, expressed that “ensuring that the document was developed with a balanced perspective was essential to safeguarding the integrity of this challenging endeavor and having a document that represents broad based commonality among each of the key stakeholders in a P3 transaction was a critical part in its development.” On the process to get the document to the point of release, AIAI Board President, Sam Chai remarked, “Over the last few months, the Association has reached out to industry professionals, both public and private, and incorporated their feedback to create a balanced document which is very much representative of industry. I have no doubt that this document will prove invaluable to owners as they procure critical infrastructure.” Owners are also weighing in on the importance of a comprehensive outline on risk. “I really appreciate AIAI’s collaborative work by providing this guide,” said Russell McMurry, Commissioner of the Georgia Department of Transportation (GDOT). “It provides public owners with a critically important view of risks and how best to eliminate, mitigate or manage when developing contracts. This is a great tool for an owner to use in contract development.” AIAI will continue to pursue feedback by engaging with industry associations in the P3 community so that expert input is regularly incorporated with the goal being industry-wide adoption of the document. Comments are welcomed during the industry opportunity to comment period which will commence on May 1, 2024 and end on June 30, 2024. AIAI also expects to hold several industry townhalls to discuss the document and solicit feedback, as well as engage in a roadshow with various industry stakeholders to continue to enhance the document’s utility and profile in the market. The publication of the First Principles of Risk Reference Guide underscores AIAI’s commitment to promoting best practices and enhancing the effectiveness of the P3 procurement process. As owners and developers seek to navigate the complexities of infrastructure projects, this document will serve as a valuable resource to approach risk discussions effectively, and positively guide decision-making.
Workshop on The Fundamentals of Public Private Partnerships Empowers Texas Mayors and Public Officials to Pursue Alternative Delivery Options to Improve American Infrastructure
Workshop on The Fundamentals of Public Private Partnerships Empowers Texas Mayors and Public Officials to Pursue Alternative Delivery Options to Improve American Infrastructure Arlington, TX — April 8, 2024 — Mayor Jim Ross recently hosted a workshop on The Fundamentals of Public-Private Partnerships (P3s) in the city of Arlington. Organized as a collaborative effort between the US Conference of Mayors (USCM) P3 Task Force and the Association for the Improvement of American Infrastructure (AIAI), this workshop aims to equip participants with the foundational understanding necessary to explore the possibilities of P3 projects. Joining Mayor Ross were city leaders from Coppell, Copperas Cove, Dallas, Denton, Port Arthur, Richardson, Sulphur Springs, Wylie, and Trophy Club. Cities are the cornerstone of the nation’s economy. Society is evolving, and city leaders willing to embrace change can capitalize on the innovation and opportunities offered with alternative delivery, stimulating economic development. Alternative delivery models allow governments to consider a range of options that offer resilient, long-term solutions to their infrastructure challenges. Adopting the P3 model allows city leaders to provide safe, secure, modern communities, creating a legacy of equity, innovation, and value. By bringing together private industry experts and city officials, this workshop is designed to facilitate dynamic discussions on leveraging P3s to address critical infrastructure needs while promoting economic growth and community resilience. “This initiative of the US Conference of Mayors represents a significant opportunity for mayors and their staff to gain valuable expertise in navigating the complexities of infrastructure development,” remarked Mayor Jim Ross, who is also a member of the USCM P3 Task Force. “As cities across the nation grapple with pressing infrastructure challenges, collaboration between public and private sectors becomes increasingly indispensable. The P3 model has been critical to our effort in Arlington and this workshop underscores our commitment to fostering meaningful partnerships that drive tangible progress and benefit our communities.” “We are proud to work in partnership with AIAI in facilitating this workshop, which serves as a platform for knowledge exchange and capacity building,” said Tom Cochran, CEO and Executive Director of the US Conference of Mayors. “By harnessing the expertise of private industry leaders and the collective wisdom of mayors from diverse communities, we are poised to catalyze transformative change and drive sustainable development across the nation.”
AIAI Delivers Much Needed P3 Certification Program
“A practical approach to understanding the value of public-private partnerships compared to other more traditional delivery methods has long been missing in the U.S. We all need to help our public sector colleagues develop a basic understanding of the model and have the confidence to utilize P3 delivery where appropriate, in bringing their projects to market faster, better, and cheaper than could otherwise be achieved.” Rodney Moss, Hunt Companies; Secretary & Treasurer, AIAI Board of Directors. Venturing into the world of public-private partnerships can be daunting. Not only is everyone’s time precious, but it’s sometimes difficult to find the educational resources necessary to develop an understanding of the complexities of the model. Furthermore, like any other delivery method, these contracts need to be procured properly with the right fundamentals so that the taxpayer receives the full benefit and power of the delivery method. Introducing AIAI’s P3 Certification Program. This program has been developed to provide public and private sector participants with foundational P3 knowledge by engaging participants in a wide range of strategic, proven processes, such as developing project charters, market-sounding exercises, procurement-options analysis, and risk workshops. When certified, graduates will know 1) when, how, and why P3s work best, 2) recognize when P3 isn’t the best option, 3) the foundational processes required for both the public and private sectors to succeed, and 4) how to communicate the value of P3s effectively and confidently to external stakeholders. “For large, complex, or urgent infrastructure projects, P3s often provide the most effective and efficient ways to deliver infrastructure in the US today,” explains AIAI executive director Lisa Buglione. “They have they been utilized around the world for decades and are rapidly gaining momentum in the US. Entering into an alternative financing structure or transferring lifecycle performance risk requires careful consideration and expertise. AIAI’s P3 Certification Program gives both public and private sector stakeholders the background, case studies, and basic knowledge to construct a P3, as well as knowing what questions to ask and when to bring experts to the table.” Delivered over the course of one year, this modular program first gives participants an understanding of the history and evolution of P3s and how it applies to the infrastructure problems they’re trying to solve. Participants then will receive an overview of the P3 delivery steps and processes, which lays the groundwork for future more in-depth sessions. The second phase of the program will provide deep dive into the features and benefits of alternative financing and risk transfer structures before shifting into a detailed examination into the three phases of P3s: pre-procurement, procurement, and project execution. This time investment is a win-win for us all. Once jurisdictions familiarize themselves with the model, they will understand the inherent value of P3 as an option in their procurement plans. From strategic risk sharing to guaranteed performance outcomes, P3s empower government to have certainty in their budgets, while giving the private sector an opportunity to invest in local community infrastructure. Given the macroeconomic market factors at play for the foreseeable future, the desire to pursue alternative delivery methods is growing rapidly. Therefore, the value of this certification program will only increase to an industry that desperately needs a common baseline of knowledge and certified participants and decision makers who have that knowledge.