How and when do P3s depart most substantially from traditional project delivery practices?
P3s depart most substantially from conventionally developed projects when they are financed with private market debt or equity that is to be repaid from project-derived direct user charges (tolls and prices) – on a limited-recourse basis. To obtain favorable financial terms, these projects must meet certain lender requirements that support secure payment and value. In such cases, guaranteed capital and operating costs, minimal and fixed completion schedules, efficient technology, and assured utilization levels are required to meet commercial lender requirements at an attractive interest rate. The required level of project performance is usually higher than traditional roads constructed solely with public funds. Toll roads typically use P3s to shift a substantial portion of the risk of meeting these requirements directly to the private sector entity performing the activities and do so in arrangements most able to reduce the risk of non-performance. Such projects are usually procured on
