National Academies Press: OpenBook
« Previous: Chapter 4 - Evaluating and Executing a P3
Page 87
Suggested Citation:"Chapter 5 - Best Practices." National Academies of Sciences, Engineering, and Medicine. 2017. Public Transportation Guidebook for Small- and Medium-Sized Public-Private Partnerships (P3s). Washington, DC: The National Academies Press. doi: 10.17226/24754.
×
Page 87
Page 88
Suggested Citation:"Chapter 5 - Best Practices." National Academies of Sciences, Engineering, and Medicine. 2017. Public Transportation Guidebook for Small- and Medium-Sized Public-Private Partnerships (P3s). Washington, DC: The National Academies Press. doi: 10.17226/24754.
×
Page 88
Page 89
Suggested Citation:"Chapter 5 - Best Practices." National Academies of Sciences, Engineering, and Medicine. 2017. Public Transportation Guidebook for Small- and Medium-Sized Public-Private Partnerships (P3s). Washington, DC: The National Academies Press. doi: 10.17226/24754.
×
Page 89
Page 90
Suggested Citation:"Chapter 5 - Best Practices." National Academies of Sciences, Engineering, and Medicine. 2017. Public Transportation Guidebook for Small- and Medium-Sized Public-Private Partnerships (P3s). Washington, DC: The National Academies Press. doi: 10.17226/24754.
×
Page 90
Page 91
Suggested Citation:"Chapter 5 - Best Practices." National Academies of Sciences, Engineering, and Medicine. 2017. Public Transportation Guidebook for Small- and Medium-Sized Public-Private Partnerships (P3s). Washington, DC: The National Academies Press. doi: 10.17226/24754.
×
Page 91
Page 92
Suggested Citation:"Chapter 5 - Best Practices." National Academies of Sciences, Engineering, and Medicine. 2017. Public Transportation Guidebook for Small- and Medium-Sized Public-Private Partnerships (P3s). Washington, DC: The National Academies Press. doi: 10.17226/24754.
×
Page 92
Page 93
Suggested Citation:"Chapter 5 - Best Practices." National Academies of Sciences, Engineering, and Medicine. 2017. Public Transportation Guidebook for Small- and Medium-Sized Public-Private Partnerships (P3s). Washington, DC: The National Academies Press. doi: 10.17226/24754.
×
Page 93

Below is the uncorrected machine-read text of this chapter, intended to provide our own search engines and external engines with highly rich, chapter-representative searchable text of each book. Because it is UNCORRECTED material, please consider the following text as a useful but insufficient proxy for the authoritative book pages.

87 Best Practices The P3 partners interviewed for this research identified nine core best practices or lessons learned that are critical to crafting and executing a small- and medium-sized P3 initiative. Each best practice identifies how it can be applied to accommodate the unique properties of P3s in each of the five P3 categories identified in Chapter 2, when applicable. When a transit agency begins to evaluate a potential P3 using the checklist accompanying this guidebook, available at www.trb. org/Publications/Blurbs/175901.aspx, transit agency employees should attempt to apply these best practice guidelines in order to best position their P3 for success. 5.1 Methodology The interviews for this guidebook aimed to identify the most critical elements of success for small- and medium-sized P3s by asking interviewees to rate the 10 elements of success as extremely critical, moderately critical, somewhere critical, or not critical to the success of their respective P3s. Through these responses from both public and private partners, the most critical elements were identified. These and other best practices that emerged from case study interviews are summarized in this chapter. Figure 13 shows that public partners placed the most emphasis on understanding each entity’s desires and objectives, having communication with stakeholders, and strong leadership and/ or a project champion. All public respondents found past experience with P3s to be the least important element for success, believing that while it can be helpful, it is not critical to success for a small- and medium-sized P3 and that many elements of P3 can be learned during the initiation process. Private partners placed emphasis on similar elements of success. Interestingly, they found past experiences with P3s more valuable that the public partners did, as seen in Figure 14. Several interviewees said that a P3 experience on both sides of the transaction often sup- ports a smoother and timelier approval process but was not a prerequisite for success. Sev- eral said that they enjoyed working with first-time public sector partners to form a new P3 collaboratively. 5.2 Best Practices Identified When preferences of both public and private partners were combined below, the extremely critical trends were clearly identified, as shown in Figure 15. These elements form the basis of the nine best practices summarized below, which emerged from conversations with both public and private partners. C h a p t e r 5

