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Evaluating and Implementing Airport Privatization and Public-Private Partnerships (2021)

Chapter:Appendix E - P3 Readiness Assessment

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Suggested Citation:"Appendix E - P3 Readiness Assessment." National Academies of Sciences, Engineering, and Medicine. 2021. Evaluating and Implementing Airport Privatization and Public-Private Partnerships. Washington, DC: The National Academies Press. doi: 10.17226/26179.
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Suggested Citation:"Appendix E - P3 Readiness Assessment." National Academies of Sciences, Engineering, and Medicine. 2021. Evaluating and Implementing Airport Privatization and Public-Private Partnerships. Washington, DC: The National Academies Press. doi: 10.17226/26179.
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Suggested Citation:"Appendix E - P3 Readiness Assessment." National Academies of Sciences, Engineering, and Medicine. 2021. Evaluating and Implementing Airport Privatization and Public-Private Partnerships. Washington, DC: The National Academies Press. doi: 10.17226/26179.
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Suggested Citation:"Appendix E - P3 Readiness Assessment." National Academies of Sciences, Engineering, and Medicine. 2021. Evaluating and Implementing Airport Privatization and Public-Private Partnerships. Washington, DC: The National Academies Press. doi: 10.17226/26179.
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Suggested Citation:"Appendix E - P3 Readiness Assessment." National Academies of Sciences, Engineering, and Medicine. 2021. Evaluating and Implementing Airport Privatization and Public-Private Partnerships. Washington, DC: The National Academies Press. doi: 10.17226/26179.
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Suggested Citation:"Appendix E - P3 Readiness Assessment." National Academies of Sciences, Engineering, and Medicine. 2021. Evaluating and Implementing Airport Privatization and Public-Private Partnerships. Washington, DC: The National Academies Press. doi: 10.17226/26179.
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Suggested Citation:"Appendix E - P3 Readiness Assessment." National Academies of Sciences, Engineering, and Medicine. 2021. Evaluating and Implementing Airport Privatization and Public-Private Partnerships. Washington, DC: The National Academies Press. doi: 10.17226/26179.
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Suggested Citation:"Appendix E - P3 Readiness Assessment." National Academies of Sciences, Engineering, and Medicine. 2021. Evaluating and Implementing Airport Privatization and Public-Private Partnerships. Washington, DC: The National Academies Press. doi: 10.17226/26179.
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Suggested Citation:"Appendix E - P3 Readiness Assessment." National Academies of Sciences, Engineering, and Medicine. 2021. Evaluating and Implementing Airport Privatization and Public-Private Partnerships. Washington, DC: The National Academies Press. doi: 10.17226/26179.
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Suggested Citation:"Appendix E - P3 Readiness Assessment." National Academies of Sciences, Engineering, and Medicine. 2021. Evaluating and Implementing Airport Privatization and Public-Private Partnerships. Washington, DC: The National Academies Press. doi: 10.17226/26179.
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Suggested Citation:"Appendix E - P3 Readiness Assessment." National Academies of Sciences, Engineering, and Medicine. 2021. Evaluating and Implementing Airport Privatization and Public-Private Partnerships. Washington, DC: The National Academies Press. doi: 10.17226/26179.
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Suggested Citation:"Appendix E - P3 Readiness Assessment." National Academies of Sciences, Engineering, and Medicine. 2021. Evaluating and Implementing Airport Privatization and Public-Private Partnerships. Washington, DC: The National Academies Press. doi: 10.17226/26179.
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Suggested Citation:"Appendix E - P3 Readiness Assessment." National Academies of Sciences, Engineering, and Medicine. 2021. Evaluating and Implementing Airport Privatization and Public-Private Partnerships. Washington, DC: The National Academies Press. doi: 10.17226/26179.
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Suggested Citation:"Appendix E - P3 Readiness Assessment." National Academies of Sciences, Engineering, and Medicine. 2021. Evaluating and Implementing Airport Privatization and Public-Private Partnerships. Washington, DC: The National Academies Press. doi: 10.17226/26179.
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Suggested Citation:"Appendix E - P3 Readiness Assessment." National Academies of Sciences, Engineering, and Medicine. 2021. Evaluating and Implementing Airport Privatization and Public-Private Partnerships. Washington, DC: The National Academies Press. doi: 10.17226/26179.
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Suggested Citation:"Appendix E - P3 Readiness Assessment." National Academies of Sciences, Engineering, and Medicine. 2021. Evaluating and Implementing Airport Privatization and Public-Private Partnerships. Washington, DC: The National Academies Press. doi: 10.17226/26179.
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Suggested Citation:"Appendix E - P3 Readiness Assessment." National Academies of Sciences, Engineering, and Medicine. 2021. Evaluating and Implementing Airport Privatization and Public-Private Partnerships. Washington, DC: The National Academies Press. doi: 10.17226/26179.
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Suggested Citation:"Appendix E - P3 Readiness Assessment." National Academies of Sciences, Engineering, and Medicine. 2021. Evaluating and Implementing Airport Privatization and Public-Private Partnerships. Washington, DC: The National Academies Press. doi: 10.17226/26179.
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Suggested Citation:"Appendix E - P3 Readiness Assessment." National Academies of Sciences, Engineering, and Medicine. 2021. Evaluating and Implementing Airport Privatization and Public-Private Partnerships. Washington, DC: The National Academies Press. doi: 10.17226/26179.
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Suggested Citation:"Appendix E - P3 Readiness Assessment." National Academies of Sciences, Engineering, and Medicine. 2021. Evaluating and Implementing Airport Privatization and Public-Private Partnerships. Washington, DC: The National Academies Press. doi: 10.17226/26179.
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Suggested Citation:"Appendix E - P3 Readiness Assessment." National Academies of Sciences, Engineering, and Medicine. 2021. Evaluating and Implementing Airport Privatization and Public-Private Partnerships. Washington, DC: The National Academies Press. doi: 10.17226/26179.
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144 The P3 Readiness Assessment tool is designed to assist airport owners in assessing whether their organization is prepared to implement a P3 and whether the project under consideration is a strong candidate for a P3. The tool is an interactive, online companion to the guidebook that provides a user-friendly way for users to access the information and resources most perti- nent to their needs. After users answer questions in an exercise, there are six “Readiness Levels” that map answers to a level of readiness for each phase of alternative delivery implementation. Each readiness assessment will include external resources and references to sections of the guidebook (chapters, cases/vignettes) that fit the owner’s circumstances. This helps the user think through the different dimensions of project execution and the factors driving the air- port’s decision to use an alternative delivery method. Intended Assessment Audience The intended audience is the airport owner and the owner’s team considering alternative project delivery. Key stakeholders—including airlines, airport tenants, and airport executive committee members—who are interested in learning more about the procurement process may also benefit from completing the assessment. Disclaimer on Tool Purpose This tool is intended to provide airport owners with information about the P3 process; however, it does not serve as a replacement for staff or consultant expertise. Use of the tool will not validate the viability of a P3 project. Because P3s do not involve a prescriptive, formulaic process, each airport has unique considerations, which require the consultation of experts. That said, there are guiding best practices and key considerations for airport owners, toward which this assessment aims to direct airports. Topics Explored by the Tool Research for the guidebook uncovered five topic areas that comprise “readiness” for alter- native delivery implementation. Readiness is determined by a combination of their level of knowledge around P3s and on their airport’s operating environment (e.g., political, legal, geo- graphical, etc.), which is needed to successfully procure a project using alternative project delivery methods. Readiness is expressed on a scale ranging from “not ready” to “ready.” The five topic areas are as follows: A P P E N D I X E P3 Readiness Assessment

