Currently Reading

Eight strategies for achieving successful P3 development models

University Buildings

Eight strategies for achieving successful P3 development models

Transparency and communication are imperative, says new white paper on these agreements.

By John Caulfield, Senior Editor | August 27, 2020

The Arts and Computational Science Building at UC Merced in California is the result of a P3 whose development team included a consortium of financial experts, contractors, operations and maintenance teams, architects, engineers, and consultants. WRNS Studio, the Academic Architect on this project, provided the image.

Public-Private Partnerships (P3s) have become important structures for financing projects, especially for entities—like state governments and universities, at the moment—that are short on available investment capital.

But P3s change the game when it comes to allocating responsibility and reward. And some partners still enter into these arrangements without a full appreciation of their pros and cons.

WRNS Studio in San Francisco has worked on a number of P3 projects, including the $60 million 90,000-sf Arts and Computational Sciences Building at the University of California at Merced, which opened last year. With global property management consultant WT Partnership and the environmental design consultant Atelier Ten, WRNS has published a white paper that provides insights into forming P3s for Higher Ed projects to ensure smooth collaboration among the stakeholders while at the same time allowing design teams to retain a measure of control and encourage innovation.

“P3 is not business as usual; it calls for a new mindset on the part of University leaders around control over project design, delivery, financing, operations, and maintenance,” the authors state.

The white paper offers eight strategies that universities should be considering before they dive in:

The allocation of risk among P3 parties varies and depends upon many factors, including University preference, project type, and market conditions. Typically, the University decides to retain control over select improvements or maintenance areas. Universities should think through and codify the specifics of risk transfer with the Developer partner to identify the appropriate party for handling the risk.

Key areas of expertise that University leaders should cultivate, internally or through outside consultants, include: cultural, institutional, legal, financial, design, engineering, construction, operations and maintenance.

The longevity of the University/Developer relationship—which can last for decades—underscores the need for a partnership mentality that should start during the development of the P3 Business Case and extend to all entities that will inform the project’s success.

The steps the white paper recommends include creating a governance board, developing a communications plan, engaging stakeholders early on to craft technical requirements, and lay the ground rules for efficient project delivery.

TRs are documents that specify comprehensive building requirements. The white paper asserts these documents need to contain the intent, goals, and priorities of the stakeholders. It also cautions about viewing TRs as merely guidelines, which can only lead to costly revisions down the road. TRs should be specific and balance performance versus prescriptive requirements. (The paper also provides tips for writing these documents.)

The Project Agreement and Financial Close comprise P3 projects’ binding legal framework. The agreement needs to be analyzed thoroughly, especially concerning the procurement stage. This agreement also needs to take into account the inevitability of change and to build in contingencies. The agreement should anticipate the impact of project reviews relative to budget and schedule.

During the course of a 30- to 40-year relationship, Operations and Maintenance (O&M) can represent up to 80% of the full term of the project. But universities’ O&M budgets can be unpredictable and lead to deferred maintenance. “The P3 model can help address this problem,” the authors state, by embedding O&M considerations into design and construction TRs, and by establishing clear lines of responsibility.

The surest way of achieving this is by implementing accountability and transparency around financial parameters, setting success measures and deal breakers, and requiring a process for decision making. 

Related Stories

Affordable Housing | Sep 25, 2023

3 affordable housing projects that serve as social catalysts

Trish Donnally, Associate Principal, Perkins Eastman, shares insights from three transformative affordable housing projects.

Adaptive Reuse | Sep 19, 2023

Transforming shopping malls into 21st century neighborhoods

As we reimagine the antiquated shopping mall, Marc Asnis, AICP, Associate, Perkins&Will, details four first steps to consider.

Giants 400 | Aug 22, 2023

Top 115 Architecture Engineering Firms for 2023

Stantec, HDR, Page, HOK, and Arcadis North America top the rankings of the nation's largest architecture engineering (AE) firms for nonresidential building and multifamily housing work, as reported in Building Design+Construction's 2023 Giants 400 Report.

Giants 400 | Aug 22, 2023

2023 Giants 400 Report: Ranking the nation's largest architecture, engineering, and construction firms

A record 552 AEC firms submitted data for BD+C's 2023 Giants 400 Report. The final report includes 137 rankings across 25 building sectors and specialty categories.

Giants 400 | Aug 22, 2023

Top 175 Architecture Firms for 2023

Gensler, HKS, Perkins&Will, Corgan, and Perkins Eastman top the rankings of the nation's largest architecture firms for nonresidential building and multifamily housing work, as reported in Building Design+Construction's 2023 Giants 400 Report.

Higher Education | Aug 22, 2023

How boldly uniting divergent disciplines boosts students’ career viability

CannonDesign's Charles Smith and Patricia Bou argue that spaces designed for interdisciplinary learning will help fuel a strong, resilient generation of students in an ever-changing economy.

Adaptive Reuse | Aug 17, 2023

How to design for adaptive reuse: Don’t reinvent the wheel

Gresham Smith demonstrates the opportunities of adaptive reuse, specifically reusing empty big-box retail and malls, many of which sit unused or underutilized across the country.

Higher Education | Aug 7, 2023

Building a better academic workplace

Gensler's David Craig and Melany Park show how agile, efficient workplaces bring university faculty and staff closer together while supporting individual needs.

University Buildings | Aug 7, 2023

Eight-story Vancouver Community College building dedicated to clean energy, electric vehicle education

The Centre for Clean Energy and Automotive Innovation, to be designed by Stantec, will house classrooms, labs, a library and learning center, an Indigenous gathering space, administrative offices, and multiple collaborative learning spaces.

Market Data | Aug 1, 2023

Nonresidential construction spending increases slightly in June

National nonresidential construction spending increased 0.1% in June, according to an Associated Builders and Contractors analysis of data published today by the U.S. Census Bureau. Spending is up 18% over the past 12 months. On a seasonally adjusted annualized basis, nonresidential spending totaled $1.07 trillion in June.


More In Category

Giants 400

Top 115 Architecture Engineering Firms for 2023

Stantec, HDR, Page, HOK, and Arcadis North America top the rankings of the nation's largest architecture engineering (AE) firms for nonresidential building and multifamily housing work, as reported in Building Design+Construction's 2023 Giants 400 Report.


Most Popular Content

  1. 2021 Giants 400 Report
  2. Top 150 Architecture Firms for 2019
  3. 13 projects that represent the future of affordable housing
  4. Sagrada Familia completion date pushed back due to coronavirus
  5. Top 160 Architecture Firms 2021