Approved by the Transportation Policy Committee on January 10, 2024
Approved by the Public Policy and Practice Committee on January 24, 2024
Adopted by the Board of Direction on July 18, 2024

Policy

The American Society of Civil Engineers (ASCE) recognizes Public Private Partnerships (P3s) as one of many methods of financing and delivering infrastructure improvements. ASCE supports the use of P3 project delivery methods to enhance federal, state, and local resources when the public interest is protected by meeting the following criteria: 

  • Any public revenue derived from P3s must be dedicated exclusively back to the project itself or comparable infrastructure facilities in the state or locality where the project is based. Revenue and assessment of revenue should be reported annually to the general public in a public forum available to access by all.
  • The P3 contract includes, at a minimum, asset performance criteria that address long-term viability, life cycle costs, return on public and private investment, transfer at end of contract term, projected yearly revenue, identification of responsible parties and their roles, and residual value.
  • Transparency and public participation in aspects of project development, implementation and operation.
  • There is participation and compliance by both public and private partners with all applicable planning and design standards, and environmental requirements. Appropriate, qualified team members, including professional engineers, should be part of this process. 
  • Engineering firms that are part of a larger P3 team should be appropriately licensed in their respective areas of expertise for which they are providing engineer-of-record services to ensure appropriate design standards are followed and applied for the project. 
  • Furthermore, a small and disadvantaged business program should be included with the establishment of participation goals, outreach provisions, local company and human resources preferences, and presentation of plans to achieve stated goals and provisions. 

Issue

P3s refer to contractual agreements between a public sector contracting authority and a private entity for delivery of public infrastructure projects. In general, successful P3s share the following:

  • A Life Cycle Perspective: Private partner provides financing in addition to combined project delivery phases including design, construction, operations, and maintenance.
  • Incentivized Risk Sharing: The private partner assumes substantial risks for compensation based on ongoing key performance metrics for the asset. The private sector partner can be compensated from either public sector payments and/or any revenue generated from the project.
  • Public Ownership: The public partner retains project ownership and ultimate responsibility to the public.

Strained federal, state, and local government budgets, combined with increasing infrastructure needs, have led to the implementation of P3s in a growing number of states and localities. The injection of private capital into public works, however, has drawn some criticism or skepticism from stakeholder groups and raised the need for guiding principles for these projects as they are planned, implemented, and maintained. Such guiding principles should address accountability, transparency, equity, public access, consumer rights, safety and security, sustainability, and resilience.

Guidelines for the development of P3 selection shall also include a Progressive Design Build Concept which is a Qualification Based Selection or be based on Best Value (50/50) Selection. The contract provisions by governing agencies shall protect the public interest. At a minimum, these guidelines shall consider input from affected individuals and communities, establish design and construction quality requirements, and address environmental and construction impacts. In addition, they shall also address long-term ownership, the completion schedule, maintenance requirements, operational performance, an acceptable outcome for all parties, and transferring provisions to the public agency at the end of the contract term.

P3s can be an effective method of project financing and delivery to supplement limited public funds to prevent continued degradation of infrastructure and reduced reliability of infrastructure systems, as well as provide needed additional capacity. P3s do not replace the need for public funding of infrastructure projects and should only be used when the public interest is protected.

Examples of financing mechanisms used on P3 transportation projects include, but are not limited to municipal bonds, private activity bonds (PABs), advance refunding, Transportation Infrastructure Finance, and Innovation Act (TIFIA) loans, Grant Anticipation Revenue Vehicles (GARVEEs), and Railroad Rehabilitation and Improvement Financing (RRIF) loans, tolling, and asset recycling.

Rationale

P3s cannot replace a public commitment to funding. These financing tools allow projects to be accelerated to deliver benefits sooner by efficiently borrowing against future revenues available for infrastructure funding. Without P3s, financing of some projects, which could provide significant economic impact, may not be possible. Financing by any method does not supplant the need for adequate user fees or other sources of revenue and funding to eventually pay for projects.

ASCE Policy Statement 526 
First Approved 2008  

Other ASCE policies that relate to innovative financing are:
PS 382 - Transportation funding
PS 434 - Transportation trust funds
PS 532 - National Infrastructure Bank