88 public transportation Guidebook for Small- and Medium-Sized public-private partnerships (p3s) Elements of Success Extremely Critical Moderately Critical Somewhat Critical Not Critical Regular and continuous monitoring Appropriate contract method Understanding each entity’s desires/objectives Communication between stakeholders Staff competency Consultant support Leadership/project champions Funding/financing Enabling legislation Experience with past P3s Figure 13. Public partners elements of success evaluation. Elements of Success Extremely Critical Moderately Critical Somewhat Critical Not Critical Regular and continuous monitoring Appropriate contract method Understanding each entity’s desires/objectives Communication between stakeholders Staff competency Consultant support Leadership/project champions Funding/financing Enabling legislation Experience with past P3s Figure 14. Private partners elements of success evaluation. Figure 15. Combined interviewee elements of success evaluation. Elements of Success Extremely Critical Moderately Critical Somewhat Critical Not Critical Regular and continuous monitoring Appropriate contract method Understanding each entity’s desires/objectives Communication between stakeholders Staff competency Consultant support Leadership/project champions Funding/financing Enabling legislation Experience with past P3s

Best practices 89 5.2.1 Identify Both a Public and Private Champion Early in the P3 Process and Make Sure They are Communicating Each public and private partner classified strong project leadership and a project champion as extremely critical to the success of its P3. Champions can come both from within the transit agency’s organization, as was the case with the TRAX P3, or from outside the transit agency in the form of a local politician or a prominent business person in the community, similar to the Boston Landing Station P3. Internal champions within the transit agency’s organization and well-established cham- pions outside of the transit agency’s organization can advocate for the advancement of the P3, but each will be able to contribute different types of support to the P3. Since small- and medium-sized P3s may be relatively new to a transit agency, an internal project champion will be integral in connecting the appropriate departments and staff, identifying or creating the most appropriate contract method that adheres to the transit agency’s rules, and working to secure high level approvals from the transit agency’s executive leadership or governing board. Depending on the type of P3, the ideal project champion inside a transit agency may vary. For example, a TOD manager would be a natural champion for a real estate P3, while a marketing manager would likely be the internal champion for a sponsorship P3, and a chief informa- tion officer may be best suited to champion an innovative technology P3. In the case of the TRAX P3 in Texas, the transportation manager at TRAX was solely responsible for identify- ing the P3 opportunity and securing the interest and approval from the agency to pursue private partners. Externally, a high profile project champion can influence the approval process, help to secure additional funding, and raise awareness surrounding the benefits of the P3. In the Boston Land- ing Station P3, the owner of NB Development Group, a long time resident of the Boston neigh- borhood where the facility was being developed, actively garnered support for the project from local stakeholders and public officials to develop the new station and provide transit access to the proposed New Balance headquarters. The NB Development Group owner secured most of the funding, agreed to contribute 10 years of O&M costs to MBTA, and agreed to design and construct the station. Without the owner’s tenacity, it is likely this new station would have never come to fruition. 5.2.2 Leverage Assets that the Public Partner Possesses that Cannot be Found Elsewhere When Structuring the P3 Transit agencies can leverage a variety of assets unique to their systems when negotiating what type of risk a private partner may assume or what type of revenue they may promise. In the case of a real estate P3, the public asset will likely be property owned by the public partner required to complete the P3, which a private partner agrees to develop. This was the case with the Dunwoody real estate P3 in Atlanta. The private partner’s real estate was much more valu- able when direct access to the transit station was provided. However, MARTA held the power to grant or withhold the necessary easement for the project to have that access. While direct access was a benefit to both private and public partners, MARTA was able to use the easement as its contribution to the P3. In the case of a sponsorship partnership such as the TRAX P3, marketing the benefits of positive public relations is paramount for transit agencies to secure private sponsorships. The transit agency in that case found value in approaching the potential private sponsor with a menu of benefits the private partner would accrue as well as visual aids representing what the private partner’s logo would look like as signage along the system. In this case, the exposure throughout the community that the service would provide was the public entity’s greatest asset.

