P3 is a Marathon: Manage the Sprints and Foxholes

P3 projects move fast and demand clarity, and changes can be disruptive and costly. A relatively new delivery model for most universities, P3 projects introduce management challenges that require the ability to forge relationships, set expectations and project parameters up front, make informed decisions on the fly, and embrace the quick pace of P3.

Implement Accountability and Transparency around Financial Parameters

The University should work with its Technical Advisors to define the P3 project’s financial parameters during the development of the Business Case. Feedback from the market and the financial modeling of the project’s impact upon the University’s debt capacity should inform the parameters. The University should also clearly define the ways in which the financial parameters may be updated throughout the Pre-Development phase. Every few months, or at defined design stages, a "health check" of the financial market should be undertaken. 

Kick-Off Design and Construction by Confirming Success Metrics and Deal Breakers

For many reasons — lack of specificity in the TR’s, changes in programmatic needs, and faculty expectations — project scope can become a contentious issue between the University and the Developer. Schedule workshops with the Governance Board, University Stakeholders, Building Users, and the Development Team at the kick-off of the Design phase to confirm project intent, goals, priorities and responsibilities. Clearly-articulated and agreed upon goals, objectives, and priorities should drive ongoing scope discussions to ensure the project stays on track and that there is buy-in for any changes. Once a process has been established, structure shoulder-to-shoulder meetings with the Developer and specific facility groups to seek feedback on TR intent and the design and schedule implications. Establish a clearly-defined decision-making process from the beginning, with all formal decisions issued from the highest level. 

Schedule workshops at project kick-off to confirm project, intent, and goals to keep the project on track and gain buy-in on changes.

P3’s Move Fast: Require a Cadence and Process for Decision-Making

Setting clear and agreed-upon milestones is key to the successful management of P3 projects. Too many milestones create a contractual mess, while too few can result in complications that can grow and impact schedule. The University should work with the Technical Advisors and the Development Team to establish a clear understanding of schedule and construction sequencing. This approach will help ensure that critical path items are defined as milestones throughout Design and Construction.  

One of the biggest schedule-related hurdles the Developer may encounter is confusion over what is a decision versus non-binding feedback from the University. Likewise, the approval process and consensus-driven culture to which most universities are accustomed can negatively impact schedule. The Project Agreement should define accountability and response periods at the project outset for typical project touchpoints, including:

  1. Drawing phase milestones

  2. Transaction document edits

  3. Requests for Information and Developer change proposals

  4. Financial model reviews

A shorter Development phase usually costs the University less. Define key milestones to ensure the Development phase stays on schedule and that check points along the way highlight any potential issues. The following critical path milestones should be identified and agreed to:

  1. Definition and agreement on overarching financing structure

  2. Assessment of potential risks that may result in costs and schedule delays, in particular environmental conditions, geotechnical conditions, and interface with regulatory agencies.

  3. Determination of financial feasibility

  4. Listing of required design drawing submittals and associated pricing confirmations (e.g. 50% DD, and 50% DD pricing)

  5. Confirmation of date for Financial close of the Project Agreement