Surety will play a key role in rebuilding critical U.S. infrastructure
October 31, 2017
Public-Private Partnerships (P3s) can be a major part of the solution as the nation faces a great challenge.
The headlines surrounding America’s aging and deteriorating infrastructure can be dismaying, both in terms of the scope of the problem and the price tag. With estimates of maintenance and replacement costs running well into the trillions, and governments at all levels grappling with budget crises, it’s easy to get discouraged. The D+ grade our infrastructure received from the American Society of Civil Engineers doesn’t paint a rosy picture either.
As the introduction to Zurich’s infrastructure web page points out, the crisis hits the very foundation of our economy and quality of life. The weakened physical state of bridges, dams, roads, airports, rails, pipelines and other vital infrastructure components poses serious risks of property damage and business disruptions if supply chains and overall operations are impacted by their failure.
In an article I wrote for Construction Executive Risk Management, I addressed the promise and challenges of Public-Private Partnerships (P3s) as one viable solution to rebuilding infrastructure. The article also focuses on how surety bonds can play a key role in creating favorable conditions for significant P3 investment.
Surety can help protect investment dollars (private or tax-funded) in case of default by the contractor and provides economic security for local subcontractors and suppliers who are often small business owners. In the bigger picture, it can also help protect the reputations of project backers, government officials and other stakeholders involved, as delays, cost overruns and other problems can generate plenty of public criticism. You can’t underestimate how the political climate – including debates surrounding local, state and federal budget woes – impacts infrastructure investment planning.
The U.S. is starting to see more P3 success stories and we’re proud to say Zurich has been involved in many of them, applying our Surety team’s experience and understanding of the complexities of the process. As Zurich’s Paul Horgan noted in an interview with LEADERS magazine, government agencies that have had P3 experience are highly likely to consider it again for new project proposals.
A strong surety works to address the varied concerns and benefits all the stakeholders in the P3 project – not just the government agencies and private companies directly involved, but the public investing in and utilizing the completed work. This mutual benefit is especially important when the project is vital infrastructure. The Port Miami Tunnel, the new LBJ Express corridor, the Long Beach Civic Center and the Rapid Bridge Replacement Project in Pennsylvania are just a few of the major projects that point to the potential of P3s turning into positive action.
P3 projects are not the only option for tackling our failing infrastructure, but with proper management and execution, the expansion of P3s can be a big step in improving upon that D+ grade in this very important test for us as a nation.
Read more about Why Surety Gets the Job Done for P3 Projects.