A P3 construction project director delivers a design-build contract that has been flowed down from a concession agreement, which means the schedule carries lender deadlines, delay damages and a longstop date that can trigger default. Hire someone who has run a job where the monthly report went to an independent engineer before it went to the owner. A strong design-build director without that experience learns it on your concession.
On a public-private partnership the first person who reads the monthly report is not the owner. It is the lender’s independent engineer, and they are reading it to decide whether the project company can draw next month’s money, which is the first thing a P3 construction project director has to understand about the seat.
A project director who does not know that reads the same report as a delivery document. The financing agreement reads it as a covenant.
What does a P3 construction project director own?
The design-build contract inside the concession. A P3 construction project director owns delivery against the design-build agreement flowed down from the concession, including the schedule the lenders financed, the substantial completion date that starts the availability payments, and the interface with the operations and maintenance partner who inherits the asset.
Set that beside a conventional design-build seat and the difference is who is holding the clock.
On a state DOT design-build highway job in Texas the owner is the department. A late finish costs liquidated damages and a difficult conversation. On a P3 delivered under the same department’s alternative delivery program, the owner has stepped back to a concession agreement with a project company, the project company has borrowed against the future availability payments or tolls, and the design-build contractor has taken the delivery risk on a fixed price and a fixed date. The FHWA P3 program sets out the structure; the contractor’s project director lives inside it.
Four things sit on the seat that a conventional design-build director never carries.
- The lender’s schedule. The financing was sized on a substantial completion date, and every month of delay is a month the availability payment does not arrive to service the debt. The project director’s schedule is a covenant, and the independent engineer reviews it as one.
- The draw. Construction is funded in tranches against certified progress. The project director produces the monthly report the independent engineer certifies, and a held draw stops the job’s cash the way a rejected pay application never quite does.
- The longstop date. Concession agreements carry a date beyond which the authority or the lenders can call default. A design-build director has never worked to a date on which the entire deal can unwind.
- The handback interface. The operations and maintenance partner takes the asset for twenty-five or thirty years, and the concession specifies the condition. The project director is delivering to a maintenance standard as much as to a design, and the FHWA P3 toolkit documents how those requirements flow down.
The last of those is the one most candidates have never seen, and it is the first one the operations partner will test.
Why does a design-build project director struggle on a P3?
Because a good design-build director is calibrated to an owner who can be persuaded, and a P3 has replaced the owner with a document. A P3 construction project director who asks for a time extension finds the department has stepped back, the project company cannot afford it, and the lenders were never asked.
The failure has a shape, and it is visible in the first six months.
| The design-build habit | What the P3 seat needs instead |
|---|---|
| Negotiate a time extension with the owner | Manage the schedule to a date the financing cannot move |
| Treat the monthly report as a progress update | Treat it as the draw certificate the independent engineer signs |
| Recover float by resequencing with the owner’s consent | Recover float inside a design-build agreement with no owner in the room |
| Price a change against the owner’s contingency | Price a change knowing the project company’s contingency is the lenders’ |
| Close out to the owner’s acceptance | Close out to a handback standard the operator will hold for thirty years |
| Report to one client | Report to a joint venture board, a project company and an independent engineer |
None of those habits is wrong on conventional work. On a concession they are the reason a strong director is surprised in month four, when a request for a time extension that any DOT would have granted comes back from the project company as a notice of potential delay damages.
The Federal Highway Administration innovative program delivery office publishes the structures that produce that surprise, and the BLS construction manager profile treats the seat as the same occupation as every other. The market does not, and the people who have done it are few enough to be known by name.
Which is why the cost of a missed date is worth putting on the table before the search starts.
What does a missed substantial completion date cost on a P3?
Three ways at once. On an availability-payment concession paying $40 million a year, the project company forgoes about $110,000 for every day the road opens late, the design-build contractor pays delay damages set at perhaps $75,000 a day, and the equity sponsors carry a return shortfall of about $25,000 a day.
Set the three daily figures beside each other and the seat’s job is clear.
The illustrative figures are a single concession, and the delay damages are the smallest of the three. That ordering is the point. On conventional work the liquidated damages are the whole cost of being late. On a P3 they are the contractor’s share of a loss that the project company and its lenders feel first, which is why the pressure on the project director arrives from three directions and why the independent engineer reads the schedule every month rather than at the end.
