PPP – Part I
THE U.S. PPP MARKET DEVELOPMENT PERSPECTIVES
Public private partnership has become a politically charged concept in 2016 with the ambitious promises of the New Administration to launch a $1 billion infrastructure development program. Considering the numerous research studies and articles presenting unclear and contradictory data on why the U.S. PPP market had its “slow” start and “insufficient” development pace, we decided to thoroughly analyze the current state of the PPP market in the U.S. and make our own conclusions about the perspectives of its development. Due to the complexity and the scope of these issues, the research project was divided into two parts.
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The first part of the research project was concentrated on:
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Summarizing current PPP market situation (legislation, main legal entities and procedures, project delivery mechanisms, funding sources, revenue mechanisms, implemented, on-going and announced projects)
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Analyzing current traffic trends, socio-economic, demographic situation and 2040 projections, infrastructure and transportation condition (coverage, congestion and wear), funding needs and gaps
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Evaluating the initiatives of the New Administration, their possible impact on the PPP market in the U.S. and proposing market development scenarios for the next five years
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Analyzing P3 situation in the most active and promising states and creating PPP Summary Cards for each of them
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Analyzing some project case studies to identify some of the best practices and lessons learned
Main research conclusions about the market:
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The U.S. PPP Market is gaining momentum and provides a window of opportunities for the private sector participants to join the market, diversify their presence, enhance their market share and rethink the overall PPP strategy
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The potential market is big and promising (infrastructure condition is poor, the number of projects waiting for environmental approval and funding is considerable, federal and local budgets are tightening, anticipated socio-economic growth requires considerable infrastructure expansion in the next 30 years)
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The market is growing both vertically and horizontally (both the number of states and the number of PPP projects in each state is increasing; new industries are joining)
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Unlike other construction delivery markets (DBB, CM), PPP Market is not settled (no dominating companies in any state/sector)
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The Market relies heavily on federal funding and support
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The New Administration is willing to increase private sector presence
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The New Administration reforms have both positive and negative possible effects on the Market
Main research conclusions about the market development driving forces:
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+ 22% population growth projected for the next 20 years
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+ 40% freight growth projected for the next 20 years
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+ 2-3% annual economic growth (moderate scenario)
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Growing traffic congestion
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Poor infrastructure condition (D+)
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Funding gap ($2 billion)
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Efficiency of P3 delivery mechanisms (20-30% cost and delivery time savings)
Team
Valeriya Bannikova
