Elizabeth Cousins and Shant Boyajian Discuss P3 Challenges and Opportunities for 2024

Public Works Financing

Elizabeth Cousins and Shant Boyajian were interviewed by Public Works Financing (PWF) for the feature article Nossaman’s Liz Cousins on P3 Challenges and Opportunities in 2024. The article provides an overview of how public sponsors can successfully navigate challenges and seize opportunities in the P3 market in 2024.

Speaking about progressive P3s to PWF, Elizabeth posited, “Early involvement of a developer has capacity to de-risk a project by enabling the developer to gain greater understanding of the project through further investigation and design. This has the benefit of reducing contingencies in proposal pricing, limiting the need for developers to provide potentially ‘heroic’ risk and cost assumptions, and providing greater certainty for public agencies.”

She added, “In terms of compensating the private sector, it is important to strike the right balance between incentivizing the private party (i.e. through a competitively bid fixed or guaranteed maximum price for any pre-development work), while also appropriately compensating the private sector for work product prepared.”

On the topic of how to combat a looming P3 cancellation, one of Elizabeth's key pieces of advice was to “prepare the agency and key decision makers to develop an appropriate internal culture for successful delivery of P3 projects. In particular they should understand the process and key decision making milestones necessary for project approval. This is particularly important since many agencies have deeply entrenched views around fixed-price/traditional contracting that can prove very difficult to adjust.”

Regarding PDAs and federal grant uncertainty, Elizabeth and Shant said one of the primary considerations that project sponsors must recognize is that if “the funding gap for full implementation of the project is great enough, it will be a significant challenge for the project sponsor to generate sufficient market interest. This may result in a limited pool of interested competitors, even at the pre-development stage, which will put the public agency in a disadvantageous negotiating position with respect to the PDA, and ultimately the resulting commercial deal.”

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