When it comes to public private partnerships, allocation of risk is critical
As cash-strapped state and federal agencies look increasingly towards public private partnerships to fund projects, panelists at the “P3s & Building for Tomorrow” forum agreed project risks need to be allocated between all parties if the partnership is to work.
Kevin Keller, with Kansas City-based HDR Engineering, says his company looks at all different perspectives and meets with all partners involved with a public private partnership, also known as a P3, to understand what they need as a return on investment to be involved.
“It’s got to be the right project,” Keller told the audience at a forum that was part of the Louisiana International Trade Week program. “Not every project will work with a P3 market. It’s got to be tailored just right.”
Paul Cristina, director of public private partnerships for BNSF Railway Company, says railways are typically averse to risk so when his company walks into a room for a P3 deal, that deal has been completely vetted throughout the entire organization and they’re absolutely sure it will benefit them.
“When we think of a good P3, it’s when the railroad can make a needed and necessary capacity gain in a key territory,” Cristina says.
Bobby Landy, vice president and chief commercial officer for the Port of New Orleans, and Tommy Clark, Louisiana Commissioner of Multimodal Commerce, say they’re looking towards P3s as an option to make improvements to state ports to keep them and the region competitive.
“We can do same thing that the Panama Canal is doing on a larger scale. We have over 200 miles of river between Baton Rouge and New Orleans,” Clark says. “We can create a true enterprise trade zone and synergize strengths of our ports. I’m not suggesting that we’re going to consolidate ports. I’m talking about creating an alliance where we can market and promote on a global spectrum, and I think P3s can help us do that.”
Jeff Roesel, executive director for the Regional Planning Commission in New Orleans, says his organization sees itself as a catalyst to line up projects in a way that enables partners to see its impacts and costs, as well as see what needs to be done to get federal help. It also works to keep the public informed.
“Our agency tries to gather as much public input as possible and give them as much info as possible, so they can make preparations if need be,” Roesel says.
As private partners, Ed Diffendal, managing director of private infrastructure Americas for Partner Group, and Antti Suhonen, with JP Morgan Chase, say when they look for partners for a P3, they look for people with an ability to finish the project on time and on budget.
“The ability to finish on time, especially if there’s a toll or public payment involved, is critical. If (the project is) delayed, that’s delayed toll revenues and you may miss loan payments.”