P3 Readiness Assessment 145 • Project and Owner Characteristics: Does the owner have clear goals and objectives for the project, an understanding of the project’s scope, and the involvement of key stakeholders? • Project Owner Resources: How do the owner’s capabilities such as experience with alterna- tive delivery, policies and procedures, and access to external advisors meet the anticipated rigorous nature of the alternative delivery planning, selection, and feasibility process? • Project Screening: How does the project scope align with the potential value a private devel- oper can bring to delivering the project? • Legal and Policy: What is the regulatory environment for the owner and what procurement processes and contract formats are allowable? • Risk: How does the owner intend to retain, transfer, or share in key risks, and what is the owner’s assessment of interface risk with key stakeholders? The P3 Readiness Assessment is designed to help an owner think through each of these dimensions. The user’s responses to each of these topic areas correspond with general infor- mation on preparing airport leadership to execute alternative project delivery. Based on responses to the assessment tool, users will be provided with a high-level evaluation of their readiness, along with references to the guidebook and external resources for recommended reading. P3 Readiness Assessment Questionnaire The tool is designed to assist airport owners in determining whether the project and operat- ing environment show “readiness” for alternative delivery implementation. Users will answer all questions in the exercise, with six possible Readiness Levels that reflect user answers about their level of readiness for alternative delivery implementation. The tool will encourage users to think through the different dimensions of project execution and the factors driving the airport’s decision to use an alternative delivery method. Figure E-1 shows, at a high level, the major categories of questions and how each set of questions leads to the next. The categories are organized by the topic areas that define “readiness” for P3 implementation. Figure E-1. Question categories and sequencing of question sets in the P3 Readiness Assessment. Project Owner Resources In -House Capabilities and Budget External Advisors Schedule (Needs, Anticipated) Project Owner Overview Overview Project Goals Stakeholder Identification Risk Overview of Risks Transferred Risks Shared/ Retained Risks Stakeholder and Political Risks Legal and Policy Enabling Legislation Procurement Regulations Project Screen Facility Type Funding and Financing Project EconomicsProject Status Procurement Methods Overview of Methods Project Delivery Goals Performance Goals

146 Evaluating and Implementing Airport Privatization and Public-Private Partnerships The subsequent questions fall under the categories shown in the graphic and are presented in the sequence to be used in the online version of the tool. Italicized text indicates the structure of the question or whether the response triggers a follow-up or specific Readiness Level report. An asterisk (*) indicates a required field. Project Owner Overview 1. Which best describes your role at the airport: (drop down) q Airport Leadership q Department Manager q Board Member q Consultant q Other 2. What is the project name? (Text Box) 3. What is the estimated project cost (capital and operating)? (Text Box) 4. What type of project is under consideration for alternative project delivery? (choose all that apply) * q New development If checked:Approximate percentage of the total project? q Reconstruction If checked:Approximate percentage of the total project? q Lease of new or existing asset If yes to "Lease": 5. Does the airport intend to apply for the Airport Investment Partnership Program? * m Yes m No If the user indicates "No," the summary report will include Readiness Level #6. 6. What is the status of the project (choose one)? * q Concept development q Preliminary planning q Design and engineering underway q Preliminary design and engineering complete 7. Will the required environmental approvals be completed in less than 3 years? * m Yes m No

