The Capital Beltway HOT lanes PPP project is the first in the Commonwealth to involve full participation by the private sector in the design, build, operation, maintenance, and finance stages. The scope of the project, escalating cost, and lease duration are untested variables in the PPTA process. Despite the Virginia Department of Transportation's stellar PPP performance record, there are few corresponding projects with long-range results to compare processes and forecast long-term outcomes.
Despite having what many consider model PPP legislation, Virginia's PPTA remains somewhat untested due to the limited history of PPP execution in the Commonwealth. Although the PPTA has existed for over ten years, Virginia has only completed three PPP projects while eight more are in progress. The three completed projects under PPTA guidelines (Route 288, Pocahontas Parkway and Jamestown 2007) do not involve the significant, private sector financial risk that Fluor-Transurban is assuming with the Beltway project. When Fluor submitted their conceptual proposal, they, estimated the original cost of the project to be $693 million. Factoring the scope expansion, inflation and equitable adjustments due to the cost of materials, current projections stand at $1.7 billion.
Despite this significant cost increase, extensive political support for the Beltway HOT lanes has enabled the project to move forward. Even after it was disclosed that the project would require a financial investment from the state, Secretary Homer voiced his commitment to the project, "We have an opportunity to obtain a billion-dollar facility with a fraction of that put in by the public sector. We are fully committed to building and funding the HOT lanes through a combination of state, federal and private resources. We'll find a way to make this project work….We could not afford to construct this project using traditional transportation revenue sources."44
It is widely acknowledged that PPPs are not a panacea for the Commonwealth's transportation needs and for a plethora of reasons, unexpected challenges such as cost increases do arise. While still supportive of the project, Fairfax County Board of Supervisors Chairman Gerry Connolly voiced his concern about the cost escalation, "We can't simply hope that the tooth fairy, in the form of the private sector, will make all of our problems go away."45 The public and private sectors concur that PPPs are one more tool in the toolbox for use on projects that maximize public and private sector resources.
The Capital Beltway HOT lanes project is a strong candidate to be a successful PPP since the transportation needs exceed public sector resources that the private sector can provide at a financial return worthy of their investment. Additionally, both parties have committed finances, staff, and their reputations in the success of this project. VDOT and Fluor-Transurban appear to be exercising remarkable commitment and stewardship in a mostly open and transparent process. We predict these arduous negotiations will result in the best possible value for stakeholders and service to Beltway users. However, since it is the first project of its kind in Virginia, many untested variables could facilitate or inhibit the project's long-term success.