P3 funding for green infrastructure and how to limit risk

Ryan Brown Ryan Brown September 27, 2021

3 min read

Public-Private Partnerships (P3) have been a popular funding mechanism for public works projects around the world since the late 80s. More recently, P3 programs have been initiated to help address water quality concerns related to stormwater by providing funding for stormwater retrofits and the development of green infrastructure throughout a municipality, and has become a promoted method for funding these projects by the EPA.

In 2015, Prince George County in Maryland entered into the first of its kind in the US, a community-based P3 program known as the Clean Water Partnership in order to meet the requirements of the Chesapeake Bay’s TMDL and MS4 permit. This community based P3 set the stage for other communities around the country to follow in their footsteps.

How do P3s work?

P3s relationships work by forming a relationship between a public entity, usually a municipality, and a private entity, usually a private developer. The private entity is responsible for the upfront capital to fund the project and is normally also involved with the development and construction of the infrastructure. The private entity is then paid back over the course of the contract (typically 25-30 years).

The public entity is tasked with defining compliance and ensuring that the design and construction meets those requirements, and furthermore the overall goal of the project. There are significant advantages to this model by improving the speed that these projects are developed by providing incentives to the private entity to ensure that the project is delivered on time and within budget.

How does this model reduce risk for municipalities?

A key component to this financing model is the re-allocation of risk. Normally, the risk is shifted from the public entity to the private one. This means that the extra costs that can creep into the project due to project delays, construction which exceeds estimates, and designs that don’t meet regulatory or other quality standards are paid by the private entity.

In the development of design plans for the constructions of green infrastructure and stormwater retrofits, this risk can be significantly reduced by using a robust drainage design software intended to quickly layout designs, ensure capacity is met within the system, validate the model against regulatory standards, and easily transfer that data to a set of plans.

How can drainage design software support risk reduction?

Unfortunately, most drainage design software on the market today doesn’t offer that level of functionality and exposes a lot of engineering firms involved with P3 projects to unnecessary amounts of risk. However, with the right software you can mitigate risk. When selecting a drainage design package there are a couple of things to consider to ensure your risk is low:

With these advantages, engineering firms can limit the risk associated with higher than expected construction costs by optimizing the design, reducing delays in plan development due to overlooked regulatory requirements, and reducing delays or errors associated with transferring necessary information from the modeling package to a set of plans.

By reducing this risk, firms can position themselves to have a more competitive bid and be more profitable when engaging in these types of projects. This is all accomplished by using a drainage design software that will produce optimally-sized designs that clearly and transparently meet regulatory requirements. Firms that leverage this kind of technology and adapt to new software on the market are likely the ones that will significantly benefit. As P3 programs become the norm for funding green infrastructure in the US, efficient drainage design software will be crucial in securing and profiting from these projects.

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