P3 Readiness Assessment 147 If the user indicates "No," the summary report will include Readiness Level #3. 8. Indicate the status of the following activities: * Yet to Begin In Progress Completed N/A Environmental approval m m m m Financial planning m m m m Enabling projects m m m m Project Objectives and Project Delivery Goals 9. Has your airport determined the goals for the project, for instance the functional characteristics of the asset? * m Yes m Nom Unsure If the user indicates that they are unsure or do not have project objectives, the summary report will include Readiness Level #1. 10. Has your airport determined the goals for the project delivery, for instance the goals for the method of procurement and contract structure? * m Yes m Nom Unsure If the user indicates that they are unsure or do not have project delivery goals, the summary report will include Readiness Level #1. 11. Rank the following goal categories, where 1=Highest Priority and 5=Lowest Priority. Ranking Goal Category Schedule: The speed of procurement process and project execution Cost: The cost of the project Design: Performance-oriented goals as it relates to design elements of the project Functionality and Quality: Performance-oriented goals as it relates to the functionality and quality of the project Degree of Control: The degree to which the owner is willing to transfer or share control of project-specific decisions with a private developer 12. Evaluate the following Schedule Goals: Very Important Somewhat Important Not Important Unsure Minimize project time to completion m m m m Minimize procurement delivery time m m m m

148 Evaluating and Implementing Airport Privatization and Public-Private Partnerships Control project construction cost Reduce overall project lifecycle cost (including operations period) Achieve cost certainty (fixed price) Limit airport funding needed 14. Evaluate the following Design goals: Very Important Somewhat Important Not Important Unsure Match existing design guidelines Use the best technical concepts from multiple proposers Provide an innovative/aesthetically pleasing project Minimize community impacts 15. Evaluate the following Functionality and Quality goals: Very Important Somewhat Important Not Important Unsure Meet future capacity/mobility requirements Outstanding customer experience when completed Minimize inconvenience to the traveling public during construction Minimize inconvenience to airport operations 16. Evaluate the following Degree of Control goals: Very Important Somewhat Important Not Important Unsure Airport has ability to make final design decisions Airport retains ownership Airport limits risk exposure m m m m m m m m m m m m m m m m m m m m m m m m m m m m m m m m m m m m m m m m m m m m m m m m m m m m m m m m m m m m If the user indicates that they are unsure or do not have project delivery goals, the report should include Readiness Level #1. 13. Evaluate the following Cost goals: Very Important Somewhat Important Not Important Unsure

P3 Readiness Assessment 149 17. What is the anticipated level of involvement from stakeholders in the project procurement and execution? Very Involved Somewhat Involved Not Involved Airlines Airport's executive committee (internal decision-makers) Government oversight (FAA, local agencies) Union and Non-unionized Labor Minority, Women/Veteran-Owned and/or Disadvantaged Business Enterprise Other airport tenants Political stakeholders (e.g., city council, governing board) Public 18. What level of awareness does each stakeholder have about the project? Highly Aware Somewhat Aware Not Aware Unsure Airlines Airport's executive committee (internal decision-makers) Government oversight (FAA, local agencies) Union and Non-unionized Labor Minority, Women/Veteran- Owned and/or Disadvantaged Business Enterprise Other airport tenants Political stakeholders (e.g., city council, governing board) Public m m m m m m m m m m m m m m m m m m m m m m m m m m m m m m m m m m m m m m m m m m m m m m m m m m m m m m m m Stakeholder Identification

150 Evaluating and Implementing Airport Privatization and Public-Private Partnerships If the user indicates "Not Aware" for Airlines, Executive Committee, or Political Stakeholders, the summary report will include Readiness Level #2. 19. What level of alternative delivery understanding does each stakeholder have? (Multiple Choice for each: Does Not Understand Alternative Delivery, Some Understanding of Alternative Delivery, Understands Alternative Delivery Very Well) * High Level of Understanding Some Level of Understanding Limited or no Understanding Unsure Airlines Airport's executive committee (internal decision-makers) Government oversight (FAA, local agencies) Union and Non- unionized Labor Minority, Women/Veteran-Owned and/or Disadvantaged Business Enterprise Other airport tenants Political stakeholders (e.g., city council, governing board) Public m m m m m m m m m m m m m m m m m m m m m m m m m m m m m m m m If the user indicates "Does Not Understand Alternative Delivery" for Airlines, Executive Committee, or Political Stakeholders, the summary report will include Readiness Level #2. 20. Thinking about projects similar in scale that the airport has undertaken in the past, what level of stakeholder resistance has been encountered (choose one)? * q Little or no concern q Some concerns q Major concerns For an answer other than " Little or no concern," the summary report will include Readiness Level #2. Project Owner Resources 21. Has the airport established guidelines and regulations for P3 procurement? * m Yes m Nom Unknown

