Reduced direct costs include savings over the estimated cost of a contract that are attributable to the use of a PPP structure. For example, the final cost of two design-build contracts for the Largo Metrorail Extension project were approximately $1 million less than WMATA had budgeted for them. Similarly, the LRT portion of Denver's T- REX project was completed under budget and the final cost did not vary from the original cost estimate published in the project's EIS.
Direct cost savings can also be attributable to innovations in project design or other changes to the project that result in savings, such as the application by the design-build contractor of a jet van tunnel ventilation system in the Largo project that saved an estimated $10 million over the vent shafts that WMATA had constructed elsewhere in the Metrorail system.
While PPP structures that include private financing offer certain important benefits, it should be noted that, just like public sector debt financing, private financing may be more expensive than pay as you go funding. For example, the BART Oakland Airport Connector project will include costs related to the private sector financing of the project. Applying a DBFO delivery approach will add an estimated $30 to $40 million to the cost of the concession over a 30 to 40 year term versus a DBOM approach in which the project's capital costs were entirely funded with public sector monies. However, given the scarcity of state funds, the project would not be possible at this point without private financing, and BART has estimated that the cost for the agency to borrow directly is similar to the cost of private financing.