Public-Private Partnerships

4 Questions Contractors Should Be Asking About Public-Private Partnerships

If you are a construction contractor considering pursuing a public-private partnership, also known as a P3, you should be asking some critical questions before entering this type of partnership. As experienced Miami contractor attorneys, we know that while P3s can be advantageous to contractors, they can be quite risky due to the inherent risks contractors will take on. Before diving in, contractors should be asking the following questions.

1. What Makes a P3 Different?

There is a great demand for infrastructure improvements all over the United States. A P3 project presents an opportunity for a public and private entity to partner to see a project through when it would otherwise be difficult for the public entity to do so alone.
Although the private entity provides the funds for the project, the project is still for the benefit of public use. However, over time, the private entity does recoup funds.

2. What Are the Risks?

Fully understanding and anticipating the risks that P3s bring will make a world of difference between a contractor’s success or failure. Contractors need to give input to shape the deal and ensure risks are allocated properly. Additionally, sureties and insurers should be thoroughly informed of agreements.

3. What Are the Rules?

While some states are silent on security required, it’s important that contractors assess what securities are required. If the required security makes it difficult or impossible to pursue payment claims, the likelihood of nonpayment may increase. To protect themselves, contractors need to secure surety bonds to secure payments.

4. What Are the Challenges?

After the P3 is approved, parties must convince the public that the P3 is sound (locally, state, and federally) and beneficial to the public since the public will pay for it. Having the capacity to educate the public as well as the legislators on the risks and benefits of the project is critical for having solid backing for the project.

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Disclaimer: The information contained in this article is for general educational information only. This information does not constitute legal advice, is not intended to constitute legal advice, nor should it be relied upon as legal advice for your specific factual pattern or situation.

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