P3 Readiness Assessment 151 22. Has the airport convened an internal working group to manage the project across disciplines/divisions?* m Yes m Nom Unknown 23. Has the airport identified a project manager, staff, or consultants that can be dedicated to educating decision-makers? * m Yes m Nom Unknown 24. Has the airport identified a project manager or staff that can serve as a liaison to stakeholders for this project? * m Yes m Nom Unknown If the user indicates "No" or "Unknown" on the above four questions, the summary report will include Readiness Level #2. 25. Does the airport have a project manager or staff that can be dedicated to the procurement process? * m Yes m Nom Unknown If "Yes," 26. What percentage of time is allocated for this person to manage the project procurement phase (enter “0” if unsure)? * 27. Does this manager/staff team have the skills and knowledge on alternative delivery to execute the procurement? * m Yes m Nom Unsure If the user indicates "No" or "Unsure" to either of these sub-questions, the summary report will include Readiness Level #2. 28. Does the airport have a project manager or staff that can be dedicated to contract management, oversight, and performance due diligence post-contract award? * m Yes m Nom Unsure If "No," 29. Has the airport budgeted for this function? * m Yes m No If " Yes," 30. Does this manager/staff team have time to manage the contract and complete ongoing performance reporting? * m Yes m No

152 Evaluating and Implementing Airport Privatization and Public-Private Partnerships If the user indicates "No" to this question or any of the sub-questions related to #15, the summary report will include Readiness Level #2. 31. Does the project budget account for procurement and other transaction costs? * m Yes m Nom Unsure 32. Does the airport have staff (or access to consultants) with experience in alternative project delivery regarding the following (choose all that apply)? * q Financial expertise q Technical (design/engineering) expertise q Operations expertise q Legal/procurement expertise q Oversight/management expertise If the user checks any resources, the summary report will include Readiness Level #2. Project Screening Facility Elements 33. Identify the project elements that the private developer/contractor would be responsible for. * (choose all that apply) q Design q Construction q Financing q Operations q Maintenance If the user does not select Financing, Operations, or Maintenance, the summary report will include Readiness Level #1. 34. What is the overall complexity of the scope of work for the project? (choose one) * q Simple q Moderately complex, but airport has overseen projects with similar scope q Moderately complex, and airport has not completed a project like the one under consideration q Complex, but airport has overseen projects with similar scope q Complex, and airport has not completed a project like the one under consideration If the user indicates the first two options, the summary report will include Readiness Level #1. 35. Are the project's elements the kind of work that you would consider part of the airport's core competencies? * m Yes m No

P3 Readiness Assessment 153 If the user indicates "Yes," the summary report will include Readiness Level #1. If the user indicates "No," the summary report will include Readiness Level #5. 36. Does the project have technical issues or risks in which the airport has limited experience?* m Yes m No If "Yes," 37. Are the issues and risks present during the construction phase? * m Yes m No 38. Are the issues and risks present during the operation phase? * m Yes m No If the user indicates "Yes," the summary report will include Readiness Level #5. 39. Do you anticipate the airport developing/operating similar facilities within the next 10–20 years?* m Yes m No If the user indicates "Yes," the summary report will include Readiness Level #5. 40. Have the lifecycle (i.e., operating and maintenance) costs of the proposed project been determined? * m Yes m No 41. Would the airport consider private operations of the facility upon completion? * m Yes m No If the user indicates "Yes," the summary report will include Readiness Level #5. Funding and Financing 42. Is there an overall cost estimate for: (choose all that apply)* q The total construction cost for all project elements q The total operations costs for the project q The total maintenance costs for the project, include reconstruction and rehabilitation at the end of the concession lease term q The total overhead costs necessary to procure the project q The total overhead costs necessary to monitor the project during the design, construction, and/or operations and maintenance phases 43. Is project funding identified and is the funding enough to cover anticipated project costs? * m Yes m No

154 Evaluating and Implementing Airport Privatization and Public-Private Partnerships If " No," 44. Is obtaining funding/financing a key motivation to consider alternative project delivery? * m Yes m No If the user indicates "Yes," the summary report will include Readiness Level #3. If the user indicates "No," the summary report will include Readiness Level #6. If " Yes," 45. Is the airport considering alternative delivery to reach the project objectives and project delivery goals irrespective of the access to private finance? * m Yes m No If the user indicates "Yes," the summary report will include Readiness Level #6. 46. Will the project generate revenue that could be used to potentially fund any or all the project costs? * m Yes m Nom Unsure If the user indicates "No" or "Unsure," the summary report will include Readiness Level #3. 47. Has a private financier, developer, or operator already approached the airport with a demonstrated interest in the project? * m Yes m Nom Unknown If the user indicates "No" or "Unknown" to this question, the summary report will include Readiness Level #3. 48. Has the airport considered the project's impacts of airline operation rates and charges?* m Yes m Nom Unknown If the user indicates "No" or "Unknown" to this question, the summary report will include Readiness Level #3. 49. If airline rates and charges are impacted, have the airlines approved the project? The delivery mechanism? * m Yes m Nom Airline Approval Not Required m Unsure If the user indicates "No" or "Unsure" to this question, the summary report will include Readiness Level #3.

