I am very lucky to have an extensive network and people willing to talk to me for an hour about a niche topic: this time, public-private partnerships (P3s, PPPs, triple Ps) with Alexis Rosenberg, a partner at Ashurst Perkins Cole with a decade-plus of experience shepherding deals from inception to closing, revision, and delivery.
What makes this chat different from others around this topic is that we didn’t assume any benefits and costs. Neither of us was or is sure that any one P3 structure is better than public delivery for any number of reasons. Instead, we dug into a 400+ page contract (at least the table of contents) and really yapped about the nitty-gritty of the P3 deal structure for the SR400 Express Lanes project in Georgia. And now you, too, can enjoy the conversation in video or audio form above.1
For your edification, Wikipedia has a pretty good explanation and/or launch pad to learn the basics of P3s. My main takeaway is that they are another tool in the toolbox for delivery, and they should be favored when the details make sense, and it’s not just a simple risk dump. Happy listening.
Edited Transcript
Sam Sklar: Good afternoon. I’m here with Alexis Rosenberg, partner at Ashurst. Congratulations again on your promotion. I’d love if you could introduce yourself, and tell me a little bit about your role and the firm you work for.
Alexis Rosenberg: Thank you. My name is Alexis, and I am a recently promoted partner at Ashurst Perkins Cole. We’re a global law firm, but one of the things we’re highly recognized for is infrastructure and energy, particularly using P3 and alternative delivery models. I’ve worked in this space for about twelve years in total. I started my career in Australia—which is where the accent is from—and then I was in Asia for about six years, doing a bit of work in the Middle East while I was there. I moved to the US in 2021 and have been working on infrastructure projects here ever since.
Sam Sklar: That’s super interesting. Maybe if we have time at the end, we can get into the differences in how different parts of the world approach building with different models of public and private investment, design, build, and operations. But I’d love if we could start with the basics. Readers and listeners may have some familiarity with what a public-private partnership—or what we’ll call P3—is. Some people call it triple P. There are lots of different ways people go about it, but what we’re talking about here is some combination of public sector and private sector investment, development planning, building, and operations. Is that about right?
Alexis Rosenberg: Yes, I think it is good to step back first and define what a P3 is. It is sometimes helpful to start with traditional infrastructure delivery, which we often describe using the jargon “design-bid-build.” This is where a state agency, owner, or authority utilizes an architectural firm or works in-house to design what they want built. Then, they bid that design out to the market and hire a construction contractor to build it. They may then operate and maintain it themselves, or contract that piece out as well.
Then we have what we call alternative delivery, which is not so alternative these days since it has been around for a couple of decades. Starting with “design-build,” rather than having a separate engineering firm design and then bidding that out, the state entity will combine those components into one package. They ask the market for someone who is going to both design and build the project. What’s beneficial about this model is that it aligns the designer with the builder, which incentivizes a constructible design and prevents the state from sitting in the middle of disputes.
Sam Sklar: Would you say those are the two main delivery vehicles?
Alexis Rosenberg: “Main” is a funny word, but I would say that represents the majority of how we deliver infrastructure, especially here in the US. The P3 model with a private financing element is more popular overseas. It has been used quite a lot here in the US as well, but it remains a bit less popular.
Sam Sklar: Excellent. I know there are other alternatives, such as design-build-operate-maintain, and progressive design-build, which is a more recent and interesting one. Maybe we can talk about that a little bit.
Alexis Rosenberg: A basic P3 is often described as design-build-finance-operate-maintain, or just design-build-finance-maintain, depending on the asset type. You are combining the design and build under the same private sector team, but they are also responsible for securing upfront financing through debt and equity to fund the construction. They are then responsible for ongoing maintenance, operations, and potentially tolling or generating user fees if it is a revenue-generating asset.
Bringing all of that under one private sector team aligns all the elements under one roof. You have a private sector partner who is incentivized to create an efficient, constructible design that will be easily maintained and operated. They are driven to complete the project on time to avoid penalties under their financing structure and to operate it well so they can pay back that financing. That is a traditional P3.
There are many different flavors these days. “Progressive” design-build is where, at the time of the bid, the exact form of the project is looser than a traditional P3. There won’t be a hard bid price when you select that contractor. Instead, you select a construction contractor based on their experience. They will then work hand-in-hand with the state to design and establish the parameters of the project before setting a final price. This can be useful for complex projects where the exact solution is not clear yet. The risk, however, is that you lose competitive tension, which means it may not incentivize the best possible price.
Sam Sklar: That’s so interesting. My understanding of one of the benefits of doing a public-private partnership or bringing in a private partner is that it alleviates or shifts some of the risk parameters from the public sector onto a private actor whose incentives naturally line up, where their benefit will exceed their risk. Everyone can win in that situation.
