The Impact of P3s on US Building and Infrastructure Projects

Skanska’s Michael C. Brown talked to Commercial Property Executive about the current status of Florida’s construction sector and the significance of public-private partnerships.
Michael Brown, EVP & general manager
Michael C. Brown, EVP & general manager

As the U.S. is increasingly turning to public-private partnerships (P3s) to advance infrastructure projects, Skanska is emerging as an important player in this arena. P3s allow private companies to work with local governments and complete projects in a quicker and less expensive way, according to the Trump administration.

Michael C. Brown, executive vice president & general manager for Skanska’s Florida operations, spoke to Commercial Property Executive about the Sunshine State’s construction sector and what to expect going forward. Furthermore, Brown talked about the firm’s current P3 projects across the U.S.

What is the current status of Florida’s construction sector compared to recent years?

Brown: Florida’s construction sector has been extremely active in recent years as demand for commercial development, public sector projects and infrastructure upgrades rises. The demand for skilled labor from across the state puts upward pressure on subcontractor pricing.

Overall, Florida added 43,900 construction jobs over the past 12 months, according to data from the Associated General Contractors of America. Many skilled employees are in search of careers that open the door to a diverse set of projects over the long-term—as opposed to a short-term position on a single project. This gives firms like Skanska a built-in advantage. We identify talent by investing time in building relationships in our communities and making inroads with local schools and training programs, including through our internship program, which is key to closing the skilled labor gap.

What type of projects and developments are in high demand in the Sunshine State?

Brown: Health care and higher education continue to be the largest sectors on the commercial side, with the highest demand for expansion work and new construction. These sectors also have a positive impact on our communities statewide.

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Public assembly projects, such as parks and museums, have a profound impact on the cities that we live and work in, which is why Skanska focuses on building projects that enhance the communities they are in, whether it’s leading the renovation and expansion of Julian B. Lane Riverfront Park in Tampa or the major renovation at Salah Foundation Children’s Hospital in Fort Lauderdale. Skanska recently delivered the Phillip and Patricia Frost Museum of Science in downtown Miami’s Museum Park and is currently building the St. Petersburg Municipal Pier project in St. Petersburg.

What are some of the factors affecting development activity?

Brown: Office, multifamily and mixed-use development have been the most active and robust real estate markets from a development standpoint. Since these kinds of projects tend to be more sensitive to the economic and real estate cycles, we need to watch them carefully as we look ahead at the next two to three years.

There has been an increased interest in public-private partnerships or P3s. What are the factors fueling this trend and how will these partnerships shape construction activity in 2018?

Brown: There is a significant need for infrastructure improvements, but little appetite for taxpayer-backed funding, which is making public-private partnerships—or P3s—a more attractive option. Our nation’s infrastructure is in poor shape, so the government is seeking alternative ways to deliver needed upgrades in a more efficient manner.

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Traditionally in the U.S., P3s have primarily been used to build infrastructure projects such as roadways, bridges and tunnels. Now, we are starting to see an expansion and greater focus in exploring social infrastructure projects, including airports, courthouses and hospitals. Skanska is one of the few firms in the U.S. that has extensive knowledge and expertise participating in P3s.

Can you tell us about some of Skanska’s major P3 projects across the U.S.?

Brown: Skanska is currently building the I-4 Ultimate Improvement Project, which is a $2.3 billion public-private partnership for the reconstruction of 21 miles of Interstate 4 in Central Florida. As part of the redevelopment of LaGuardia Airport, Skanska is leading the design and construction of the LaGuardia Central project, a public-private partnership between LaGuardia Gateway Partners and the Port Authority of New York and New Jersey. Another major project is the Elizabeth River Tunnels (formerly Midtown Tunnel) development in Portsmouth and Norfolk, Va. (a Skanska, Kiewit Construction and Weeks Marine Inc. joint venture).

Image courtesy of Skanska