P3 Readiness Assessment 155 50. Does the project sponsor have legal authority to pursue delivery of the project using an alternative project delivery method? *m Yes m No m Unsure If the user indicates "No" or "Unsure," the summary report will include Readiness Level #4. 51. Will transparency laws (also known as "sunshine laws") make it challenging to maintain confidentiality in engaging potential private partners or protecting submitted proposals from Freedom of Information requests? * Yes No Unsure If "Yes," 52. Is the airport required to disclose proposers' applications? * m Yes m No Unsure 53. Can the airport take the revenue risk for the project (i.e., a position where the airport could have a return or loss on investment)? * m Yes m No Unsure If the user indicates "No," the summary report will include Readiness Level #4. Procurement Process and Contract Format Risk Allocation 54. Are there enabling projects necessary to start or complete the project? *m Yes m No If the user indicates "Yes," the summary report will include Readiness Level #3. 55. Has your airport conducted a risk analysis to consider which risks the airport intends to retain, transfer, or share with a private party? *m Yes m No If the user indicates "No," the summary report will include Readiness Level #3. 56. Identify the risks that the airport may consider to retain, transfer, or share from the list below: (Matrix with check-box options to transfer, retain, share, N/A; Question Optional) Retain Transfer to Developer Share with Developer Unsure Schedule Environmental approval m m m m Complete the project on schedule m m m m Obtain permits/approvals on time m m m m Legal and Policy

156 Evaluating and Implementing Airport Privatization and Public-Private Partnerships Enabling projects completed on time Cost Project must not exceed a specific amount Changes to scope in design and construction Financial Accessing funds for project development Responsibility if revenues are below expectations Implementation Quality control Design and construction Communication with traveling public (signage, community relations, public art) Compliance with local and federal regulations Functionality Disruption during construction to traveling public, airport tenants Coordination with TSA and security protocol Return area surrounding project to existing conditions Site Conditions Hazardous site where safety is a concern Treatment of hazardous materials Unforeseen conditions (environmental, geotechnical, archeological, etc.) Right of way acquisition Utilities (known, unknown, relocation, third-party agreements) Interfaces with other projects/assets m m m m m m m m m m m m m m m m m m m m m m m m m m m m m m m m m m m m m m m m m m m m m m m m m m m m m m m m m m m m m m m m m m m m m m m m

P3 Readiness Assessment 157 Operations Reporting on performance m m m m Maintenance expense m m m m Handback expense m m m m Traffic/demand risks m m m m If the user indicates "Transfer" or "Retain" to all options, the summary report will include Readiness Level #1. Stakeholder and Political Risks 57. Is the project likely to be controversial for any reason (for instance, environment, noise, traffic, functionality, cost)? * m Yes m No If "Yes," 58. Why? If the user indicates "Yes," the summary report will include Readiness Level #4. 59. Are additional approvals from regional public boards, commissions, or political appointees required (above or beyond typical contract award requirements)? * m Yes m No If the user indicates "Yes," the summary report will include Readiness Level #2. 60. How would you characterize the support of elected officials for the project (choose all that apply)? * q Supportive q Neutral or Mixed q Opposed q No Position Taken q Unsure If the user indicates "Opposed," "No Position Taken," or "Unsure," the summary report will include Readiness Level #2 and Readiness Level #4. 61. When thinking about the project (regardless of public or private delivery), what level of opposition is anticipated? * No Opposition Some Opposition Significant Opposition Unsure Airlines m m m m Public m m m m Government officials m m m m

158 Evaluating and Implementing Airport Privatization and Public-Private Partnerships Airport's executive committee (internal decision-makers) m m m m Airport tenants m m m m Airport staff m m m m If the user indicates "Some opposition" or "Significant opposition" for any sub-items, the summary report will include Readiness Level #4. 62. When thinking about a potential P3 delivery model, what level of opposition is anticipated (rank, no opposition, some opposition, significant opposition) for an alternative procurement method? * No Opposition Some Opposition Significant Opposition Unsure Airlines m m m m Public m m m m Airport's executive committee (internal decision-makers) m m m m Airport tenants m m m m Airport staff m m m m If the user indicates "Some opposition" or "Significant opposition" for any sub-items, the summary report will include Readiness Level #4.