Alexis Rosenberg: I definitely agree. One of the primary benefits of this model, backed by data, is the alignment of incentives. You have a private sector entity that relies on the asset—either through generated revenue or regular availability payments from the state—to pay back their own debt. They have every incentive to keep the project functioning optimally.
During the design and construction phases, they are incentivized to construct cost-effectively. That doesn’t mean cutting corners if you have the right contract with the right parameters, but rather finding ways to optimize construction costs. They also tend to design in a way that optimizes revenue, which a state agency might not naturally focus on.
Sam Sklar: To summarize, it is about leveraging as much value as possible for the taxpayer to realize projects on a reasonable timeframe, allowing different actors to check each other. One of the main benefits is preventing a runaway state that might lack the capacity, resources, or expertise, especially for highly localized infrastructure. My newsletter mostly covers transportation, but infrastructure also spans water, energy, and electricity.
I’d love to move beyond the basics and talk about an actual public-private partnership that you worked on, the SR 400 express lanes project in Georgia.
Alexis Rosenberg: The entire contract for the SR 400 express lanes project is more than two thousand pages. The “front end” portion alone is about 470 pages. It is publicly available on the website.
Looking at the table of contents, we have the two parties involved: the State Road and Tollway Authority (SRTA), which is a sister agency to GDOT, and the private developer, SR Partners LLC. The developer is a special purpose vehicle (SPV)—a new company created solely to execute this project. This structure is very important for lenders. The financing provided to this entity is inoculated from any other corporate risks; lenders are lending strictly to this specific project and expecting to get the revenue of the project back to pay down the debt.
The structure of this agreement is very similar to many other P3 agreements. It covers right-of-way and land acquisition, approvals, oversight, and how to deal with existing utilities or third-party interfaces like local cities or transit authorities. It includes design and construction obligations for the 16 miles of express lanes, moving from a 30 percent design to full construction readiness. It outlines operations, maintenance, and the “hand-back” parameters since this is a 50-year contract. Finally, it details tolling mechanisms, payments, revenue sharing, non-compliance penalties, supervening events, and termination defaults.
Sam Sklar: In your perspective, having done many of these in your career, which sections typically receive the most scrutiny when parties come to the negotiation table?
Alexis Rosenberg: I would divide it into two main parts, starting with construction risks. Many of these are similar to traditional design-build risks, but they are exacerbated in a P3 due to the project size and private financing. This includes site access, land acquisition, utility relocation, and unknown site conditions like hazardous materials. There is a lot of scrutiny on who should bear these risks. The general rule is that the party best suited to control the risk should bear it. In a P3, the private sector can only bear risks that they can reasonably control and price, because they can go bankrupt if costs spiral out of control.
A tangible example from the SR 400 project is existing utilities. How should you split that risk? This contract utilizes a utility verification period. During the procurement phase, the state discloses all the information they have about known utilities, and the private sector must price their work accordingly. After the contract is awarded, during the design phase, the private sector partner has a set number of days to conduct studies and confirm utility locations. If they discover unknown utilities during this verification window, they receive compensation for the increased cost. However, if they fail to do a proper verification job and discover an unknown utility years into construction, they do not get compensated. This incentivizes discovering issues early during the design phase, where they can design around the problem, rather than during construction when shovels are already in the ground and delays are incredibly expensive.
Sam Sklar: That makes perfect sense. It sounds like you are trying to turn uncertainty into risk, because uncertainty cannot be priced, but risk can. The more information you have, the more accurately you can price it. Critics of P3s often argue that too much risk ultimately falls back on the public sector when projects stall. How long have these models been around in the US?
Alexis Rosenberg: In the US, they go back to the late 1990s. In the UK and Australia, they started a bit earlier. Regarding the perception of risk, the history of P3s in this country actually saw the pendulum swing the other way initially. Too much construction risk was placed on the private sector, which caused several construction contractors to go bankrupt or drop out of the P3 market entirely because they saw it as too risky. Over the last two decades, there has been a concerted evolution to find a better balance. We have gotten better at identifying what the state can do to mitigate a risk versus what the private sector can do.
Sam Sklar: We are talking about massive infrastructure changes happening in already developed, populated areas. There are endless layers of utility and existing infrastructure interfaces. Often, contracts can be ambiguous or left incomplete, which I understand is what led to the rise of progressive design-build to avoid locking too much up front. Is that accurate?
Alexis Rosenberg: Some blame for contract complexity certainly lies with the legal profession. There is almost a conscious protectionism in making contracts hard to understand so that you have to hire a lawyer. At my firm, we are very focused on a movement called “plain English drafting,” trying to draft contracts more like people actually speak so they are usable by non-lawyers.
Regarding your second point, it’s true that public sector entities that do not execute P3s frequently may lack the internal resources to draft a strong contract. They might be afraid to remove legacy clauses from older templates because they don’t know what they originally did. That can lead to poor contracts.
