P3 Toolkit

Fact Sheets

FHWA'S Public-Private Partnership (P3) Toolkit

The use of Public-Private Partnerships (P3s) marks a shift away from traditional ways of procuring and financing highway projects. Under the P3 model, a private partner may participate in some combination of design, construction, financing, operations and maintenance, including collection of toll revenues.

The Federal Highway Administration's (FHWA) Office of Innovative Program Delivery (OIPD) is producing a P3 Toolkit comprising tools and guidance documents to assist in educating public sector policy-makers, legislative and executive staff, and transportation professionals. The P3 Toolkit forms the base of a broader P3 capacity-building program which includes a curriculum of P3 courses and webinars. The P3 Toolkit will address Federal requirements related to P3s and four key phases in P3 implementation:

1. Legislation and policy;
2. Planning and Evaluation;
3. Procurement; and
4. Monitoring and Oversight.

P3 Evaluation Tools

The P3 Evaluation Tools are a key component of the P3 Toolkit. They serve as a reference for decision-makers and practitioners seeking to understand P3s as a financing alternative for major capital projects. The P3 Evaluation Tools include:

• An Orientation Guide to serve as a higher-level summary of the issues and factors that are evaluated when considering a P3 as a financing and procurement mechanism;
• Three Primers, one each on Risk Assessment, Value for Money Analysis, and Financial Structuring and Assessment;
• An analytical tool called P3-VALUE to help practitioners understand the process for evaluation of P3 approaches and educate the user on methods used to assess the viability of a P3 approach to infrastructure delivery along with User Guides and Frequently Asked Questions;
• A Evaluation Guidebook (under development) for practitioners seeking a deeper understanding of the concepts, assumptions, inputs and outputs involved in the above analyses; and
• A P3 Screening Tool (under development) along with a supporting guide to assist practitioners seeking to perform a preliminary screening evaluation of the suitability of a major highway project (costing $100 million or more).

The P3-VALUE Analytical Tool

Practitioners can use P3-VALUE to better understand the concepts, inputs, key assumptions and outputs from evaluations of risk, financial feasibility and "value for money" analyses used to compare the aggregate financial benefits and costs of a P3 alternative with traditional procurement. P3-VALUE is comprised of four Excel-based spreadsheet tools designed to educate the user, not as finished tools for use in detailed evaluation of actual projects. The complexity of the analyses for specific projects requires that they be done by experts using more detailed modeling. The four tools are outlined below, and their inter-relationship is presented graphically in Figure 1.

1. Risk Assessment (RA) Tool: This tool assists the user in understanding the process used in identifying, defining, valuing, allocating, and mitigating risks. Aggregate risk values output from this tool are used as inputs into the Public Sector Comparator (PSC) tool and the Shadow Bid (SB) tool described below.
2. Public Sector Comparator (PSC) Tool: This tool assists the user in understanding the process used in developing the hypothetical risk-adjusted cost if a project were to be financed, constructed, maintained and operated following the traditional public sector delivery model.
3. Shadow Bid (SB) Tool: This tool assists the user in understanding the process used in estimating the cost to deliver a project as a P3. It calculates the current value of future payments to be made by the government entity to the private contractor.
4. Financial Assessment (FA) Tool: This tool assists the user in understanding the process used to calculate value for money under a P3 and to evaluate financial viability, including identification of required financial subsidies, cash flow deficiencies, and payment amounts.

Figure 1 Relationship of Individual Tools within P3-VALUE