90 public transportation Guidebook for Small- and Medium-Sized public-private partnerships (p3s) 5.2.3 Transfer as Much Financial Risk to the Private Partner as the P3 Will Allow Transit agencies should pursue P3s that will remove the burden of financial or operational risks from the transit agency and take advantage of the private sector’s ability to assume addi- tional levels of risk up front. The type of risk to be transferred will differ based on the type of P3. For real estate P3s, transit agencies typically look to the private partner to assume the financial risk of developing the project and offer to contribute other “assets,” such as an easement or property already owned by the public partner. In the case of the Boston Landing P3, the private partner assumed the financial risk of developing the project and even transferred its risk to a construction manager at risk during the initial planning phases, further shielding the P3 from financial risks during the initial phases of project development. With the HART advertising P3, the best value approach to transferring risk emerged in the form of the firm, Commuter Advertising, assuming all risk for the revenue-generating adver- tising operation. While risk becomes something shared by both parties in many of the P3 case studies presented in this guidebook, in this particular case, HART had additional leverage when contemplating the risk sharing approach of this P3 model. Without access to HART’s system, the private partner’s business model does not work. 5.2.4 Set Clear and Formal Guidelines, Objectives, and Performance Targets that Must be Met by Each Partner Setting clear objectives during the initial P3 process was also cited as extremely critical to the success of a P3 by both public and private partners. Small- and medium-sized P3s are only suc- cessful when they are mutually beneficial to both parties. When a transit agency begins to pursue private partners, it should have already defined clear objectives for the P3 and outlined specific responsibilities that a private partner should be capable of fulfilling. This should be accom- plished by public partners prior to issuing an RFP. Issuing an RFP with specific schedule targets, cost assumptions, and performance requirements allows a private partner to enter the P3 with complete awareness of the public partner’s expectations. Setting strict operational guidelines is another way for public partners to decrease their share of risk in the P3. Once roles are defined and key performance indicators agreed upon, the public partner has a formal way to monitor the performance of a private partner and ensure that their customers are receiving the highest possible levels of service. When the transit agency is partnering with a private company who is providing revenue to the system through commercial advertising along its system, such as Commuter Advertising for HART, the transit agency must be vigilant in approving all marketing messages that will be played to ensure all messages are appropriate for riders. As public agencies, transit agencies should establish clear content-neutral policies on the type of advertising permitted on transit properties, to avoid free speech challenges under the First Amendment of the U.S. Constitution. Developing upfront policies will save both partners time while securing advertisers and approv- ing content as well as protect both parties from lawsuits and negative public feedback that could harm the reputation of the transit agency and the P3. In San Mateo County, California, SamTrans set objective performance standards for its pri- vate O&M concession partner, MV Transportation. The contract clearly set targeted standards for vehicle safety, service-related feedback from customers, and on-time performance. MV Transportation is incentivized to not only meet these standards to avoid penalties from Sam- Trans but also receives additional compensation as a bonus for exceeding these metrics. Setting clear expectations allows the private partner to work toward clear goals, securing the P3’s success for both partners and the riders they serve.

Best practices 91 5.2.5 Draw From Your Private Partner’s Industry Expertise in the Non-Transit Aspects of the P3, Beginning in the Early Stages of the Partnership Public transit agencies are experts in operating transportation systems and managing transit assets. However, a benefit of a small- and medium-sized P3 in many of these P3 categories, such as innovative technology, real estate, and sponsorship, is the public partner’s ability to capitalize on the private partner’s expertise in a particular field. Drawing on the insights of private industry early in the planning process for a P3 can help both partners ultimately save time and money over the life of the project. In the case of the ARTIC P3, the public partner acknowledged that it would have been ben- eficial to bring in the professional real estate partner during the design process when the city was laying out the plan for the tenant and commercial spaces. The private partner could have offered suggestions on how to increase functionality and optimize revenues in tenant and com- mon spaces. In New York, the MTA did not have the in-house knowledge or capabilities to provide and oper- ate a wireless service for its riders, which is why it chose to partner with Transit Wireless who was adept at providing high-quality wireless services for transit stations across the world. By selecting Transit Wireless to manage the installation and operation of this service, MTA saved $250 million in upfront capital funds that were instead contributed by Transit Wireless in return for a $3 million annual payment to the private partner once each station’s wireless was operational. In the case of the joint development with RTD and Pedersen Development, the private real estate partner brought innovative ideas to develop the bus facility at Depot Square Station, drawing on the importance of transit oriented development and promoting affordable housing opportunities near the facility. Without Pedersen’s suggestions for a new hotel and the inclusion of affordable housing, RTD might have never developed the facility as is, which contributed to the kick-start of TOD all over Boulder. 5.2.6 Select the Appropriate Contract Method, Tailored to the Unique Type of P3 An appropriate contract method that both parties are comfortable with becomes the foun- dation of any P3 implementation. Contracts summarize anticipated costs, define responsibili- ties, solidify objectives, and legally assign risk to either party. Selecting the appropriate contract method was identified as extremely critical by all public and private partners interviewed during the case study process In the case of New York MTA’s Wi-Fi and wireless service P3, MTA was able to apply lessons learned from a previous partnership to inform the contracting method decision. The private wireless provider had also developed a financial model that allowed MTA to fully understand potential pricing options based on the engineering and design costs. This financial model, which has been used with other large transit agencies for this type of project in the past, provided MTA with additional certainty regarding the cost of delivering the program. An appropriate contract method is also particularly important when a P3 may include mul- tiple private partners. Establishing a uniform contract that removes any preferential treatment toward one private partner is paramount to foster trust between the public and private side as well creating consistency for legislative ease. This is how PSTA manages its relationships with mul- tiple private ride providers, including Uber, Lyft, and taxi companies, for its Direct Connect P3, which requires each partner to adhere to a similar agreement and use the same technology net- work standards.

