Nilmini Rubin & Jennifer Hara at the Stanford Social Innovation Review: “…the American Society of Civil Engineers (ASCE) estimates that the United States needs $4.56 trillion to keep its deteriorating infrastructure current but only has funding to cover less than half of necessary infrastructure spending—leaving the at least country $2.0 trillion short through the next decade. Globally, the picture is bleak as well: World Economic Forum estimates that the infrastructure gap is $1 trillion each year.
What can be done? Some argue that public-private partnerships (PPPs or P3s) are the answer. We agree that they can play an important role—if done well. In a PPP, a private party provides a public asset or service for a government entity, bears significant risk, and is paid on performance. The upside for governments and their citizens is that the private sector can be incentivized to deliver projects on time, within budget, and with reduced construction risk. The private sector can benefit by earning a steady stream of income from a long-term investment from a secure client. From the Grand Parkway Project in Texas to the Queen Alia International Airport in Jordan, PPPs have succeeded domestically and internationally.
The problem is that PPPs can be very hard to design and implement. And since they can involve commitments of millions or even billions of dollars, a PPP failure can be awful. For example, the Berlin Airport is a PPP that is six years behind schedule, and its costs overruns total roughly $3.8 billion to date.
In our experience, it can be useful for would-be partners to practice engaging in a PPP before they dive into a live project. At our organization, Tetra Tech’s Institute for Public-Private Partnerships, for example, we use an online and multiplayer game—the P3 Game—to help make PPPs work.
The game is played with 12 to 16 people who are divided into two teams: a Consortium and a Contracting Authority. In each of four rounds, players mimic the activities they would engage in during the course of a real PPP, and as in real life, they are confronted with unexpected events: The Consortium fails to comply with a routine road inspection, how should the Contracting Authority team respond? The cost of materials skyrockets, how should the Consortium team manage when it has a fixed price contract?
Players from government ministries, legislatures, construction companies, financial institutions, and other entities get to swap roles and experience a PPP from different vantage points. They think through challenges and solve problems together—practicing, failing, learning, and growing—within the confines of the game and with no real-world cost.
More than 1,000 people have participated to date, including representatives of the US Army Corps of Engineers, the World Bank, and Johns Hopkins University, using a variety of scenarios. PPP team members who work on part of the Schiphol-Amsterdam-Almere Project, a $5.6-billion road project in the Netherlands, played the game using their actual contract document….(More)”.