...overall project value. “So it doesn’t make economic sense to consider any project under $100 million,” he says. The same goes for the public side. “We are very careful in terms of picking projects for P3s,” says McQuay. “We look for fairly large projects since there is financing associated with it. You have to have something you can measure in the long term—performance goals that you can check over 30 years.”

Legal clauses of most contracts are very restrictive. There are no special exemptions for unforeseen delays or change orders, and the penalties for not turning the project over on the exact stipulated deadline can be as high as $100,000 a day, says Douglas. “You have to deliver a project on the day you say you’re going to deliver it,” he says.

Even relationships among the players within a concessionaire can be complex. On Montreal’s 7-km-long A25 extension project, concessionaire Macquarie and the design-build team of Kiewit and Parsons grappled with who was responsible for payment disputes with independent engineers. “The independent engineer concept is good, but you have to better define the function and limit the liability,” said Keith Sabol, then the design manager for the design-build team, in talking about the project last year at an industry conference.

Bilfinger’s Small notes one difference in Canada’s P3 process and Europe’s: “We need to take it to a more complete stage when we bid,” he says. “You go to financial close in a matter of months. In the U.K., it can take a year.”

Nevertheless, preparing the concessionaire team itself takes about a year. Once the right team is assembled, “success boils down to how to price the risk,” said Sabol. “[We had] no room for value engineering. We devleoped a risk matrix—mitigation, pricing, life of risk.” The team held a three-day lockdown session before submitting its proposal.

“It’s tough. These projects cost a lot of money to pursue,” notes Small. “So when we get into this, we want to be sure we reach financial close.”

Not being certain of closings has held back some global concessionaires from bidding on potential big P3 projects in the U.S. For example, Texas, once a trailblazer, suffered a setback when its legislature refused to extend the authority of the Texas Dept. of Transportation to sign agreements with developers after a two-year moratorium on toll roads ended this spring. But Small is confident the time will come. “It may take another two or three years, but it will be a big market. There just needs to be a couple of successes,” he says.

One success may be Florida’s Interstate 595 project, a 35-year, $1.8-billion agreement signed this year with a team led by Spain’s ACS Infrastructure Development. ACS also entered into a $650-million P3 with the North Carolina Turnpike Authority to design, finance and build a new seven-mile-long toll bridge in the Outer Banks. In February, California Gov. Arnold Schwarzenegger (R) approved a bill allowing transportation agencies to enter into an unlimited number of P3s until 2017.

Small cautions, “P3 is not free money. People have to be aware that it’s going to cost money, and you need a proper procedure in place, with good advisers. It’s not the sort of thing you craft your own documents for. Look at other examples, get all the approvals in place....It makes sense for U.S. authorities to come up and have a lessons-learned session with the authorities here.”