The public-private-partnership (P3) model for building and maintaining infrastructure is becoming increasingly popular in the U.S. While they are not the best model for every project a government wants to consider, they are certainly one valuable tool that should be used more often.

But, there are frequently incorrect perceptions about the reasons for getting into a P3. The most common misunderstanding is it's cheaper than if the government builds the project itself. In point of fact, it's not uncommon for P3 projects to be MORE expensive up front - in part because the private-sector providers know they will be on the hook down the road for maintenance and replacement, and they will be contracted to eventually turn over the asset back to the government partner. They are thus usually motivated to make sure the asset is essentially 'overbuilt' and easier to maintain in the future. The result can be higher initial construction costs than if the government built it themselves, when there is generally a focus on low-cost providers.

This article gives a great short summary of the primary reasons why P3's can be valuable to achieving asset buildout and maintenance - and it's not all about cost. It's about risk transference and taking on a long-term perspective (since these are usually long-term assets). This is a good primer to keep in your hip pocket as you start talking more about P3 as a model for your own capital financing strategies.