The Right and Wrong People at the P3 Housing Table
Imagine yourself embarking on a cruise. As you board the ship, you meet the captain. Shortly after, you meet the cruise director, who is in charge of your experience on the ship. The cruise director is the person you are interacting with regarding entertainment. The captain makes announcements and joins you at a formal dinner. The cruise director radiates charisma, while the captain exudes silent dignity. There’s a reason why both of these jobs exist, and you don’t assume the skill sets are interchangeable. It seems intuitive, but what does this have to do with the risk of higher education?
Public-Private Partnerships: Opportunities and Risks
Institutions are increasingly relying on Public-Private Partnerships (P3s) to build out their student housing portfolios. The private partner typically assumes responsibility for the upfront capital costs and long-term maintenance expenses. This financing model shifts millions of dollars in financial exposure away from the university’s balance sheet, but it does not come without risk. P3 agreements require university personnel with a solid understanding of financial modeling, contract law, operational oversight, and risk management. One risk that can be overlooked is ensuring that the right personnel are included in critical decision-making and financial reporting. Without this knowledge, your institution could be steered by cruise directors into a financial risk iceberg.
Why Use a P3?
A P3 is a rational outcome from a student housing make-or-buy analysis. Universities typically lack the in-house expertise to construct a large new student housing facility. Between permitting, following modern design requirements, and managing construction companies, it is a complex and time-consuming process. Furthermore, operational management and maintenance become the private partner’s responsibility. To achieve a successful P3 partnership, institutiona