Buildings PPPs

Like most other markets, the key in the buildings P3 market will be to find ways to do things faster and cheaper. Builders are on a collision course with escalating costs and what their clients think makes economic sense.

There are no new building technologies in the pipeline, so gains must come by wringing inefficiencies out of the contracting process. One target, is misallocation of risk in contracts, which can account for up to 30% of project costs.

That's the market opening for P3s.

In the public sector, the most recent example is the Long Beach Courthouse in California, a 35-year DBFOM project financed with availability payments over 35 years. If the bureaucrats can get comfortable with the Value for Money analysis on that project, there are hundreds of courthouses, schools and other social infrastructure projects that could be built this way in California and beyond.