This synthesis of PPP projects from around the world demonstrates the wide variety of infrastructure, project, and contract types using PPP arrangements to finance or deliver critical public-use infrastructure. PPP projects represent almost a trillion dollar investment in planned or completed infrastructure projects worldwide since 1985. The largest component of this is for highway-related projects, which on a global basis represents almost 40 percent of the total costs of PPP projects planned or completed over the past 20 years. In the United States alone, PPP projects represent a $104 billion investment in infrastructure since 1985, of which $42 billion is for roads, bridges, and tunnels. This represents 13 percent of the total PPP funding for highway-related projects worldwide.
While the use of private sector resources to leverage scarce public sector resources for road projects is not new, what is new is the growing interest in and variety of funding, financing, and project delivery approaches that are emerging under the guise of public-private partnerships. This transformation has been spurred by fundamental changes in how nations overseas perceive the relative roles, responsibilities, risks, and rewards of the public and private sectors for infrastructure ownership, funding, development, and operation. This is best illustrated by the trend towards privatizing the road development and management programs of nations in Europe, Asia, and Latin America since the early 1990s. This was spawned by two key developments: (1) the recognition that the public sector could not afford on its own to adequately support the growing needs for highway-related infrastructure in many nations; and (2) the changing institutional context resulting from the emergence of Eastern European nations following the break-up of the Soviet Union. Even in the United States, where a substantial dedicated funding mechanism long supported a robust highway development program, there is growing recognition that traditional infrastructure funding and delivery approaches are inadequate to meet the increasing economic development and mobility needs of citizens and businesses alike, while keeping the existing highway system in a state of good repair.
When other regions of the world began to experiment with different ways to finance and deliver highway infrastructure through greater involvement by the private sector, such as the early use of Shadow Tolls in the U.K. and Portugal, Concessions in Spain and Germany, Joint Development Agreements in China, and Asset Sales in Mexico, the United States was less aggressive in applying PPPs to its highway program. Most PPP road projects in the U.S. have been delivered through Design-Build or Management Contract approaches. As noted above, this was due to the existence of a dedicated funding program and a strong tradition of separating the public and private sector stakeholders in the delivery and financing of highway facilities. As developed nations in Europe, Asia, and South America moved to the Concession or BOT/BTO approaches to PPPs, they granted contracting teams more responsibility and flexibility to produce desired performance outcomes while promoting higher levels of accountability and transparency. These are important lessons for public sponsors and private developers of highway infrastructure in the United States who are interested in applying PPPs to expedite the delivery of needed facilities and services.
Clearly there are ample resources and techniques available to help spur PPP infrastructure initiatives in the United States, provided the public and private stakeholders in the process are willing and able to enter into prudent business relationships that are based on mutual trust, flexibility within a defined contractual framework, transparency and accountability, and the ability to achieve a reasonable balance of risks and rewards between all parties to the partnership. With over $42 billion already identified for PPP road projects in this country and even greater flexibility to promote PPPs under the recently-enacted SAFETEA-LU3 reauthorization of the Federal-Aid Highway Program, the prospects are bright for the United States to make even greater use of PPPs for highway infrastructure financing and development in the future. One way to expedite this transition is to learn from international experts in the development and administration of PPPs, where their experiences can be related to the situations, constraints, and opportunities found in this country.
This synthesis is one way to benefit from this experience by revealing the nature and extent of PPP arrangements being proposed and implemented around the world. The results are intended to inform decision-makers and potential practitioners of the many choices available to public and private parties to a PPP for structuring and managing the partnership for the maximum benefit of the traveling public and the investment community willing to place its capital at risk to expedite these projects.
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3 On July 29, 2005 Congress passed the "Safe, Accountable, Flexible, Efficient Transportation Equity Act: A Legacy for Users'' or ''SAFETEA-LU". The Act authorizes $286.5 billion in funding for surface transportation projects through FY 2009. It also includes several provisions that will enable public funds to be leveraged with private investment through public-private partnerships, including:
• $15 billion in private activity bonds (PABs) for highways and surface freight transfer facilities,
• enhanced authority to use tolling to finance construction of interstate highways,
• increased flexibility in using Design-Build contracting,
• streamlined environmental processes, including a 180-day statute of limitations on actions
contesting federal agency approvals for transportation projects, and
• improvements to innovative finance programs, including Transportation Infrastructure Finance
and Innovation Act (TIFIA) and State Infrastructure Banks (SIBs).