Public Private Partnerships: What Are They?

Simply put, a public-private partnership is a public service or project funded by private sector capital. Sometimes referred to as a PPP, P3 or P3, this partnership is a joint venture, whereby the private sector assumes substantial financial, technical, and operational risk in the public project.

The process of creating a successful PPP is a complex one. For this type of venture to succeed, critical collaboration from many stakeholders is needed. The comprehensive services of a professional consultant will make the difference between success and frustration. Consider the following:

1. MARKET RESEARCH: Knowing the needs of the market is essential any successful PPP strategy. Without it, you limit your chances of success—by almost 100%. You can’t address the concerns and issues of the parties involved until you know what they are. You need a consultant who knows where to look and what to look for.

2. DEVELOPMENT FEASIBILITY: Geographic locations for real estate development must be studied in conjunction with market research and financial and political factors. Although each project is unique, all projects must adhere to jurisdiction guidelines and achieve public approval.

3. PARTNER IDENTIFICATION AND SELECTION: A good consultant works closely with their clients to create their ideal partnership profile. However, there is no e-Harmony or Match.com database for this process. It involves research, evaluation, discussion, compatibility and negotiation.

4. REVENUE PLANNING: This is different than strategic planning. It’s about determining, compromising, and then agreeing upon the right financial mix for each partner. Who will bear the brunt of the cost? The taxpayer or the user? How do the facts support that decision?

5. CAPITAL INVESTMENT AND FUNDING: What’s the main source? Are there grants you can apply for? What’s the partner’s share? Whose name is on the loan? How much is needed? When and how are funds disbursed?

6. BUSINESS STRUCTURING: What’s the best legal structure for your PPP? A traditional partnership? A corporation? A limited liability company? Considerations other than tax consequences come into play.

Woven throughout all these phases is the art of negotiation—one of your business consultant’s most valuable tools, a tool sharpened over years of experience.

Since its inception, Barbar & Associates has delivered high quality consulting to assist clients in public-private partnerships in the United States and internationally.