A Focus on (Actual) Function


A project I’m doing for the Water Infrastructure Resiliency and Finance Center (WIRFC) at the US EPA involves developing a learning module for ‘P3s’. Not incredibly exciting in itself, but I’m thinking of it as an opportunity to start demystifying the topic using Value for Funding principles — by definition, an effective learning tool cannot be mysterious.
Here’s where I’ve got to so far:

Half the mystery in P3 land is the lack of clear definitions in the terms used – not the least of which is the (over-exposed) handle ‘P3’ itself.

More fundamentally, all P3 concepts can be unpacked and anchored in some clear function associated with the infrastructure project. The functional parts of an infrastructure project aren’t mysterious, especially to the public sector folks who deal with this stuff all the time. I think there’s four big categories:

  1. You have to build it.
  2. Then you have to operate and maintain it.
  3. Almost all larger projects will need debt financing to spread out the capital cost.
  4. And someone has to own it. For public infrastructure, this functional category is rarely considered since the owner is almost always the ‘public sector’. But that changes when a P3 is being considered – and it’s where most of the cognitive dissonance arises.

Each of the four functional categories have a ‘Traditional’ and an ‘Alternative’ approach. The Alternative approaches might be new to the US public sector, but mainly they’re pretty well established in the private sector or elsewhere – so again, no mystery.

Finally, this framework supports a clear and easy way to define the elusive ‘P3’ – regardless of whether a ‘partnership’ is actually involved, a ‘P3’ really mean some combination of two or more Alternative approaches.

All this – and more – summarized in the presentation above.