P3 Readiness Assessment 159 P3 Readiness Assessment Tool Report Readiness Levels The italicized text following the assessment questions indicated which responses prompted different report Readiness Levels. It is possible to receive multiple Readiness Levels or just one Readiness Level, depending on the user’s answers. Each readiness assessment report will include external resources and references to sections of the guidebook (chapters, cases/vignettes). The following describes the six potential Readiness Levels: • Report Readiness Level 1: “Not Ready for P3.” If the owner indicates no project delivery goals or an uncertain understanding of project objectives, the report narrative would explain the importance of having agreement on those issues before proceeding with an alternative delivery. The narrative explains that while some uncertainty about project elements may be useful in incentivizing developers to pose innovative solutions, a general understanding of the project is necessary. • Report Readiness Level 2: “Getting Ready for P3: Building Capacity and Support.” If the owner indicates that there is a lack of stakeholder support or insufficient in-house capability, the report narrative would focus on building relationships and buy-in around the project concept and would suggest ways to best prepare for the complexity of a P3 procurement. • Report Readiness Level 3: “Getting Ready for P3: Assessing Project Feasibility.” If the owner indicates that there is insufficient/uncertain funding, the owner has not completed environmental processes (to a certain degree), or there is uncertainty in market conditions, the report narrative would explain the steps to determine financial feasibility and assess market appetite. • Report Readiness Level 4: “Getting Ready for P3: Understanding the Policy and Regula- tory Framework.” If the owner faces legal issues (no authority to use P3), the report would display a checklist to assess the policy and regulatory framework and point to relevant sections of the guidebook. • Report Readiness Level 5: “Ready for P3: Moving from Concept to Completion.” The report indicates that there is alignment between project goals and alternative delivery methods, reiterates what the owner understands about the project, suggests next steps beyond the high-level screening exercise, and considers an approximate timeline. • Report Readiness Level 6: “On the Path for Federal Aviation Administration Airport Investment Partnership Program (AIPP).” The report outlines the steps in the AIPP pro- gram and indicates external resources that would support an AIPP application. Example readiness reports follow. Please note that these example readiness reports include language directing readers to relevant guidebook chapters and case studies as well as external resources. For users of the online P3 Assessment tool, a listing of the relevant information will follow this language. Since the readiness reports shown here are for illustration only, the relevant resource information is not included. Readiness Level 1: “Not Ready for P3” A. Project Goals and Objectives The results of your assessment show that the airport has not reached a consensus or conclu- sion regarding the project’s delivery goals and implementation objectives. This indicates that your airport may not yet be ready for P3. Every project delivery method has pros and cons, and a clear understanding of the goals and objectives is necessary to determine if P3 could be the best solution for your project. Project delivery goals define the efficiencies that the airport owner intends to gain or risks the airport intends to transfer. Project delivery goals could mean that the owner wants to meet an accelerated procurement schedule, have certainty over the budget, meet labor goals, transfer certain risks, etc. Project objectives, on the other hand, describe the result or physical end Readiness Level, such as a new concession space within the terminal, meeting

160 Evaluating and Implementing Airport Privatization and Public-Private Partnerships technical standards, and operational performance requirements that must be achieved by the developer. An owner must then weigh the relationship between the project delivery goals and the project objectives to select a project delivery method most suitable to reach their overall goals. Internal and external stakeholder input is critical to this goal-setting process. Owners should determine delivery goals and project objectives before evaluation of project feasibility for alternative delivery. B. Transfer of Finance and/or Operations Risk Your answers indicate that the potential scope of work for the private sector would not include financing and/or operations and maintenance. These elements are key to unlocking the value a P3 can provide to the airport owner by incentivizing innovation in design and construction to maximize revenue and control costs over the full lifecycle of the asset being developed—even when those benefits are subject to the typically higher financing costs of private development. If the airport is retaining these responsibilities, a different delivery mechanism (such as design- build or design-build-finance) might be appropriate. Similarly, if a project is too proscribed and thus constrains innovation by the private developer, a more traditional delivery approach should be considered. C. Scope Elements for P3 Your responses indicate that the project is within your airport’s core competencies, which refers to the set of services that the airport owner identifies as within their mission. When proj- ects are outside the airport’s core competencies and the airport does not expect to undertake similar projects in the future, P3 could relieve the airport of the need to have in-house exper- tise for a one-off project. For instance, if an airport did not historically operate commercial services, as at Everett Paine Field, then there may be a benefit to engaging more private sector involvement on a project that focuses on commercial services. Similarly, if a project has technical complexities for delivery that an airport is unlikely to use again, such as at LaGuardia Airport, alternative concepts from private parties could improve the project design. If, on the other hand, the project is similar to others the airport undertakes, a P3 might limit the opportunity for air- port staff to gain/expand expertise. Your results indicate that your airport may not be ready for P3 and needs to explore how alternative project delivery may serve your project and airport’s needs. The following links will help get you started. Readiness Level 2: “Getting Ready for P3: Building Capacity and Support” A. Stakeholder Awareness and Education Your assessment results indicate that stakeholders—those deciding to undertake the project and those impacted by the project—may have insufficient awareness of the project. Given the role that most airports play in their regional economies, there is typically heightened attention and interest in development projects occurring at airports. There is also a wider range of stake- holders impacted by large-scale projects occurring at airports, such as airlines, the traveling public, labor interests, other business community members, and the general public. Negative perceptions of the project may pose challenges to airport owners, particularly if those negative perceptions influence decision-makers that have “veto” power over the project. Educating stake- holders on the purpose and value of the project, as well as soliciting their feedback on the goals of the project, is a critical part of securing the buy-in needed to execute the project. Your answers also indicate that there may be a lack of awareness and/or understanding of alternative delivery methods, ranging from design-build to privatization. Stakeholders that do not understand the benefits and drawbacks of alternative delivery methods are not well-informed

