Last week, I spoke at the annual meeting of the Tennessee Road Builders Association. Fellow speaker and lobbyist, Dave Bauer of the American Road & Transportation Builders Association, gave a legislative update on the status of Federal transportation funding. During his talk, Dave suggested that Public Private Partnerships (PPPs) can help, but are not a solution to the economic problems currently facing the industry.
I previously wrote about whether PPPs could help revive highway and bridge construction. Whether you are talking about PPPs or some other partnership arrangement between owner/developers and contractors, partnering can work. But problems often arises in three areas:
- Partnering often works until there is a dispute about time or money. While this may be no different than a traditional contracting approach, the partnering relationship becomes strained when project delays arise or cost overruns come into play. The natural reaction is to start assessing blame. Used effectively, however, the partnership should be able to find common sense solutions to time and money problems.
- Partnering is often accepted by upper management, but not at the project level. You can imagine the problems that may arise when there is a disconnect in the family where both the owner and contractor feel they are being taken advantage of. This feeling can be exacerbated at the project level by those who are involved in the day-to-day construction. You need to get all levels to "buy in" to the process.
- Partnering often highlights an imbalanced decision-making process. When disputes arise between partners, it is important that each have equal bargaining in the process. For example, it can be difficult for the contractor’s project manager to be negotiating and attempting to resolve disputes with the owner’s representative, who may be at a higher level.
There are many other problems that can exist with partnering. However, the goal is to avoid the frustration that is often felt by those who want the relationship to work. The best way to avoid these problems is to: (1) have a balanced partnering agreement that properly allocates risk between and among the partners; (2) get all players together at the inception of the project, both within your own organization and with the other partner, to foster team-building in the relationship; and (3) incorporate an alternative dispute resolution process that allows for effective and efficient resolution of internal disputes.