Challenges and enabling features of small and medium infrastructure public–private partnerships (P3s): a case study of the US P3 infrastructure market

Purpose

In classical perspective, projects under a certain size are not feasible for P3. However, there is an emerging trend on using P3 to deliver projects which are frequently at small- to medium- size to meet ever-increasingly complex social needs, including enhancing lifecycle performance of existing facilities, designing and building for resilience and sustainability, ensuring cost effectiveness of public spending and fostering innovation. In contrast with the increasing implementation, small and medium P3s, especially those in the United States, receive little attention in existing studies. This study aims at answering the question: in the context of US, what features of those small- to medium- sized P3s with success records enable the selection of P3 as delivery method.

Design/methodology/approach

By critically reviewing the literature, this study synthesizes and discusses the challenges in classical perspective. The authors use a framework drawn from the transaction cost to propose two types of enabling features that could contribute to the success of small and medium P3s. The proposed enabling features are supported by case study of twelve identified small- to medium- sized P3s which have reached financial closure as of 2018 in the United States.

Findings

The results show how the identified enabling opportunities have been used in these cases to enhance the viability of the P3 model in the infrastructure market. The two types of features are high tolerance enabler explained by the expectations on indirect and non-monetary compensations, and cost reduction enablers including: (1) being in the sectors with well-established traditions on using private investments; (2) having developers with expertise on infrastructure finance; (3) being in the jurisdictions with favorable legislative environment and (4) having less-uncertain future project revenue.

Originality/value

This study, for the first time, critically examines the enabling features of the P3 model for delivering small and medium infrastructure projects in the United States. This research sheds light on the credibility and viability of small- to medium- sized P3 and increases the confidence in policy makers to promote this model.