The 23 CFR Part 635 framework still governs the federal-aid portion of most of these jobs, and the Department of Labor prevailing wage determinations still apply to the craft on the grade. The Census Bureau spending series shows highway and transit volume that the FHWA value capture and P3 programs are increasingly financing, which means the number of contractors that will need this seat is growing faster than the number of people who have held it.
The GAO has reviewed federal P3 practice more than once, and the recurring finding is that the risk transfer to the private side is real. The contractor’s project director is where it lands.
Where do P3 project directors come from?
From the last three concessions in the country, and from the design-build joint ventures that delivered them. The pool of proven P3 construction project director candidates in the United States is small enough that the ENR contractors who have delivered availability-payment highway, transit and social infrastructure concessions know each other’s people by name.
The pool is thin for a structural reason: the country has delivered a few dozen concessions of this type, each with one project director.
Three sources exist, and the brief should say which the firm will accept.
The first is a director who ran a previous concession for a competitor or for a joint venture partner. Complete profile, known to the lenders’ advisers, and almost certainly running a live concession in Atlanta, Charlotte or Dallas right now for a firm that will notice. That is the search that cannot be posted.
The second is a design-build director who sat one level down on a concession, as deputy or as the design-build contract’s construction manager, and has watched the draw be held once. Less complete, cheaper, and the more realistic target for a contractor delivering its first P3.
The third is a director from outside the United States, where availability-payment concessions have been standard for longer. The OEWS tables price the domestic pool; the international one is priced differently and the relocation is its own project, but for a contractor pursuing a large concession it is often where the proven experience actually is.
Whichever source, the firm is approaching a person whose current employer is a competitor on the next pursuit.
Can a P3 construction project director search be posted?
Almost never. A posting tells every competing consortium on the next procurement that the firm’s delivery leadership is in transition, tells the lenders’ advisers on the live concession the same thing, and tells the independent engineer to read next month’s report more carefully. The pool is small enough that the posting itself is the leak.
Selah Talent Partners runs these as confidential executive search for mandates that cannot be publicly posted, which is a different process from a discreet version of a posted search. The mechanics are set out in how a confidential construction search runs, the joint venture side of the seat in joint venture construction leadership, and the confidential search process is built for a market where the candidates are the competition’s current directors.
Selah works with contractors and construction consultancies across the United States on preconstruction and estimating, project and construction management, and cost and commercial management, in commercial building and heavy civil. Candidates are never charged a fee at any stage.
The search is not the right tool for a contractor whose P3 exposure is a subcontract to a consortium. There, the seat is a strong design-build project manager who understands the flow-down, and the consortium’s own director carries the lender interface. The confidential search earns its cost when the firm is the design-build lead or a joint venture partner on the concession itself, holding the delivery risk the CFMA benchmarks show as the largest single variable in a heavy civil contractor’s year, and pricing it with the AGC and OSHA construction frameworks that still govern the grade underneath the financing.
Hire the one who has had a draw held
The instinct on this hire is to find the best design-build director in the market and brief them on the concession.
The seat wants someone who has produced a monthly report knowing the independent engineer would read it for the lender, who has explained to a joint venture board why the schedule was a covenant rather than a plan, and who has had a draw held once and never let it happen again. People who have done that describe the financing agreement. People who have not describe the highway.
Ask every candidate what the longstop date was on their last concession, and how close they came to it.
If you are scoping this seat and want to compare notes on the brief, get in touch.
Sources and further reading
- FHWA P3 program public-private partnership resources
- FHWA P3 toolkit guidance and model documents
- FHWA alternative delivery project delivery methods
- FHWA value capture and project finance resources
- Federal Highway Administration innovative program delivery
- 23 CFR Part 635 construction on federal-aid projects
- Department of Labor prevailing wage on government construction contracts
- GAO reviews of federal public-private partnership practice
- Census Bureau construction spending
- BLS construction manager occupational profile
- BLS OEWS construction manager wage tables
- ENR top 400 contractor rankings
- CFMA construction financial benchmarks
- AGC industry guidance
- OSHA construction standards