Quick Question! What do the voyages of Christopher Columbus, the Erie Canal, and the Pennsylvania Turnpike all have in common? No, this isn’t a trick question. It’s a question answered by David Wallace in his book: Retail Development through Public-Private Partnerships. By now you’ve guessed that all three events were partnerships between the public and private sectors.
The Columbus voyages were underwritten by the governments of Italy and later Spain in exchange for a share of the trade goods. The Erie Canal, first proposed by a private businessman seeking to reduce transportation costs, was later funded partly by the New York legislature. Lastly, the Pennsylvania Turnpike, a costly project built over treacherous geography, was funded with a combination of grants, bonds purchased by private investors, and user fees.
In today’s development world we see an increasing number of projects in which the public and private sectors come together to work on a project. As governments look to stretch their funds or private companies find that market forces are lacking, the parties may decide to work together to get projects off the ground. Typically, the public-private project solves a problem or provides a need in the community. And the projects often occur where an economic incentive is needed to bridge a funding gap. Lastly, it’s vital that a “win-win” factor is present.
Since 2005, Smet Construction Services has been involved in more than a dozen public-private development projects. In reviewing our track record, I’ve compiled a short list on the characteristics of what I think makes up a successful public-private partnership.
I’ve found the best public-private projects have the following characteristics:
- Win-Win Solution for All Parties.
- Seeks to Solve a Problem.
- Parties Collaborate with Different Skillsets.
- Typically Involves Economic Incentives.
- Enhances Property Values or Community Attractiveness.
- Results in Additional Development.
- Involves Financial Transparency – Due to Public Contribution.
- Returns May Not Be Equal but Need to be Fair.
While this short list certainly isn’t all-inclusive, I think it represents the basic components of putting together a public-private project. As our local, state and national governments face ongoing and future budget and infrastructure challenges, the use of public-private projects will increasingly be adopted as a time-tested and reliable project delivery method.
If you are looking for a company that has a successful track record in completing public-private projects, give us a call. If you have a project that needs a solution, has a funding gap, or just needs another set of eyes to look at it, think of Smet Construction Services. We pride ourselves in finding solutions to overcome obstacles. We look for ways to make things happen. And most importantly, we look for the Win-Win!
For more information:
Greg Polacheck, Director of Market Research