Virginia Concrete Conference March, 2011 Public Private Partnerships

1. Virginia Concrete ConferenceMarch, 2011Public Private Partnerships Dan Dawood, P.E. (PA)

2. Public Private Partnerships What are Public Private Partnerships (P3)? A means of bringing together public and private partners to satisfy social priorities by utilizing the skills of the private sector, while relieving government of the burden of large capital expenditure, and transferring the risk of potential cost overruns to the private sector.

3. Public Private Partnerships Some Facts on P3 • In 1992 the United Kingdom initiated the Private Finance Initiative (PFI). • Over the past two decades 1400 P3 contracts were signed in the European Union. • P3s are used for prisons, Shipyards and even health care.

4. Public Private Partnerships So what does that all mean? • Public Sector makes an asset available. • Public sector provides annual payment through tolls or combination of payments.

5. Public Private Partnerships So what does that all mean? • Private sector makes an offer to build or maintain asset. • Private sector assumes risk for the period of the concession.

6. Public Private Partnerships How do P3’s Work? SPV D/B Contractor Maintenance Contractor Bank

7. Public Private Partnerships How do P3’s Work? Owner paysConcessionaire for leasing Asset Owner SPV

8. Public Private Partnerships Common Provisions Found in P3 Contracts: • Agency - Owner sets standards for highway construction. • Agency - Owner sets standards for highway maintenance.

9. Public Private Partnerships Common Provisions Found in P3 Contracts: • Agency - Owner sets standards for highway for Handback Requirements.

10. Public Private Partnerships How do Concessionaires select Pavement Type? • P3’s for new construction are basically Design Build Projects. • Most D-B Contractors and Design Firms use multi-disciplinary skills such as geotech, pavements, lighting, and landscaping consultants.

11. Public Private Partnerships How do Concessionaires select Pavement Type? • Factors affecting pavement type selection: • Initial Cost • Long Term Performance • Maintenance Costs • Stage Construction • Owner - Agency Requirements

12. Public Private Partnerships How do Concessionaires select Pavement Type? • Typically the D-B Contractor’s Team will evaluate the results of a Life Cycle Cost Analysis (LCCA) • M&R’s in the LCCA are based on the SPV Team and local experience (PMS data if available).

13. Public Private Partnerships How do Concessionaires select Pavement Type? • D-B Contractors ultimate goal is to WIN • If the agency allows, the Concessionaire may choose HMA and perform stage construction through the concession period. • P3’s which used concrete pavements*** Germany, Belgium, and Austria rarely saw any maintenance over the concession period

14. Public Private Partnerships How do Concessionaires select Pavement Type? • Concrete is selected if the LCCA produces reasonable results • Contractor experience with concrete placement • Availability of local materials • Agency preference in the project requirements!

15. Public Private Partnerships Why Concrete Should Be Considered For P3*** • 30 year P3’s in Germany, Austria, and Belgium with concrete pavements see little to no maintenance. • Reducing future maintenance cost benefits both the contractor and agency in the long run.

16. Public Private Partnerships Why Concrete Should Be Considered For P3*** • Reducing future maintenance cost benefits the contractor by lowering the total bid amount for the project. • Decreasing the amount of routine maintenance and required M&R also benefits the motoring public.

17. Public Private Partnerships Concrete pavements are a good and viable pavement solution for P3 projects providing the contractor and agency with a high performing low maintenance roadway structure.