The final course of the specialization expands the knowledge of a construction project manager to include an understanding of economics and the mathematics of money, an essential component of every construction project. Topics covered include the time value of money, the definition and calculation of the types of interest rates, and the importance of Cash Flow Diagrams.
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Public - Private Partnerships
Karl Reichert introduces public and private partnerships.
Instructor, Department of Civil Engineering and Engineering Mechanics, Columbia University Director of Research and Founder, Global Leaders in Construction Management
What are the benefits of P3s?
As I show here, there are certainly benefits to clients and
what I would call by clients is the agency or authority that we're partnering with.
So you get projects completed, you shed the long term legacy O&M costs,
you receive the asset back at the end of the concession agreement,
and you're guaranteed on time on budget delivery.
To the users, to the public, to the tax payers, to the citizens,
you get new infrastructure which improves your life quality.
And the best example is the manage lanes concept,
where you choose to get out of traffic you pay a little bit more but, you're able
to get to your destination in good time in a safe way perhaps at a constant speed.
Whereas, the alternative is you're sitting an hours of traffic every year and
banging on your steering like most of us.
Infrastructure is built for the life cycle and built to last for the long term
because there's incentivisation with the private partner to do so.
It allows non-PPP projects to move forward.
It's interesting that if a client has a limited budget and
can stretch that budget using a P3, then that frees up available resource to
deliver projects that don't qualify as a P3.
Then of course, P3s require a customer-focus and we don't always see
that when we have publicly owned assets where we're actually concerned
about the consumer, concerned about the customers that are utilitizing the asset.
In a P3, the customer is key because they are the ones paying the bill,
they are the ones using the asset, paying the toll or their tax dollars are going
toward the availability of payment that we need to live up to.
So in a public-private partnership, it's critical that we deliver excellent
superior customer service because it has an effect directly on the bottom line.
Whereas in a governmental agency the accountability level isn't quiet as high.
And there you'll see where poor maintenance occurs, poor customer service.
And I think people get frustrated because they see their tax dollars going toward
projects that they need but the service levels aren't maintained to
the level that you might see in a public-private partnership.
And so this trend, I'm on this P3 trend because I really,
truly believe it is one avenue that we can take as a nation to really address
the staggering infrastructure deficit that we have.
We see procurements coming out in new sectors as I mentioned earlier.
It's a way to drive the agenda and prove life quality,
local hiring, safety, sustainable green aspects,
deals are getting less risky so they're become more competitive.
You have four, five, six, seven consortia attempting to pre-qualify and
then short-listed down to four or five to bid so
you have high-quality teams coming in to compete for the work if you will.
Clients are seeing value in P3s.
There was a while where P3s hadn't matured enough in the United States to really
prove their full worth, and
now you see clients that have procured P3s in the early to mid 2000's.
They're now built up and running these assets and
clients are seeing the true value in what they have achieved in this partnership.
So the model is being proven in the US.
There is a lot of capital available on the sidelines.