Since the late 1980s, public-private partnerships (PPP) have come to the fore in various countries around the world to expedite or otherwise make possible the provision of needed infrastructure which the public sector cannot provide in a timely manner by itself. PPPs provide an opportunity for governments to expedite the provision of social capital infrastructure in the form of schools, hospitals and roads while benefiting from greater cost-efficiency that may be achieved from private sector involvement. It is argued that alignment of incentives drives the efficiencies that are derived from PPP arrangements. Private sector participation in asset and service provision can maximize value for money for government by expediting financing, facilitating innovation, providing better risk management, and integrating life-cycle management.
Over the last twenty years, private involvement in financing and delivering transportation infrastructure has grown significantly as governments sought ways to leverage scarce public resources, especially in the absence of dedicated funding sources for transportation. More recently there has been as greatly expanded interest in PPPs to expedite transportation projects needed to accommodate the changing and expanding movement of people and goods across national boundaries previously closed by political adversaries. Among the factors driving the renewed interest in PPPs for transportation infrastructure financing and development overseas are the following developments over the last two decades:
▪ Establishment of the European Common Market;
▪ Creation of the European Union;
▪ Break-up of the Soviet Union which spawned numerous sovereign nations in Central and Eastern Europe seeking entrée into the European Union;
▪ Establishment of the South American Common Market;
▪ Rapid economic expansion of the economies in China and India; and
▪ Emergence of such nations as South Africa and Vietnam.
PPPs provide public agencies opportunities to deliver transportation facilities using private sector resources without necessarily committing public debt or equity. In the face of increasing gaps between infrastructure financing requirements and revenues, public agencies in other countries often view PPPs as a way to expedite critical infrastructure that may otherwise not be built.
The advantages of PPPs and the urgency of the transportation infrastructure needs has led to an increasing willingness by public agencies at both the national and local levels to consider and in some cases apply alternative funding, financing, contract delivery, and life-cycle preservation methods to leverage the scarce public resources. In many cases this has required legislation permitting the use of these alternative project delivery approaches by government agencies sponsoring transportation improvement projects.