The benefits of procuring public infrastructure through P3 methods come at a cost. These drawbacks of undertaking a P3 procurement approach rather than a conventional procurement consist of three elements:
◆ the incremental cost of private financing;
◆ any additional costs of risks transferred to the P3 partner (i.e., the risk premium); and
◆ the incremental transaction costs.
If these costs are offset by the value associated with transferring selected risks to the private partner, the overall costs of the project will be lower under a P3 approach than under traditional project delivery.