Most of us grew up playing sports throughout the year. The type of sport was typically determined by the season. Sometimes we were free to play outdoors while other times the weather kept us indoors. No matter the environment, we all have fond memories of those places where we spent our formative years learning sportsmanship, active life skills, and how to be part of a team.
The growing interest in sports and the use of sporting facilities has resulted in the development of a unique architecture, engineering, and construction (AEC) industry sector around the design and construction of athletic facilities. These facilities support public interest in sporting events as well as private sector business opportunities in and around sports. They also serve as a hub for community engagement and a source of jobs and revenue for the surrounding population.
Indoor sports facilities can contribute to broader economic improvements beyond the direct impacts of facility operations. Youth sports teams can benefit from using “year-round” indoor sports facilities, which typically includes swimming, soccer, basketball, ice rinks, and tennis. Venue operators can schedule community events and other uses for the facilities in and around such sporting events to compliment indoor recreational sports leagues. In addition to economic stimulus from local community sports, these facilities are often host for regional competitions that can be a positive benefit for local retailers and the hospitality sector as the teams bring out-of-area guests into the community. Further, the expansion of sports participation results in better public awareness on the benefits of physical activity and health which can lead to more demand for other industry services.
For many new sports facilities, public owners are using Design-Build-Operate (DBO) contracts as a beneficial delivery option. This unique project delivery model is where a single general contractor (or developer) is appointed to design and build a project and then continue on to operate it for a designated period of time. This format reliably ties the execution of design and construction to the operational results, keeping the vendor engaged in providing the best end deliverable possible. However, it does tie both the owner and the DBO contractor into a very long-term relationship that can be difficult to price.
The DBO team receives a concession fee from the public sector (or the private sector on rare occasions) to finance, design, construct, and operate a facility covered under the overall DBO contract. This enables the project proponent to recover its initial capital investment, along with operating and maintenance expenses involved with the project. This model is normally considered as a form of public–private partnerships (P3). Due to the long-term nature of the arrangement, the fees must raise sufficient revenue during the contract period. The rate of increase in fees is often tied to a combination of internal and external variables, allowing the proponent to reach a satisfactory internal rate of return for its investment.
Since we are focusing on DBO delivery, here are four key “best practices” that we have experienced with our P3 projects to improve success with sports facilities for municipalities:
In summary, the DBO delivery is promising alternative project delivery option to providing important public infrastructure. This form of P3 contracting can benefit the public owner by providing access to the creativity and expertise available in the private sector. The delivery method can be complex, however, the end results can make the additional time and resources used to set up the most effective concession plan well worth the effort.
Learn more about P3 delivery by visiting additional blogs below: