The non-partisan Legislative Analyst’s Office (LAO) of California evaluated the increased costs as a result of electing to use public-private partnerships to deliver two different projects in the state: the Long Beach Court House and the Presidio Parkway in San Francisco. The report concludes that neither of these projects were suitable for P3 delivery and that the rationales used to reach that decision were not accurate and conflicted with established best-practices regarding P3 projects.
Overall they found that the analysis done to compare project costs under different procurement options were based on several assumptions that are subject to significant uncertainty (and interpretation) which favored the selection of P3. In both of these cases the LAO determined that the projects could have been delivered at a lower cost through traditional procurement. The LAO went on to offer concrete recommendations for how to refine the P3 process, including the use of realistic value for money and cost analysis and better project selection.
The report focuses on the susceptibility of the cost analyses to manipulation which is an important aspect in P3 delivery, as it is usually lower cost and financial risk that are prime motivators in choosing P3 delivery. Especially when a private consulting firm is hired to perform the cost analysis and promised benefits of P3 procurement compared to traditional design-bid-build.