by Scott M. Helfrich
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public-private partnership, as the name illustrates, is exactly that, a partnership. In many cases these partnerships will involve a variety of participants, including the college or university, a property owner (or owners), and a manager or operator. While the relationships and legally binding agreements that define them may be complicated, the goals of the P3 should be relatively straightforward and transparent. Everyone should understand what they bring to the table and, in the end, how they expect to benefit. Still, for all the crossed T’s and dotted I’s of the agreement, there likely will come a time when one partner will have to remind another about the letter of the agreement. In order for everyone to meet their goals, accountability should be expected and fostered by all partners involved.
At its best, accountability is more involved than simply following a contract. Criticism from one side or the other (whether it is deserved or not) can foster a culture of mistrust. In turn, there are times when differences in operational culture, lack of communication, and unrealistic expectations from both a host institution and private partner can equally contribute to discord, brinkmanship, and, ultimately, poor service to students. To avoid relatively small issues from blossoming into full-fledged disagreements, both sides need to be accountable for their actions and willing to communicate concerns with their partners.
Public-private partnerships are elaborate legal arrangements filled with more than their share of issues that could arise and easily cause conflict that results in one partner questioning the other. These issues are not solely one-sided, as the host institution and private partner can both experience accountability issues from their respective partner in the P3 relationship. For example, a private partner that is also responsible for property management could be responsible for issues with maintenance response times, angering the residents and thereby raising concerns with university officials. Likewise, a host institution, as part of their routine interactions with residents such as independently mediating disputes and granting various exceptions, may opt to permit students to back out of their leases.
Obviously, a wide variety of issues can occur between different P3s and their host college or university. However, there are common themes in the types of conflicts that tend to arise. One of those is the issues that occur during development and construction of the facility. Timelines and deliverables are crucial, and issues of conflict and of accountability can arise. Everyone wants a project to be on time and on budget, but that does not always occur. Development companies will display ultimate accountability by walking away from institutions even before a project is approved because it may appear that the university is not fully committed to a project or university executives are fishing for alternative development plans while intending to use another development company or construct the project themselves. Once the building is complete, facilities and maintenance can become an area of dispute. Response times and expenditures on routine maintenance and annual capital project completion will always cause frustration, particularly because some things are out of everyone’s control. Random pipe breaks and other unforeseen maintenance issues, sub-par contractors, and lagged delivery times for inventory can easily pit one partner against the other if communication and accountability are not made routine in the day-to-day operations of the P3 partnership.
Everyone wants happy and satisfied students, but partners that do not strategically plan for student life engagement and satisfaction initiatives will eventually be at odds with one another when complaints or conduct issues arise.
Financial disagreements over revenue and expenses are also commonplace. Maximizing revenues and mitigating expenses is good business. However, not everyone is always on the same page as to how that needs to be accomplished. Heads-in-beds and providing a safe and comfortable housing experience is generally the overall goal, yet conflicts can arise between partners about how to accomplish those goals. Closely tied to finances are issues related to occupancy management. This is always a source of contention, particularly depending upon the market a property is located in, the status of enrollment and retention at the host institution, and the institution’s residency requirements, if any. Strong occupancy results in payments for the project’s debt service, as well as its operational and capital costs. If a partner is not holding up their end of the bargain and this results in lower occupancy, there are clear ramifications for not being able to make debt payments or maintain adequate staffing levels.
Finally, there are issues related to residence life initiatives. Unlike financial metrics that are cut-and-dried, student learning outcomes can be nebulous and not easily (or consistently) assessed. Achieving a required 95% occupancy and meeting budget goals is very clear-cut, whereas developing and assessing student integrity or self-efficacy is not. Everyone wants happy and satisfied students, but partners that do not strategically plan for student life engagement and satisfaction initiatives will eventually be at odds with one another when complaints or conduct issues arise.
Despite the various relational problems that can occur between P3 partners, various strategies and tactics can be employed to hold one another accountable in order to meet the mutually agreed-upon goals of the project. While this list is certainly not exhaustive, it will provide a strong set of recommendations for how to hold a P3 partner accountable.