92 public transportation Guidebook for Small- and Medium-Sized public-private partnerships (p3s) For O&M P3s, tailoring a contract to the specific P3 to document the intricacies of performance- based compensation is of paramount importance. As shown in the SamTrans example, the public and private partners have agreed to not only specific increments tied to performance- based pay, but also to the appropriate method of monitoring and reporting on such measures. SamTrans and MV Transportation have agreed-upon performance standards based on safety, service-related complaints, and on-time performance. These benefit the rider by incentivizing the private partner to operate as safely and efficiently as possible, and by incentivizing the transit agency to properly monitor and regulate their private partner to best serve SamTrans Customers. 5.2.7 Engage Internal Staff Members Integral to the Success of the P3 Once Operational During the Initial P3 Conversations with Your Private Partner Engaging a transit agency’s staff early on is essential to secure stakeholder buy-in from the staff members responsible for carrying out a P3 once an agreement is reached. In several case studies, public transit agencies identified the need for this type of internal collaboration earlier in the P3 planning process as a lesson learned. When a transit agency begins to evaluate a potential P3 using the checklist provided in this guidebook, the person in charge of evaluating the P3 should work with all departments able to assist in completing the checklist and developing an implementation plan. For example, the project manager should consider meeting with the transit agency’s planning department to com- plete the “Planning” subsection of the checklist, or the procurement manager to help answer the questions of procurement and contracts, or the financial officer regarding potential funding sources and strategies. Aside from obtaining the most accurate information possible to execute a P3, involving these internal staff members during the initial evaluation of the P3 will demonstrate that the project manager respects their roles, insights, and opinions. Empowering transit agency staff to take on new initiatives and offer suggestions to improve P3 proposals will help foster a sense of ownership and pride in the project. Such was the case with the MARTA P3 and the TOD manager within the TOD and Real Estate Team. The TOD manager worked directly with KDC and proactively reached out to other internal MARTA teams responsible for the day-to-day train operations and track maintenance on the property. Once developed, communication between internal departments and the private partner will likely be much smoother, since the relationship had previously been established, and the internal staff members might be more enthusiastic about implementing a P3, knowing they had an important role in shaping its structure. 5.2.8 Create a Realistic Project Schedule Based on the Lead Time of Public and Private Approvals Involved in Implementing the P3 An unrealistic project schedule can ultimately cost both parties unnecessary time and money, in the form of both physical and human capital. A realistic and actionable schedule will allow for the most effective planning and implementation of a project so as to not waste valuable staff resources. Alternatively, private partners may have financial capital at risk during the P3’s imple- mentation, and construction or operational delays can quickly turn costly. Creating an achievable project schedule may incorporate other best practices, such as securing a champion, capitalizing on a private partner’s industry knowledge, and engaging internal staff during the planning process. Transit agency staff in departments involved in the implementa- tion of the P3 can help to provide estimates of how long the lead time for certain scope items may take. A private partner will likely have extensive knowledge of how long scope items such as construction, installation, or tenant procurement for retail space should take once the project