P3 Readiness Assessment 161 enough to make decisions related to the project. Many people make assumptions that might not be accurate about P3s and will benefit from education about alternative delivery. Airport owners should engage with their stakeholders and convey the knowledge necessary to understand the tradeoffs between delivery methods. B. Institutional Readiness Your answers show that your airport lacks dedicated staff with sufficient budget and time to manage a complex feasibility and procurement process, as well as the contract management and oversight that comes with an alternative project delivery method—all while still conducting their regular day-to-day duties. P3 transactions can be complex and require more management than traditional procurements. The airport’s goals for the project and its delivery method must align with the private sector’s appetite to take on the risks being transferred. This requires sub- stantial outreach to the private sector to refine the procurement, construction, and operational requirements to ensure a competitive result. This in turn drives the budget and schedule certainty that may be produced by alternative project delivery methods. Furthermore, the owner must anticipate financial, legal, and technical contingencies that are unique to P3 procurement. As a result, P3 projects tend to have higher transactional costs than traditional delivery. The highlighted chapters (below) provide information on building internal capacity to support a complex project development process (including consultants). In addition to securing the resources necessary to support a complex transaction, your air- port should also consider effective practices to manage an interdisciplinary process. The case studies, indicated below, illustrate ways that other airports organized their team internally to ensure communication with the business community. C. Political Risk While it is important for an airport owner to consider the needs of its stakeholders and how the project impacts the public, the owner must also consider the political risks that come with a complex project. Alternative project delivery may necessitate additional approvals from an owner’s governing entity (i.e., city council, county board, mayor, and so forth). The process to secure those approvals usually requires the airport owner to go through a deliberative process necessary to educate those with the authority to cancel the procurement or stop contract award. During the feasibility phase of project development, an owner can assess the level of support from elected or appointed officials as well as consider the overall political environment. If an election is upcoming, the political dynamic can change (or the project itself could become an election issue, as happened in Westchester County). The case studies highlighted below show how airports engaged with their political stakeholders to reduce risk and address concerns well before contract award. Readiness Level 3: “Getting Ready for P3: Assessing Project Feasibility” A. Financial Feasibility After establishing the foundation of a P3 through policy and building organizational capacity to deliver a P3, project owners are ready to consider which projects may be feasibly delivered through a P3 or other alternative means. Airport owners that assess project feasibility are evalu- ating: “Is the project a good fit for P3 delivery? And, does delivery of the project as a P3 repre- sent a value proposition for the traveling public?” Your answers indicate that the airport has not determined its plan to fund and finance the project. Your answers also indicate that the airport has not fully considered the ways the project may impact airline rates and charges and other revenue streams that could attract private investment and allow the public entity to shift financial resources to other projects. To assess financial feasibility, a project owner typically takes

162 Evaluating and Implementing Airport Privatization and Public-Private Partnerships three steps: (1) screens projects for suitability, (2) assesses delivery options, and (3) considers the financial viability for possible P3 projects. The chapters highlighted below provide further information. B. Status of Environmental Processes Your responses indicate that required environmental processes are not fully complete. Because project delays are extremely costly to proponents that must deploy staff and financial resources to compete for the project, this is an important risk factor for procurement. Delays in achieving the environmental review or permits may impact the overall procurement and project delivery schedules. While some P3 procurements, such as the Los Angeles International Airport automated people mover, have proceeded concurrently with environmental approvals, doing so adds risk of delay to the project that could reduce proponents’ interest in the project or, in a case where a P3 suffers from delay, impact confidence in your organization to utilize alternative delivery in the future. C. Market Interest in the Project Your answers show that the airport has not considered whether there are a sufficient number of qualified bidders (contractors and/or developers) interested in the project. When evaluating delivery options, an airport may conduct progressively rigorous financial and technical studies to determine the best way to deliver a project. Once a project is selected, the project owner then looks at how best to structure and procure a potential P3 project and provide an opportunity to communicate with stakeholders. During this phase, an airport assesses the market’s interest in the project by showing some initial information on the potential contract structure, regulatory framework, and feasibility. Key factors to attracting market interest include a clearly commu- nicated process for engaging with the business community, demonstration of public support or political support for the project, and sufficient technical specifications that indicate that the project is financially feasible. The chapters referenced below provide further information. D. Risk Assessment Your answers indicate that your airport has not conducted a risk assessment for the project. This activity can occur during different phases of project development. For the sake of this readiness assessment and its focus on evaluating an airport’s readiness for P3, we have focused on a risk assessment that occurs during the project feasibility phase. Efficient risk management can transfer the cost of risks transferred to the private party and the airport, reducing overall cost and generating “value for money” (discussed further in the guidebook). Identification of key risks begins with the recognition of threats and opportunities (usually displayed in a register or matrix) and then evaluating the airport’s ability to transfer that risk or if there is a need to retain the risk. The level of risk transfer suitable to the project and the airport’s risk tolerance should align with the level of risk transfer that an alternative delivery method would provide. For instance, if an airport decides to retain operational services for the asset for political and economic reasons, then the alternative project delivery method most suitable to the project would not transfer operations and maintenance to a private party, and design-build or design- build-finance would be the best model to use for the project. Readiness Level 4: “Getting Ready for P3: Understanding the Policy and Regulatory Framework” A. Legal Authority for Alternative Project Delivery Your answers indicate that it is uncertain whether your airport has the legal authority neces- sary to execute an alternative project delivery process. Enabling statutes create the framework

