FAQ - P3 Initiatives
FAQ - P3 Initiatives
What are the key benefits of P3s, and how do P3s benefit Arizonans?
P3s make it possible to deliver much needed transportation projects in a timely manner, often years before the projects could be delivered using traditional project-delivery methods. Because P3s are business ventures for the private sector, the private sector has become efficient at delivering projects under this method. These efficiencies, combined with the private sector's resources, provide a more effective life-cycle cost and timely approach to delivering projects and provide a greater value for money for the public owner. In short, P3s make it possible for Arizonans to get much-needed transportation improvements faster than if conventional delivery methods are used, thus providing more travel options, reducing congestion and improving roadway safety for Arizonans.
What are the differences between a P3 and the way ADOT typically does a transportation project?
Under a conventional project-delivery method, ADOT finances both the design and construction of a transportation project. First, ADOT typically bids out and oversees the engineering design. Once the design is complete, ADOT then bids out and oversees the project's construction. Once the construction is complete, ADOT assumes the operations and maintenance of the facility. This process often results in change orders, which increase the cost of the project.
Under a P3, a private partner either finances or assists in financing a transportation project. ADOT bids one contract for the project, and the resulting P3 agreement covers both the design and construction of the project. It may also include the operation and maintenance of the facility by the private partner for a defined period of time. Typically, the private partner, not ADOT, is responsible for change orders.
The private partner is responsible for managing and operating the project for the term length, with ADOT serving in an oversight role. The private partner typically is responsible for adding future capacity to enhance the ongoing operations of the project. Under all circumstances, ownership of the project remains with ADOT.
What types of projects can be done using a P3?
Eligible projects include those that are used or are useful for the safe transport of people or goods via one or more modes of transportation, including enhanced, upgraded and new facilities. Eligible projects could involve any of these structures:
- Bus systems
- Guided rapid transit
- Fixed guideways
- Intermodal or multimodal systems or any other mode of transport
- Rail yards or storage facilities
- Rolling stock
- Other related equipment, items or property
What types of project-delivery methods are allowed under a P3?
ADOT can use a variety of project delivery methods:
- Predevelopment agreements leading to other implementing agreements
- Design-build agreements
- Design-build-maintain agreements
- Design-build-finance-operate agreements
- Design-build-operate-maintain agreements
- Design-build-finance-operate-maintain agreements
- A concession providing for the private partner to design, operate, maintain, manage or lease an eligible facility
Who owns a transportation facility constructed under a P3?
ADOT retains control and ownership and sets the standards and rules of the P3 facility.
How long will a P3 agreement last?
In Arizona, the term of a P3 agreement can extend up to 50 years. However, ADOT may extend a P3 for additional terms.
Will private partners try to increase their profit at citizens’ expense by raising tolls and reducing service?
No. A toll facility is a business venture for a private partner. If tolls are too high, fewer people will travel on the facility, which will result in lower profits for the private entity.
Similarly, reducing service will also drive customers away, which is the last thing that a business wants to do.
Additionally, provisions regulating toll rate increases and performance standards are included in the P3 agreement, and the private partner is legally required to adhere to these provisions.
Will existing roads be tolled?
Legislation requires that any P3 agreement must be used for a “new, upgraded or enhanced facility.” Therefore, P3s can be used for new facilities or for expansions to existing facilities. Existing lanes cannot be tolled under current law.
How can I reach the Office of P3 Initiatives?
You can send us an email using our online form or call 602.712.4424.