Public Private Partnerships (P3)

P3 Delivery Methods

ADOT has broad authority under the P3 statute to use project delivery methods or agreements or combination of methods or agreements that will serve the public interest. Examples of potential project delivery methods include:

• Predevelopment agreements leading to other implementing agreements
• A design-build agreement
• A design-build-maintain agreement
• A design-build-finance-operate agreement
• A design-build-operate-maintain agreement
• A design-build-finance-operate-maintain agreement
• A concession providing for the private partner to design, build, operate, maintain, manage or lease an eligible facility
• Any other project delivery method or agreement or combination of methods or agreements that the department determines will serve the public interest

Potential Benefits of P3 Delivery

• Lower transaction costs: Working with a single private partner across all stages of the project eliminates the costs of developing, awarding and monitoring separate contracts at each stage. In other words, a P3 can reduce the transaction costs of bringing the private sector into the project.
• Synergy across the phases: Working with a single private partner across all stages provides a powerful incentive to design and construct the facility to minimize the long-term costs to staff, operate, and maintain it.
• Expedited delivery: With the cost of labor and materials increasing steadily each year, the private partner is incentivized to complete the construction as quickly as possible. Most research on P3s shows that they are almost always completed faster than traditional procurements.
• Cost certainty: At the point of contract execution, the private entity confirms not only the cost of design and construction, but also the long-term costs to operate and maintain a facility — known as its life cycle costs — which provides substantial financial and political benefits. 
• Risk transfer and performance focus: With the transfer of risks and potentially operations and maintenance responsibilities, P3s have a much larger emphasis on outcomes. In a traditional procurement, the government tells the design consultants and build contractors what to design, how the highway should look, what materials should be used to build it, and so forth. This approach is popular and timeless because we know how to hold everyone accountable.  
• P3s demand a different approach. Presumably, the highway should provide a specific level of service based on traffic patterns. But how the highway facility looks and works would be up to the private partner. Instead of tracking as to whether certain specifications were met, government can now monitor traffic operations, pavement smoothness, cleanliness, and enforce the other contract provisions.
• Innovation: Innovation is the process of creating something new or improving an existing product, idea, or field and can involve introducing new goods, methods, markets, sources, or organizations. Through the transfer of risk and focus on performance, the private partner is provided the ability and incentive to optimize the project for the long-term and bring forth new and innovative designs, materials, means and methods for construction, operations, and maintenance.

*These may not apply to every P3 project.

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