P3 Readiness Assessment 163 within which airports protect public interests through the establishment of procurement prac- tices, approval processes, and contract conditions. P3-enabling legislation varies widely among states, but the basic goal is the same: to allow public entities to take advantage of the benefits of P3 project delivery while protecting the public interest. Since the late 1980s, enabling legislation has been passed by several states that allows state DOTs to use the project delivery method. As of June 2019, 37 states, the District of Columbia, and Puerto Rico have enacted legislation enabling P3s for transportation projects. Enabling legislation is important because it establishes the legal grounds on which P3 con- tracts can be formed and enforced. The legislation typically includes provisions that specify which entities have authority to use P3 and which models and processes are approved for use (such as project type, sector type, and/or delivery model), as well as the geographic location where P3 projects may be located. The chapter referenced below contains a checklist that may assist you in determining whether your airport has sufficient legal authority and what to do if that authority is not clear. It is important to note that even if an enabling statute is not in place, so long as a P3 is not expressly prohibited by applicable law, it could proceed. However, airport and municipal legal advisors will have to determine if and how a P3 procurement and award could be permitted. Readiness Level 5: “Ready for P3: Moving from Concept to Completion” A. Project and Institutional Readiness for P3 Your answers indicate that your airport has considered, at a high level, the project and insti- tutional readiness required to execute your project using alternative project delivery methods. At this point, your airport may have already completed the feasibility studies and amassed the internal resources necessary to move forward with a selected project delivery method. At the outset of the procurement, an airport owner must consider their approach to a fair and com- petitive procurement environment. Procurement policy, procedure, and goals are established during the planning and program development phase and are shaped by enabling legislation. The airport owner will continue to reiterate these items throughout all stages of procurement. Consequently, your airport should consider the overall procurement structure (one-step versus two-step procurement), incentives and disincentives, schedule and practice for communicating with the business community, and the term and payment mechanism required for the project. Some owners create a conceptual agreement structure, which communicates the characteristics of the project, goals, and capabilities of the project owner; desired capabilities of private part- ners; and incentives used to drive performance. In addition, an owner may draft procurement documents that communicate the allocation of risks and responsibilities, financial consider- ations like the payment mechanism and term, and performance standards and management processes. Project owners should also consider how to ensure a transparent procurement process. This is a key element of a successful procurement process. It is recommended to fully disclose the following: • Stipends awarded to shortlisted proposers • Current and proposed contract standards • Rates and charges policy • Use of rates and charges revenue for other investments • Non-compete clauses or other limitations in making transportation improvements • Transaction costs incurred by the public sector

164 Evaluating and Implementing Airport Privatization and Public-Private Partnerships Some agencies establish policies and procedures to ensure transparency is built into the procurement process. The following recommended case studies, vignettes, and guidebook chapters will help your airport move into the procurement and implementation process. B. Project Oversight A P3 does not end with the cutting of the ribbon on a new facility. It is typically a long-term relationship that includes operation of the facility, maintenance, modernization, and handback requirements. Considering how the airport sponsor will oversee these aspects and measure the performance of the private operator is a key part of the process. Particularly as the individuals (and even the organizations in the event of a sale of the concession) are likely to change over time, codifying the responsibilities of the airport and the concessionaire and having a clear process to resolve disputes is essential for success. Readiness Level 6: “On the Path for Federal Aviation Administration Airport Investment Partnership Program (AIPP)” A. Applying to the FAA’s AIPP Your answers indicate your airport’s interest in the FAA AIPP. An airport owner that intends to participate in the AIPP must first receive FAA approval through an application process. Once the FAA approves the preliminary application, the owner can negotiate a use agreement with airlines (65% of which must approve the transaction), select a private operator to manage the airport, negotiate an agreement with the private operator, and prepare a final application for submittal to the FAA. The resources listed below will help your airport with the AIPP process. The guidebook will help your airport prepare for the application process. The AIPP applica- tion must contain summary narratives describing the project, a description of the process used to select a private operator, and a schedule for project completion. The application must also contain the airport’s financial statements and a copy of the request for qualifications/proposals that the airport intends to use. The information collected during this assessment may prove useful when assembling the information required for the application. A PDF of your input is included below. After securing a spot in the program, the airport then selects an operator, negotiates an agreement, and submits a final application to the FAA. The FAA then conducts a 60-day public review and comment period, and the Department of Transportation, FAA, and TSA may con- duct a public meeting in the community to solicit public comment. Finally, the FAA completes its review and publishes the agency decision. If the application is approved, the FAA monitors the legal settlement and transfer of the airport from public owner to private operator.

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A public-private partnership (P3) can be a dynamic tool to help infrastructure owners achieve a range of objectives on projects, such as incorporating lifecycle project costs into decision-making, benefiting from innovation in design and construction techniques, or sharing certain performance risks.

The TRB Airport Cooperative Research Program's ACRP Research Report 227: Evaluating and Implementing Airport Privatization and Public-Private Partnerships expands upon research presented in ACRP Report 66: Considering and Evaluating Airport Privatization.

Supplemental materials to the report include a Comparative Deal Matrix database, a website for the P3 Readiness Assessment, and a presentation that communicates research findings to key technical and non-technical industry stakeholders.

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