"In a time of funding shortages at all levels of government, it is particularly important that we look to opportunities for the private sector to participate in funding transportation infrastructure improvements." - FHWA Administrator Mary Peters[32]
An increasing number of States are discovering the many advantages of public-private partnerships. This chapter begins by highlighting the cost and time savings of projects built using public-private partnership. It then explores the factors that contribute to these savings. These factors include the flexibility to use private sector financing and intellectual capital, the allocation of risk to the party best able to manage it, and the incorporation of life-cycle costs in the price of the project.
Public-private partnerships provide greater flexibility in the design, construction and maintenance of transportation facilities through the use of innovative financing, design, and contracting techniques. As a result, they have the potential to deliver higher quality transportation projects faster and cheaper than through traditional contracting and financing methods. Importantly, public-private partnerships can facilitate the construction of projects that have been sidelined due to fiscal constraints. These advantages are discussed in detail below.
Public-private partnerships are not without risks. The traditional method of financing and developing transportation projects was designed to protect public interest by providing substantial oversight by the public sector and by standardizing competition for contracts to avoid waste, fraud or abuse of public funds. Changing this traditional approach raised concerns that some of these protections will be less effective. These are discussed at the end of this chapter.