Best practices 93 has been initiated. And while many scope item lead times cannot be greatly expedited, a project champion can help keep the process moving through the planning, procurement, and imple- mentation phases. Within a transit agency where a new P3 may not be the transit agency’s high- est priority, an internal champion can frequently check in with departments within the transit agency organization to make sure the necessary scope items are being reviewed and approved in a timely manner. An external champion, such as a politician, can keep the project in the public eye and can hold public officials accountable for approving certain P3 steps. 5.2.9 Establish a Formal Method of Communication and Project Monitoring Between the Public and Private Partners During Implementation and Throughout the Operation of the P3 A formal and routine method of communication both during the P3 planning and operational phases was cited during case study interviews as extremely critical to the success of partnerships by public and private partners alike. This best practice relates to both internal and external com- munication and monitoring methods. Internally, it is critical to establish a clear chain of communication regarding P3 initiations and day-to-day operations once the P3 has been implemented. As noted, a single point of con- tact for the transit agency and the private partner should be identified as project leads. These persons should be responsible for overseeing internal communications between the staff mem- bers who contribute directly to the P3 and higher level individuals within an organization, such as an executive director of a transit agency. Externally, during the planning and negotiation phases of the case study P3s, the most com- mon type of communication was in the form of weekly meetings between two designated points of contact—one from each side. While many case study subjects recalled that the two primary points of contact were in constant and regular communication, particularly when any issues arose, a formal weekly meeting provided a setting for the larger teams to touch base and discuss items that may need to be addressed and to stay abreast of progress on either side. Once the P3 is implemented, it is best practice to use a formal reporting or monitoring process between the private partner and the transit agency. This typically comes in the form of either weekly or monthly reports that identify whether or not agreed-upon obligations are being met, revenues reported, and documentation of issues that had occurred are either been solved or remain outstanding. In the case of the PSTA Direct Connect P3, each of the private partners must submit a monthly report of aggregated data regarding total trips to and from the bus sta- tions via an e-mail to PSTA. Similarly, the private property management partner provides the City of Anaheim weekly status reports of activity within ARTIC. 5.3 Applying Lessons Learned These best practices were derived from the lessons learned by transit agencies who have already experienced the trial and error process of planning and implementing small- and medium-sized P3s. These practices may serve as the foundation of a successful P3 and should be considered by practitioners in the planning and implementation of their own P3s.

Next: Chapter 6 - Conclusions »
Public Transportation Guidebook for Small- and Medium-Sized Public-Private Partnerships (P3s) Get This Book
×
MyNAP members save 10% online.
Login or Register to save!
Download Free PDF

TRB's Transit Cooperative Research Program (TCRP) Research Report 191: Public Transportation Guidebook for Small- and Medium-Sized Public-Private Partnerships (P3s) serves as a resource to explore, evaluate, initiate, plan, and implement small- and medium-sized public-private partnership (P3) initiatives. The guidebook addresses why and when to consider P3s for small- and medium-sized initiatives, what types of initiatives may be undertaken, and how to effectively undertake these initiatives.

A P3 Project Screening Checklist, a Microsoft Excel spreadsheet, accompanies the guidebook and may assist transit agencies with screening and evaluating a P3 initiative.

Disclaimer - This spreadsheet is offered as is, without warranty or promise of support of any kind either expressed or implied. Under no circumstance will the National Academy of Sciences, Engineering, and Medicine or the Transportation Research Board (collectively "TRB") be liable for any loss or damage caused by the installation or operation of this product. TRB makes no representation or warranty of any kind, expressed or implied, in fact or in law, including without limitation, the warranty of merchantability or the warranty of fitness for a particular purpose, and shall not in any case be liable for any consequential or special damages.

  1. ×

    Welcome to OpenBook!

    You're looking at OpenBook, NAP.edu's online reading room since 1999. Based on feedback from you, our users, we've made some improvements that make it easier than ever to read thousands of publications on our website.

    Do you want to take a quick tour of the OpenBook's features?

    No Thanks Take a Tour »
  2. ×

    Show this book's table of contents, where you can jump to any chapter by name.

    « Back Next »
  3. ×

    ...or use these buttons to go back to the previous chapter or skip to the next one.

    « Back Next »
  4. ×

    Jump up to the previous page or down to the next one. Also, you can type in a page number and press Enter to go directly to that page in the book.

    « Back Next »
  5. ×

    To search the entire text of this book, type in your search term here and press Enter.

    « Back Next »
  6. ×

    Share a link to this book page on your preferred social network or via email.

    « Back Next »
  7. ×

    View our suggested citation for this chapter.

    « Back Next »
  8. ×

    Ready to take your reading offline? Click here to buy this book in print or download it as a free PDF, if available.

    « Back Next »
Stay Connected!