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Municipalities and local governments contract with private companies to deliver critical drinking water and wastewater services for a variety of reasons. Chief among those reasons are the potential for cost-savings, better service, and new resources to invest in system improvement. But there is more behind the growth of public-private partnerships than cost savings. The benefits of public-private partnerships are outlined below.
Environmental Compliance
Over the years, the federal government has increasingly tightened regulations regarding the quality of drinking water and the quality of discharges from wastewater treatment plants. Complying with such regulations can be costly and sometimes require expertise unavailable to local governments. Private-sector partners such as CH2M HILL can draw upon experience operating other similar facilities and in certain partnerships can provide funding resources required to make necessary capital upgrades.
Efficiency
Public-private partnerships cannot be successful unless they result in the same level of—or improved—service to customers. Drawing upon expertise gained in operating other plants, private-sector operators can reduce costs through bulk-purchasing discounts and through achieving greater efficiencies in plant operations such as electrical usage and facilities maintenance. Efficient operations allow private partners to enter into contractual arrangements with local governments that control the costs of these vital services in ways a local government alone cannot. Typically, the public-sector partner benefits from O&M savings ranging from 15 to 40 percent—money that can be invested in system improvements and upgrades. In addition, private partners have a greater incentive to deliver improved customer service; their ability to renew contracts and secure new partners depends on it.
New Resources
Private partners can help plan, manage and pay for capital improvements such as construction of new treatment facilities, upgrades of existing plants and other general improvements. As local governments struggle to find funding for water and wastewater infrastructure improvements that the U.S. Environmental Protection Agency estimates will cost an estimated $300 billion to $1 trillion over the next 20 years, public-private partnerships are capable of creating new financial resources for such projects. Funds from an O&M contract can relieve a municipality’s need to issue bonds or raise user fees to pay for capital improvements.
Workers Benefit
CH2M HILL typically takes on all of the “inherited” municipal workers as employees when it enters into O&M arrangements with local governments. CH2M HILL OMI offers comprehensive educational and training opportunities to its employees. In addition, with CH2M HILL’s more than 1,570 employees and 180 facilities, there are substantial opportunities for professional growth and advancement that are unavailable to most local government employees. CH2M HILL OMI is employee-owned, meaning that our employees have a direct interest in the success of the organization at every level.
Shared Risk
There are significant financial and environmental risks associated with managing water and wastewater utilities. In well-structured public-private partnerships, the private partner shares the risk and reduces the burden on local governments. For example, the private partner in most cases assumes responsibility for environmental compliance and is responsible for any fines incurred during management of the facility—yet another incentive for companies such as CH2M HILL to focus intently on environmental compliance. |
