A Pup by Any Other Name

In preparing for my role in the ABA's Fundamentals of Construction Law program in Tampa, I was reviewing the 50 slides I was expected to cover in an hour, and generally wondering how I would ever make sense of this information for an audience that is not supposed to know much about construction law. I eventually arrived at the last slide, which began with a description of P3s. In full-on wearied speaker mode, I began to silently bemoan my fate: here, on the 50th slide of a one-hour presentation, I'm supposed to say something meaningful about P3s, a topic about which many intelligent people can expound for hours. As I was trying to make sense of this, my eyes drifted to the bottom half of the slide, which contained this interesting nugget: "PuP: Contract between two or more government bodies to share risk of projects." Thus, while a PPP is a Public-Private Partnership, a PuP is (apparently) a Public-Public Partnership. The cynical voice in the back of my head, shaped by many years of representing contractors, said "Great: if one public owner isn't enough to screw up this project, we'll just keep adding more." I then wondered how it was that I had never run into a PuP before---indeed, never heard it discussed before. The idea certainly seemed to make a lot of sense. As I was thinking about it, I realized: I had run into PuPs many times before, just never by that name. I have seen many projects where the financing of construction, and the ultimate management of the constructed facility, was shared between two or more different government agencies. And the odds are, you have, too. So, with the novelty of the PuP dispelled, I started wondering: what could be said about the PuP? What wisdom or sage counsel could a community of construction lawyers bring to bear? These were my thoughts. 1. Intra-Owner Liaisons Are Critical. Whenever a project has a diverse ownership group (and this could be multiple owners or multiple stake holders within a single owner), coordination inside the ownership group becomes critical. During the course of construction, the owner needs to speak with one voice and provide clear, timely, and definitive answers to the designer and the prime contractor. In a PuP project, some member of the owners’ team (including a consultant or the designer, as appropriate) should have a formal role as the liaison for all the owners. That person needs to be tasked with running the regularly-scheduled owners’ meeting, developing an agenda for that meeting, and leaving that meeting with specific action items, whether those are answers, questions, or proposals. 2. Let the Stake Holders Run Their Stakes. In multiple owner projects, one owner is often designated as the lead owner for the purposes of project administration. This advances the cause of having the owners speak with one voice, for the lead representative provides that voice. But it frequently causes problems as the project progresses. In the construction of a facility that will be used by multiple owners, it makes little sense to have one owner provide guidance for the construction of a portion of the facility that will be used by another owner. Everyone would be better served by allowing the individual owners to take charge of their portion of the project. This increases the need for intra-owner coordination, but it should streamline overall project management, because there will be fewer mid-course corrections. The “lead owner” approach tends to increase changes during the project, as stake holders who have either not been consulted or not been heard review the plans and realize that their portion of the project will not actually fit their needs. 3. Remember the Golden Rule As most lawyers know by heart, few partnerships are true partnerships. Instead, most partnership operate under the Orwellian truism that while all animals are equal, some are more equal than others. It will be the rare PuP where all owners are financially contributing in equal shares. Similarly, it will be rare that the project is equally important to all owners. More likely, there will be one, or a few, major stake holders, and the remaining stake holders will have much smaller interests. It makes sense to identify this elephant in the room at the earliest stages of the project, and recognize and acknowledge the key owners. One of the roles of the intra-owner liaison will be to manage this unequal partnership in a way that both ensures that the key owners are satisfied and that the other owners get what they need to get out of the project. With those thoughts, I turn the conversation over to my fellow construction lawyers, to share their own experiences and recommended best practices for the well-known, but not always named, PuP project.