Expert: Governments face more competition for PPP dollars
Government Product News, Jan 16, 2014, Source
While gathering info to use in the 2014 Keating Report forecast on government budgets and spending, we had a chance to get the views of Terry Bennett. In the Q&A below, Bennett offers his views on public-private partnership trends in the U.S. in 2014. Bennett is senior industry manager at San Rafael, Calif.-based Autodesk.
GPN: Are more governments looking at public-private partnerships as budgets shrink?
Terry Bennett: Absolutely. As municipal & state governments are caught in the squeeze between federal/sovereign funding cuts and local government demands, cities, counties, regions and even countries are being pitted against each other in competitive funding programs. We need to keep in mind that private investment dollars are highly portable and even though the funding source may be in a particular state or country, that doesn’t mean those investment dollars will stay local to the source. The competition for these dollars is global so gaining access to them will be fundamentally different then say PPPs of a decade ago where most dollars where locally sourced. That is no longer the case.
GPN: Can you share any PPP trends for 2014?
TB: Trend #1: Holistic business case development. The gap between infrastructure investment demand and supply of funding is going to grow even more rapidly thus intensifying the competition for capital resulting in a shift of funding away from a first come first serve basis toward those projects backed by the best business case. As stated above, demand for those private investment dollars is global and I foresee funding priority being assigned to projects that offer the greatest "holistic return" accounting for not only the financial, social and environmental aspects of a design approach but given recent impacts of natural disasters the resiliency of that infrastructure as well and ensuring approaches are viable and equitable too.
Trend #2: Rethinking the infrastructure problem and approach. Infrastructure is a system of systems, interconnected, interrelated and interdependent and future infrastructures capacity and resiliency to environment and its people relies on the decisions we make today. Even with successes to date, the demand is still far outpacing the supply of investment dollars. I foresee a change in thinking and approach where we are not trying to simply recreate what exists but instead focus the design for what is needed for the next 35-50 or 70 years and what our urban environments will look like then not now. We will take a full lifecycle approach and visualize and simulate future conditions and not base approaches on only today’s view of the environment.
Trend #3: Increasing use of more modern planning, design and delivery tools. There is still a growing interest in more private sector involvement; this would help to prioritize infrastructure needs and get projects built faster, more effectively and more efficiently. We have modern tools and processes, but more modern thinking is required in the planning, design and construction phases. The coupling of private infrastructure investments with a strategic and innovative use of 3D technology will not only provide infrastructure owners and investors with a better understanding of the scope and complexity of the investment, but can also help them to route efficiency gains made from this change toward financing future projects. Using a model-based process like Building Information Modeling enables a planner to take a more holistic approach by assessing how long a project will take to complete, as well as the cost.
GPN: Are there any kinds of partnerships that will expand more in 2014 than the overall partnership market?
TB: Today, there are a number of partnership delivery options, and PPPs are just one type. Others include: Build-operate-transfer (BOT), Build-own-operate (BOO), Build-own-operate-transfer (BOOT), Concession, Design-build-finance-and-operate (DBFO), and Private Finance Initiative (PFI). While PPPs are the most notable, paramount to success is to have the project owner’s objectives and project organizational characteristics dictate which project delivery strategy to use based on the desired level and share of risk. In all cases, the most appropriate delivery strategy will also depend on the specific project circumstances and in some cases the governmental approval to use a particular approach in a particular state or country.
GPN: Thank you, Terry Bennett.
Autodesk offers cloud-based 3D design, engineering and entertainment software. Its customers are in the manufacturing, architecture, building, construction, media and entertainment industries, as well as government. Many—from design professionals, engineers and architects to digital artists, students and hobbyists—uses Autodesk software to unlock their creativity and solve challenges.
Terry Bennett