PRAG considers several factors before undertaking a public-private project such as determining not only whether a proposed project is feasible but also whether a more cost-effective approach exists. We also establish a public sector benchmark for projects or the likely outcome if the project were undertaken by the public agency responsible for the project which provides a point of comparison for a cost benefit analysis and helps determine whether the alternative public-private project would provide value. Because public-private projects generally involve longer-term arrangements, PRAG strives to analyze project-related costs (or revenues) over the long term. PRAG can assist in proposal evaluation which may include an assessment of the plan of finance, the financial strength of vendors and risk allocation among the private and public parties. The assessment falls under three areas: financial feasibility, credit structure: managing construction and operating risk.
The financial partners can negotiate the operating and maintenance responsibility and the force majeure risks to develop an equitable risk profile. The financial strength of the vendors must be analyzed to ensure that they can meet their financial guarantees. Below are some of the P3s in which PRAG has been involved:
- Pocahontas Parkway (VA) – $525 million
- U.S. Route 460 Corridor Improvement (VA) – $1.5 billion
- Northwest Corridor (GA) – $835 million
- I-4 Ultimate Project (FL) – $2.0 billion