A leader, a champion of the cause is needed to stand up for the project and the model.

A P3 project needs a champion, on the political side, within the sponsor agency, and in the local community to ensure that the procurement has the support and direction needed to progress. The champion can be:

· Elected officials

· Senior staff leadership

· Organizations, associations and other support groups

· Community leaders

Select an internal owner P3 champion at the outset of the procurement. It is imperative to arrange a chain of command for project support throughout the process, which includes a path to access champions & decision-makers.

Ideally, the project champion should not only be knowledgeable on all details pertaining to the project, but also be able to articulate the goals of the project and speak publicly to defend against politically-driven mischaracterizations.

Be outcome focused.

Many times, local governments, water districts, or state offices begin the procurement process for a P3 before they have a clearly articulated idea of the true goals of the proposed project. There are many reasons a P3 works for a project, and those reasons must be clearly defined, including the challenge faced and the solution provided. The public owner of the project must determine and communicate the expected outcomes (the services to be delivered to the rate payers and end users) such as better water quality or more reliable service) and understand the project’s risk allocation.

Setting objectives is the crucial first step for any partnership and is critical for promoting innovative and efficient solutions.  Prior to engaging with the public or the private sector, the sponsor agency should examine its specific needs and desired outcomes for a project. These activities should be consistent with current proponent practices to provide the optimum development strategy of the private sector, and on a practical level, to ensure that the outcomes are reasonably achievable.  Overarching precepts:

1. Provides an immediate and long-term solution.
2. Connects effectively with the community of water users and water fee payers.
3. Provides transparent review of all viable options.
4. Accelerates delivery of performing assets with clearly understood risk.
5. Mitigates risks to guarantee performance delivery for the contracted asset life and end of term conditions.

For further details, see item 5. Performance-based Criteria

BEST PRACTICES IN COMMUNICATIONS AND PARTNERING

Public outreach, public outreach, and more public outreach!

Many different community stakeholders can be impacted by any infrastructure project and should be informed of the impacts as early as possible. When a project is being delivered as a P3, those communities will have even more questions and more information will need to be shared to address any potential points of confusion that may exist around the P3 delivery model. The three most common points of confusion are:

• A P3 is NOT privatization. Ownership and control stay with public sector.
• A P3 is NOT more expensive. Optimized risk allocation, design innovation, and fully funded regular maintenance provide value and drive down the total cost to the owner over the life of the project.
• A P3 is NOT union-busting to lower labor costs. Innovative technologies and approaches bring much more efficiency than squeezing hourly labor costs.

The transparent flow of information regarding the progress of a P3 project during conception, planning, procurement, and even operational phases should be controlled by the public sector owner. Direct communication with the public is the responsibility of the owner, and the elected and appointed officials are accountable to the project users. The public owners should have a robust go-to-market communications plan to introduce the project to the users and stakeholders, and a plan to keep them informed throughout the project’s planning and execution phases.

Establish performance-based criteria for the project.

Partnerships are only as good as the underpinning contract signed by both parties. The project agreement must contain achievable performance-based criteria that have been mutually agreed to by both the owner and the project team in order to ensure project success. Disagreement, or miscommunication between the two parties as to what success looks like, from the response time for customer service requests to gallons of throughput treated, can lead to public outcries, default and other untold costs. It is much better to have difficult conversations around performance before the contract is signed than while the project is being built.

The authority should examine the current standards and identify where changes need to be made when determining the performance-based criteria for a project in order to maximize the benefit of the program and serve the best interests of the community. Higher performance standards or outcomes required of the P3 contractor may increase costs to the owner, compared to other service options. If these higher standards (and costs) are attributed only to the P3 project option, public opposition to the project can jeopardize success. The public owner should determine what higher standards are the desired outcome of the project before selecting the procurement method.

The stated goal of any water project should be quality, regardless of the procurement model. Dialogue during the procurement process of a P3 is highly encouraged to ensure that both industry and owners have a full understanding of the impact of requested outcomes. There must be clarity as to cost and achievability.

As in any complex commercial transaction, the sponsor should consider relevant project risks during the evaluation process and particularly after the P3 agreements are executed. Failing to deal with problems on a timely basis will be a critical error on the part of the owner. Remember that providing clean, dependable water to your community is still your ultimate goal and duty.

PROJECT EXAMPLES OF PERFORMANCE BASED CRITERIA

Identify and communicate risks and responsibilities for all parties.

Beyond goals and performance expectations, there must be an accounting of project risks and a true understanding of the costs associated with each risk.  A risk register will identify and assign responsibility of each risk associated with the project to a partner best qualified to address it. The risk register should be a robust document of all possible (known) risks that could impact the procurement, design, construction, financing, maintenance, operation or transfer of a project, and the approach to mitigating them. Many of these risks will have only a remote possibility of occurring, and some will have no true mitigation, but the remaining risks must be addressed and assigned to a partner.

SAMPLE RISK MATRIX

Track progress, identify concerns, report and communicate.

A good P3 is based on regular communication – communication of good and bad news between the partners (public and private) on a regular, ongoing, and informal schedule. This communication should touch all aspects of the partners from required reports to informal updates, and general concerns. 

It is critical that the entire team of all internal and external advisors and resources meet on a frequent basis and communicate and collaborate as they work through all the issues associated with structuring and delivering the project. There should be a mutual understanding of how all the issues impact each other, and how they are being addressed and resolved.

Reach specified agreement on project oversight and delivery.

P3s will require dedicated ongoing sponsor agency resources to ensure project performance goals are being achieved. It is vital to identify a person or team whose responsibility is to ensure the above is addressed efficiently, timely, and with accountability.