Builders find big opportunities in P3
At six sites scattered across Prince George’s County, teams led by Gilbane Building Company are executing a massive, rapid and unprecedented construction project. Prince George’s County Public Schools has embarked on a first-in-the-country initiative to use a public-private partnership (P3) to bundle design, financing, construction and 30 years of maintenance of a group of schools. Under the $1.23 billion venture, construction teams will complete five middle schools and one K-8 school within three years – a process that would normally take six to eight years.
“This is not an off-the-shelf project that has been done 25 or 30 times before,” said Paul Choquette, Executive Vice President of Gilbane. “We don’t normally build six schools concurrently so the scale of this project is unique.”
Large, ambitious P3 projects, however, are becoming more common as state and local governments recognize P3 as a viable path to delivering public facilities on a tighter schedule and with lower financial risk. That trend presents opportunities to the construction industry and also the challenge of meeting the demands of a different development model.
Big, fast and exacting
Although P3 projects can come in any size, they tend to involve developments that are large and/or demanding.
To complete the Prince George’s schools, Gilbane estimates it will execute 200 to 250 contracts, meet the project requirement of awarding at least 30 percent of subcontracts to minority-owned businesses and community-based enterprises, and employ up to 1,500 workers on the six sites.
Coordinating work at six sites that will share some contractors is unusually complex, but it also creates opportunities.
“The big lesson being learned is how to take advantage of six continuous projects to create efficiencies and innovative practices,” Choquette said. “Every one of these sites can provide knowledge transfer as subcontractors complete work on one site and move onto the next. It’s amazing to watch that knowledge transfer. It’s a unique opportunity for us to become more lean, more efficient and deliver greater benefit to the client.”
One distinctive aspect of a P3 venture — namely, the requirement that a private partner operate the facility, often for 30 years — adds large and uncommon considerations to the design and construction phases. Teams have to focus on more than how to meet the client’s needs while minimizing construction costs. They also have to factor in how design, construction and contracting choices will impact the building’s operational costs for decades.
“There are things that you don’t always think about as a contractor — quite frankly, even designers and owners don’t always consider them — that are big, important issues with a P3 development,” said Timothy Campbell, Project Executive at Clark Construction Group. Clark served as the design-build contractor for the recently completed Howard County Courthouse, the first P3 project completed by Howard County.
Those considerations include flooring and other finishes that will withstand wear and keep maintenance and replacement costs low, building systems that are both energy efficient and resilient (since operators are penalized for space unavailability or unplanned downtime), and roofing systems with long lifespans. A hot-applied roof may cost more than a TPO roof but come with few maintenance needs and a 30-year warranty that make it the more cost-effective choice for a P3 project. Even the size of doors and HVAC equipment become financially important considerations for the building operator who might one day have to move equipment.
“The cost modeling is a lot more involved than we would ever typically see as a contractor,” Campbell said. “P3 engagements warrant a more holistic approach to cost-modeling and encourage us to think beyond the construction bottom line. A $100,000 shift in our number could mean a change of hundreds of thousands of dollars in total project costs depending on how that change impacts maintenance and operations, or the overall financing.”
The Howard County Courthouse project (like other P3 developments) tackled those considerations through very early and exhaustive collaboration with all members of the development and construction team, including the building’s operator, Johnson Controls.
“Our engagement early in the project is critical,” said Claudio Andreetta, Director of Business Development for P3 at Johnson Controls. The company is currently involved in 40 P3 ventures across North America. “We are there to assess all systems and equipment and how those selections will impact the lifecycle costs of the building. We pride ourselves on choosing the right finishes, systems and equipment. On this particular job, we were able to optimize building technologies to support guaranteed costs and operational outcomes written into the contract.”
Several subcontractors were brought into project planning early to provide design assist services. The long-term planning for the facility also extended to the courthouse’s new garage.
“It changes the calculus of how you design,” said Robert Tirocchi, Government Programs Manager at Harkins Builders, the design-build contractor for the garage. “For Clark, Harkins and Johnson Controls, the Herculean lift was to align everyone and ensure the design and pricing accounted for everyone’s needs.”
To achieve those objectives, the project team also opted to share major subcontractors — including the mechanical, electrical, glazing, precast and elevator contractors — between the courthouse and garage in order to deliver design requirements, ensure seamless integration between the buildings, and minimize punch list items and warranty issues, Tirocchi said.
Construction industry watchers predict that contractors could be dealing with growing numbers of P3 projects in future. When the courthouse opened last summer, Howard Country officials said they were considering further P3 projects. Prince George’s County Public Schools is reportedly preparing to contract for a second tranche of school projects through a P3 arrangement. And federal infrastructure funds are creating opportunities to embark on more, large P3 endeavors.
“From this point on, I don’t think P3 will be seen as a radical or revolutionary option for public sector clients in Maryland,” Choquette said. “There is proven credibility for P3 in this market and clients won’t feel like they are pioneering a new contracting method.”