Public, Private, Partnerships (P3s)

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A higher education Public- Private Partnership, or P3, is a development/deal structure in which a public or private college or university takes on a private sector partner (or partners) to share in the resources, risks, and incentives that come with the development and operation/maintenance of campus facilities. The National Council of Public-Private Partnerships identifies 18 different legal and financial P3 structures, and each P3 agreement is unique to the partnership, or deal. P3s are not a silver bullet. They are not short-term engagements, nor are they without their challenges; indeed many in the P3 world think of them as marriages. They are simply one type of alternative delivery method for schools to finance projects that might otherwise go unfinanced, to leverage assets like land, to transfer risk, and to ensure operational success for years to come.

Benefits

Allows a campus to use their utility system as a financial asset
Can accelerate system transformation using best-in-class professionals and private funding sources
Can provide financial stability and predictability for the campus energy infrastructure

Challenges

Requires a significant amount of due-diligence to reach a long-term agreement
Requires ongoing management of a complex business arrangement

Impacts

GHG Impact

Enormous

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P3s can enable the suite of projects needed to achieve systemic change required to drop emissions campus-wide emissions by as much as 50-90%.
Economic Impact

Large Net Savings

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P3s may add a small premium to the cost of capital, but can still improve financial performance by speeding up implementation, reaching economies-of-scale, lowering implementation risks and transferring operational risks to third-parties.
Feasibility

A Big Lift

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P3s require a team with financial, technical, legal and operational expertise. Contracts can be difficult to negotiate, but can also provide robust planning and due diligence to make things much easier in the long-term.
Timeline

2-5 years

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Going from idea to a final transaction can take months to years depending on the scale and duration of projects within the P3. There are P3s that can be executed quickly. Transformational change can take some time.
Maintenance

Moderate

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Many P3 projects are designed to transfer maintenance to a third-party, but the campus will still need to oversee the performance of the P3 and interact with the other partners.
Publicity

Wow!

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Large-scale projects can be more than the “talk of the town” they can be the talk of multiple industries and stakeholder groups.