A valuable first step is to understand the key assumptions, key performance indicators (KPIs), and metrics of an agreement. A firm basis upon which the relationship starts is key to success and to holding each other accountable. All partners involved in a P3 relationship must fully understand and adhere to key assumptions and work toward common goals throughout the course of the relationship. If partners are working at odds with each other toward disparate goals, problems will ensue. Being able to refer back to key performance indicators, such as occupancy numbers, expenses, and student satisfaction assessment goals, will help to create accountability.
It is also important to create a culture of communication. In any relationship distance creates complications, and prolonged absence can create unintended consequences and eventually chaos. Therefore, partners must stay in touch. Unfortunately, institutions can vary widely in their leadership; whereas one university may make sound decisions with full transparency, another may make unilateral and emotional decisions without involving key constituents at the table. Likewise, corporate partners can change their internal corporate processes quickly, such as accounting-related procedures, and not fully explain all the nuances of the changes to the institutional partner, which can cause frustration. Holding regularly scheduled meetings between the partners is certainly a best practice. Whether it is corporate P3 staff and university executives or the property manager and student affairs staff meeting together, everyone needs to be on the same page. In some cases, property staff will have joint staff meetings with key university personnel on a weekly or biweekly basis. Colleges and universities have a propensity for being divided into separate silos with varying agendas, which is typically not the case for P3 corporate partner organizations. This can create an us-versus-them mentality that continually fosters discord. Adding non-university entities into the mix can exacerbate the problem. Overcoming this by creating a culture of communication sets the stage for being able to hold partners accountable if and when problems arise. Ideally, better communication will prevent problems before they start.
Both sides of a P3 agreement should openly discuss and plan for “what if” scenarios. Being prepared for a variety of scenarios should be something that is regularly discussed and planned for. This can include everything from low occupancy, health and safety emergencies, public relations problems, facilities and maintenance contingencies, staffing issues, marketing, student conduct incidents, and more. Attempting to remediate these problems after it’s too late can create a hostile environment of finger pointing between partners that can destroy the relationship. Policies and standard operating procedures should be regularly reviewed and modified with all parties involved. Continuing education and training for all associated P3 staffers should also be a part of this process.
When in doubt, partners should be able to refer back to the operating agreements, bond covenants, and concessionaire agreements. Ultimately, the various agreements that legally define the P3 relationship are sacrosanct and need to be fully understood by not only the executive-level leaders, but also by staff on the ground who are managing the day-to-day business, facilities, and residence life operations. Many times incorrect assumptions are made, which can quickly lead to problems. Partners should be regularly reminded of these agreements if and when someone starts to get off track. There should not be any hard feelings with this either, particularly when everyone agreed to the various conditions of the P3’s existence in the first place.
Finally, there should always be room for good old-fashioned compromise. There is nothing wrong with trying to find common ground and come to a sensible resolution for whatever issue may be occurring. Rarely does anyone like unexpected surprises that end up costing a substantial amount of money and time or creating dissatisfaction in students and parents. In most cases, P3 partners are very professional and cordial with one another and attempt to work the problem out together. More than anything, P3 partners simply want to be informed or consulted about something that may be amiss.
It is unlikely that a P3 or any other relationship – business or otherwise – will run its course without any rough patches. With an understanding of where those conflicts may occur and what strategies should be used to address them, though, the relationship can remain productive. To facilitate such a relationship, the remaining step is to create and expect an action plan to resolve any issues. Similar to employee discipline, some semblance of a progressive improvement plan needs to be explored. Simply firing an employee without any discussion or without giving them the opportunity to improve performance is not good practice. P3 property issues rarely will rise to the level of egregiousness that warrants an abrupt cessation of the relationship that could occur for an individual employee. Additionally, P3 concessionaire, land lease, and property management agreements are legally contracted to last for multiple years, if not decades, so quickly terminating the P3 arrangement is usually not an available or simple solution. Letting problems fester until there is a financial or health and safety emergency can cripple a P3 relationship for years. However, gathering key players around the table to discuss issues and come up with a workable solution will always be a best practice.
Scott M. Helfrich, D.Ed., is the director of housing and residential programs at Millersville University in Pennsylvania. He is also the owner of Helfrich Advisory Services, LLC.
