New infrastructure projects are complex. From the initial feasibility analysis to the final delivery and operational start-up, there are hundreds of decisions to be made. Utilizing a public-private partnership (P3) to develop and deliver your new facility offers tremendous benefits when it comes to securing capital and transferring risk, but it also adds an additional layer of complexity. The best advisors should be able to simplify the complex, reduce political and organizational noise, and keep your project on schedule.
So, what should you look for when selecting an advisory team? Let’s start first by affirming the fact that you need a trusted advisor to help you navigate the P3 process. A great analogy for this is the experience of buying a home. Given the financial commitments and legal perils, even veteran home buyers will engage a realtor or attorney to assist with this major investment. Now imagine entering into a multi-decade commitment with a private development partner and spending hundreds of millions to deliver a project for your campus or community. To say it would be unwise to wade into these waters without an experienced advisor by your side would be a massive understatement. Having the support of an experienced advisory team who understands how to assess, procure, structure and deliver a P3 will ensure you are in the best position for success.
The most important skill for your primary advisor is the ability to simplify complex questions and processes into a clear, manageable plan for decision makers. Initially, there are numerous questions to be answered as well as risks to be mitigated. How do you deliver maximum value for your unique project? What are the priorities for your organization? Who are the key stakeholders and decision makers? How should procurement process be managed? How will you evaluate proposals? What will the negotiation process look like? How will the approval process work for a P3 project vs. traditional design build? What are the next steps after financial close? How do you transition from construction to operate and maintain?
Without an advisor to help guide these decisions and the challenges associated with them, it can feel overwhelming. The best advisors are those who can create a comprehensive plan and clear pathway that will move the project from the initial assessment stage, into a competitive procurement and successful financial close. While every project is unique, and there is no single “right way” to deliver it, you should select an experienced advisor who has a proven track record of leading and delivering successful P3 projects. These advisors understand technical, financial and legal challenges associated with advancing new infrastructure projects and will help you to define the project, develop a plan, mitigate risk and maximize value for your organization.
When evaluating and selecting an advisory firm, there are three key components to consider:
1. Record of success
Experience is the best teacher, and it is paramount to select an advisor with a record of achieving financial closings and delivering projects on schedule. While there are several ways to evaluate an advisor’s credentials, few things matter more than their record of success. Every project will encounter challenges and, while the development partner will ultimately be at risk for the final delivery of the new facilities, having an experienced advisor who knows how to help you select the right partner, identify and manage risk, and negotiate effective partnership terms is essential.
2. Building a multi-disciplinary team
Capable advisory teams are comprised of individuals from diverse professional backgrounds, who have experience with a variety of projects and real estate sectors. Because P3 projects are complex, and involve a broad range of disciplines, it is essential that you identify a technical advisor who brings a multi-disciplinary team to your project. In addition, an advisor who has experience working with developers on a variety of projects from multiple real estate sectors can help you stay more informed on shifting market conditions, design innovations, and risk management strategies.
3. The value of delivery expertise
Ultimately, all successful projects begin with the end in mind. Every decision made during the initial feasibility analysis, procurement, developer selection, and negotiation impacts the delivery schedule and quality of the final project. It is essential to select an advisor who has expertise and experience with project controls, cost management, and the delivery of new construction. This knowledge base is critical for holding your development partner accountable for their performance and resolving potential disputes.
Navigating the P3 journey with confidence
Selecting a competent and qualified team of advisors to help you navigate the P3 process will ensure your project has the best overall opportunity for success. Public-Private Partnerships offer an amazing alternative delivery strategy for innovative new facilities that have the potential to transform your community, create a sense of place, and facilitate learning, service, and entertainment. They are also complex real estate transactions that involve significant financial commitments, binding partnerships, and buildings your organization will need to live with for decades.
While retaining an advisor is certainly not mandatory, achieving a successful P3 project that delivers maximum value and reasonable risk transfer will likely necessitate additional technical, financial, and legal expertise. With this in mind, select an advisor with a multi-disciplinary team, track record of success, and the project delivery expertise necessary to hold your development partner accountable and achieve your goals.
