PUBLIC-PRIVATE PARTNERSHIP

Public-private partnership: Better projects through collaboration

Public-private partnerships offer diverse models for funding, designing, building, operating, and maintaining large, resource-intensive projects.

People seated at a conference room table viewing construction plans on a large screen
Public-private partnerships require collaboration between government agencies and private companies.

What is a public-private partnership (PPP or P3)?

A public-private partnership (PPP or P3) is a project funding model that involves collaboration between a government agency and private firms to develop and/or maintain resource-intensive infrastructure projects.

Close-up of people standing around a 3D model of a park and buildings
Public-private partnerships are often used for the development and maintenance of municipal resources.

How do public-private partnerships work?

To understand why governments often opt for PPPs, here are some of the scenarios where PPPs are the best course of action:

  • Capital-intensive projects that a smaller government agency (like a state or a council) may struggle to fund out-of-pocket
  • Infrastructure projects that require highly skilled workers that the government might be unwilling or incapable of hiring long-term
  • Ongoing maintenance of critical services, municipal resources, and facilities that are too small for a dedicated government agency to be formed to oversee them

In practice, there’s no set rule, and the structure of a public-private partnership is determined on an ad hoc basis. The private partner can be engaged to manage any part of the project lifecycle, including funding, construction, operation, maintenance, divestiture, or a combination.

Types of public-private partnerships

Here are a few examples of how PPP projects can be modeled, especially how they’re financed:

Design-build-operate (DBO)

Private partners design, build, and operate the public project, while the public partner retains ownership and handles the project financing.

 

Design-build-operate-maintain (DBOM)

This is similar to a DBO, but the private partner also has a contract to maintain the construction, usually for a period of 20-30 years. 

 

Design-build-finance (DBF)

Private partners design, construct, and handle short-term financing of the work. Meanwhile, the public partner takes charge of the long-term operations and maintenance.

 

Design-build-finance-operate-maintain (DBFOM)

Here, the private partner takes on the project’s lifecycle for a certain time, including maintenance for usually 20-30 years, which is paid for through some kind of user free or government payment.

 

Design-build-finance-maintain (DBFM)

This PPP is similar to a DBFOM, except that the public partner takes on the operations for the infrastructure. 

 

Risk management for public-private partnerships

Public-private projects are often one-of-a-kind megaprojects that require intensive investment and lots of original research. That novelty factor usually comes with unforeseen obstacles that, in return, extend the project longer than intended.

 

Or, as megaproject consultant Bent Flyvbjerg writes in his book How Big Things Get Done, you can think of the duration of a project as an open window, and “the longer the duration, the [wider] the window, and the more the opportunity for something to crash through and cause trouble, including a big, bad black swan.”

 

The “black swans” in a PPP are low-probability, high-consequence events—unforeseen issues that can disrupt projects like natural disasters, recessions, pandemics, market volatility, or regulatory changes. Since traditional PPP projects can be massive and complex, there’s an increased risk of such projects encountering problems that increase costs or delay completion.

Autodesk software for public-private partnership projects

BIM Collaborate

Cloud-based design collaboration and coordination software for architecture, engineering, and construction teams to review designs, run automatic clash detection, and track project status.

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Revit

Plan, design, construct, and manage buildings with powerful tools for Building Information Modeling.

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Architecture Engineering & Construction collection

Powerful BIM and CAD tools for designers, engineers, and contractors, including Revit, AutoCAD, Civil 3D, Autodesk Forma, and more

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Examples of public-private partnership projects

Hands holding a tablet displaying structural designs for the Phoenix Mountain Sports Park

PHOENIX MOUNTAIN SPORTS PARK

Green BIM process for an iconic sports venue

Learn how China Construction Eighth Engineering Division used Autodesk’s building information modeling (BIM) features to create detailed 3D blueprints, coordinate public and private partners, and use sustainable design throughout the construction lifecycle of the Phoenix Mountain Sports Park in Chengdu.

 

Read story
Aerial view of Museo do Ipiiranga building and grounds

MUSEO DO IPIRANGA

Preserving a center of national heritage and art

Autodesk collaborated with Brazil’s Museu do Ipiranga and global imaging firm Faro, employing laser scanning and software tools to create a comprehensive 3D model of the historical landmark and the surrounding park grounds.

 

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Facade of the Matta Sur Community Center

MATTA SUR COMMUNITY CENTER

Adaptive reuse brings the past into the future

Spanish design consultancy luis vidal + architects used the Autodesk Revit design suite to transform an abandoned 19th-century school building and its surrounding plot on behalf of the municipal government of Santiago, Chile. The resulting Matta Sur Community Center is a 26,750-square-foot facility that includes a healthcare center, community kitchens, a nursery school, a gym, and an auditorium.

 

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Public-private partnership resources

A snapshot of how governments can partner with private firms to build resilient infrastructure, align economies with zero-carbon commitments, and import technical expertise to be more adaptable facing climate change and other crises.

 

P3 investments—at local, state, and federal levels—might be the missing link to bridge the US industrial water shortage.

 

Programs like the Federal Communication Commission’s Affordable Connectivity Program are examples of P3s combining the power of private capital and government oversight to bridge the country’s digital divide.

 

Frequently asked questions (FAQ) on public-private partnerships (PPP or P3)

What are the different public-private partnership models?

The are many different public-private partnership (PPP) models, but these major PPP types indicate how much of the building or infrastructure project’s lifecycle the private-sector partner will handle: designing, constructing, financing, operating, and maintaining. In the cases where the private sector is responsible for maintenance, it is usually contracted for a period of 20-30 years.

  • DBO – The private partner designs, builds, and operates the project.
  • DBOM - The private partner designs, builds, operates, and maintains the project.
  • DBF - The private partner designs, builds, and finances the project.
  • DBFOM - The private partner designs, builds, finances, operates, and maintains the project.
  • DBFM - The private partner designs, builds, finances, and maintains the project.

What types of projects can be built under public-private partnerships?

Public-private partnerships are most often used for resource-intensive infrastructure projects like transit (MRTs, high-speed rail, airports, seaports, toll roads); civic development (parks, urban renewal); and affordable housing.

What are the key elements of public-private partnerships?

PPPs create an avenue for massive infrastructure projects to be funded with private capital and to be better-maintained long-term. To achieve that, PPPs focus on collaboration and sharing risk for project outcomes.

How are public-private partnerships different from outsourcing?

Outsourced projects are contracted to a third party to reduce spending on non-core activities. In contrast, the PPP model commits government agencies and private investors to share responsibility throughout the execution process.

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