It will not be easy for America to restore the lagging reputation of its infrastructure, but PPPs could serve as the catalyst for the long rebuilding process. Other nations with more robust infrastructure have compiled an impressive track record of pooling public and private sector expertise and financial resources. Their experiences can provide both encouragement and educational lessons for government officials in America.
PPPs have frequently been used for highway construction, mass-transit development, airports, seaports, hospitals, schools, and utilities of all kinds, employing innovative schemes for financing, constructing and operating the asset. They got their start in the UK in the 1980s- where they are referred to as Private Finance Initiatives (PFIs)-and soon spread to other parts of Europe, Australia, Canada, South Africa, and various countries in Asia. Those nations have benefited in many ways from PPPs, including the timely completion of projects, transfer of risks to the most appropriate stakeholders, and high levels of accountability and transparency. These partnerships often result in considerable cost savings during the bidding process. For example, the winning Waldwei consortium for the N31 Leeuwarden-Drachten motorway in the Netherlands bid 30 percent below the public-sector estimate due to maintenance efficiencies that the private-sector partners could bring to the project.13 Between 1999 and 2009, more than 700 PFI transactions were conducted in the UK alone, valued at $98 billion, according to Partnerships UK, which was set up by the UK Treasury to act as an intermediary between the public and private sectors.
Some countries are completely revisiting the relationship between the asset and the user of the asset. As a result, they are also rethinking how best to finance, build, and operate the asset. In the Netherlands, for example, where interest in PPPs is on the rise, the government hopes to involve the private sector in an innovative way to pay for road construction and maintenance that could reduce congestion and improve air quality. The Dutch Ministry of Transport plans to introduce road pricing based on advanced satellite navigation technology that will cover more than 8 million vehicles and be implemented starting in 2012. The concept: gradually phase out current road taxes and the taxes imposed on vehicle sales, and replace them with a fairer, pay-as-you-drive system based on distance driven, time and place of travel, and type of vehicle. Such a payment plan aims to make drivers think twice before starting their engines. To make the ambitious, $8.5 billion annual revenue-generating plan a reality, the government hopes private companies will compete to design, finance, produce, install, and maintain onboard units that would monitor a vehicle's journey. If the private sector doesn't participate, the transport ministry plans to develop the system itself.14
Canada Line is the first transit project in North America to be developed as a PPP; it was completed several months ahead of schedule in August 2009.
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13 PricewaterhouseCoopers, Delivering the PPP Promise: A Review of PPP Issues and Activity, 2005.
14 Martin Blokland and Fons Koop, "A New Dawn for PPPs: Improving Public Services in the Netherlands," PricewaterhouseCoopers Netherlands, 2009.