Is that why progressive contracts are rising? Yes, the fear of being locked into an rigid contract is a major driver. Progressive models can be highly effective when you need to move fast. For example, the Tennessee DOT utilized progressive contracts to respond quickly to the impacts of Hurricane Helene because they didn’t have time to dot every ‘i’ and cross every ‘t’. California tried a solution-neutral progressive model for the Sepulveda project to see what different innovations the market could offer.
However, change orders are frustrating for everyone. The private sector fears their legitimate costs won’t be covered, and the public sector feels like unexpected costs are piling up. The problem with progressive models is that if you think negotiating a single change order is tough, imagine negotiating the pricing for the entire contract without competitive tension. It can feel like negotiating the largest change order you’ve ever seen, making it very hard to get a good price.
Sam Sklar: That makes a lot of sense. If you had to estimate, what percentage of major infrastructure projects in this country are delivered via P3? Is it less than five percent?
Alexis Rosenberg: Pulling a number out of the air, less than five percent sounds about right. We use this model very infrequently in the US.
Sam Sklar: I was talking to someone about this, and they noted that in Europe, the private sector has more distinct access to debt, whereas the US has long relied on municipal bonds available to the public sector. Because the public sector’s cost of borrowing is lower due to tax-exempt municipal bonds, there is less financial pressure to seek alternative capital stacks.
Alexis Rosenberg: I would absolutely agree with that. There isn’t that same level of municipal bond availability in other global jurisdictions, which drives their reliance on private capital markets.
However, data shows that P3s generally deliver on time compared to traditional delivery models, and they can be highly cost-effective because the private sector swallows much of the cost overrun risk. P3s can deliver real value for money, which might represent a missed opportunity in the US due to how our debt markets are structured.
Sam Sklar: In places like New York, municipal bonds are often triple tax-exempt, which heavily incentivizes institutional investors and pension funds to buy them up. At the end of the day, whether it’s public debt or private capital, the taxpayers and citizens are paying for it. It’s just a matter of who handles the risk and how we extract the most value. Other countries seem to incentivize value over absolute lowest cost. Madrid built its metro incredibly fast in the early 2000s because their contracts prioritized the highest value per dollar and on-time delivery incentives rather than just the lowest bid.
Going back to the SR 400 project, did it generate a concession fee for the state? What does that mean exactly?
Alexis Rosenberg: When bidding a revenue-generating P3—like a toll road, express lanes, an airport, or a stadium—the private sector expects to make a profit. If their projected revenue significantly outweighs the cost to build, maintain, and pay down their debt with a reasonable return on equity, they may offer to pay the state a “concession fee.” Essentially, they pay the state upfront for the privilege of developing the project because they know they will make that money back over its lifespan.
The SR 400 project generated a very large concession fee—billions of dollars—for the state of Georgia. That revenue can now be redirected by the state to fund non-revenue-generating projects, like fixing a rural bridge, repairing potholes, or completing other necessary but “unsexy” infrastructure.
States can also use procurement metrics to incentivize other values. Instead of just accepting a cash concession fee, a state could give higher technical points to bidders who promise to build extra miles of road, add pedestrian enhancements, protect bike lanes, or invest in community green spaces. P3s are a fascinating way to harness the innovation and competition of the free market and channel it directly into the specific values a community wants, whereas traditional delivery simply dictates a strict layout based purely on the lowest cost.
Sam Sklar: Do you think there is room for P3 models in future mega-projects, like the California High-Speed Rail or New York’s Second Avenue Subway extensions? How different would California’s rail project look if it had been conceptualized as a P3 from the start?
Alexis Rosenberg: Rail is inherently more complex than roads, and there are many layered political and environmental complexities with the California High-Speed Rail project. However, choosing a P3 model doesn’t mean the *entire* project has to be a P3.
For a major rail project, you can break it into distinct packages. You might use a traditional design-build for early works like utility relocation, a P3 contract for the heavy civil engineering or tunneling, and a separate delivery model for the rolling stock, operations, and maintenance. Utilizing a P3 for the core complexities allows you to attract the world’s premier global rail developers from Europe and Asia, bringing world-class innovation to the table. You just have to find the right components of the project to fit the model.
Sam Sklar: There is often a fundamental mismatch because environmental reviews like NEPA require a linear project model, which conflicts with a branching, fast-paced P3 structure where different components move on separate timelines. We need innovative acquisition models that bring the private sector to the table efficiently while protecting public values. I’ll give you the final word.
Alexis Rosenberg: We shouldn’t be afraid of the private sector as a partner in infrastructure. With the right parameters, clear rules, and proper incentives, the private sector can bring immense value to public infrastructure delivery.
Sam Sklar: That is a great note to end on. Thanks again for your time, Alexis.
I want to make it clear that I am not endorsing the project on its merits, but simply accepting that it exists and this is how we paid for it. Generally, I am against bypasses, tolled or not, but I will leave that editorializing for another time.
