Paper Reviews - List and Status

[Jen Mayer]

Thanks to all who volunteered to review papers for the subcommittee. To kick start the process, I have already assigned reviews to a number of you, based on your particular expertise - if you cannot complete your review by September 15th, just let me know and I will find another reviewer. 

Below is the full list of papers submitted, along with their abstracts.  If you are interested in reviewing a specific paper, I will be glad to assign you as a reviewer.

Thanks again for supporting this important work!

Regards, Jennifer Mayer

 

Paper List

ABE10(1) - Public-Private Partnerships

Abstracts By Paper Number (16)

14-0657 - A PUBLIC-PRIVATE INFRASTRUCTURE COOPERATIVE: A NEW INFRASTRUCTURE FINANCING PARADIGM

Julie Kim (corresponding)

Abstract: A state-level public-private infrastructure cooperative (“iCoop”) is proposed as an effective means to finance public-private partnership (P3) transportation projects. iCoop is an independent state-level infrastructure bank dedicated to financing P3 projects and operated like a credit union with guaranteed minimum returns to its investors. Its ownership is founded on public-private partnership and its initial capitalization draws upon the state’s non-capital contribution in the form of P3 participation guarantees, private capital contributions from local and global investors, and its own bank deposits. iCoop’s business model eliminates the state’s need for P3 “subsidies” due to toll-revenue shortfalls and converts them into additional debt capacity with returns for reinvestment. iCoop helps to lower the overall P3 financing costs and reduce perceived risks associated with greenfield construction funding. iCoop is also explicitly designed to mitigate key political risks underlying P3 projects. Through iCoop, the state can effectively increase its infrastructure debt capacity without jeopardizing its current debt limit and with no direct capital contributions. For global investors, iCoop provides a new vehicle to access a portfolio of infrastructure assets, thereby offering them the opportunity to further diversify their risks. iCoop gives a face to the much talked about infrastructure bank idea with sound business rationale and clear implementation strategy.

14-1075 - A User-friendly Model to Assess the Financial Feasibility of Availability Payment PPP Projects

Goran Mladenovic (corresponding),     Cesar A.V. Queiroz, University of Belgrade

Abstract: Over the last couple of decades there has been an increased contribution of the private sector to finance transport infrastructure. However, in view of the current global financial crisis, it has become more difficult for governments, particularly in transition and developing economies, to attract private financing for transport projects, which may affect negatively the capacity of many countries to expand, and even keep up their transport infrastructure. While this is an observed short-term phenomenon, it is still not clear what will be the medium to long term effect of the crisis. It may well be that governments may be willing to increase their financial support to transport infrastructure projects so as to make them more attractive to potential private investors. This paper focuses on availability payment (AP), which has been increasingly used to undertake critical infrastructure projects in both developing and developed countries. It presents the development of a user-friendly tool for financial assessments of availability payment PPP transport projects. The model is suitable for preliminary assessment of potential PPP projects. The applicability of the tool has been demonstrated through a numerical example of a potential road PPP project. The model can also be applied to any other mode of transport. The model can be used to carry out sensitivity analyses. The user can change the value of an input parameter (e.g., construction cost) and obtain the resulting impact, for example, on the project financial internal rate of return.

14-1489 - PPP Tenders: Optimising On Competition

Athena Roumboutsos (corresponding), University of the Aegean, Greece    Fabio Sciancalepore, Politecnico di Bari, Italy

Abstract: The scope is to provide a guiding methodology in the design of Public Private Partnerships (PPPs) tendering processes on the basis of the number of potential bidders in the market (existing competition) and their respective transaction cost. Analytical models, initially proposed by McAfee and McMillan, are further investigated with respect to the various tendering procedures, by recalling the dynamics of transaction costs for competitors in PPP market. The proposed methodology, in the form of a “graphical instrument”, potentially provides an optimum balance between existing market competition and tender transaction costs. The methodology, also, has the potential to protect against market concentration. The proposed “graphical instrument” reduces excessive transaction costs for the public and private sector and proposes tendering procedures suitable to the existing market. The present research work, based on reported findings, takes an alternative approach and reports on how to exploit all existing competition in the market through the tendering procedure. Therefore, this work takes a rational approach endorsing the notion that for a specific level of transaction costs there is a maximum number of bidders that may tender and competition is optimum when this number is secured.

14-2203 - Social Welfare Analysis for Alternative Investment Public-Private Partnership Approaches

Omid M. Rouhani (corresponding), Cornell University     H. Oliver Gao, Cornell University    Raymond Richard Geddes, Cornell University    Germà Bel, Universitat de Barcelona    Hossain Zarei, AECOM

Abstract: Policy makers often evaluate public-private partnerships (P3) projects using Value for Money (VfM) analysis. However, a more comprehensive evaluation criterion is one based on the overall social welfare consequences of a P3 project. Apart from several theoretical studies, a detailed social welfare analysis that includes all major P3 project stakeholders (residents, users, government, and the private sector) is lacking in the transportation literature. Developing such a framework, we estimate the benefits and costs of using alternative Investment P3 (IP3) approaches. An IP3 redistributes a significant portion of the value created by road pricing back to the citizen-owners of the transportation facility in an urban transportation system. A major policy insight from our study is that system-optimal tolling scenarios favor average users, but government and consequently taxpayers should pay for costly tolling systems. In contrast, scenarios allowing unlimited profit maximization raise substantial profits for government, citizen-owners, and the private sector, but the average user is worse off. From a social welfare perspective, one should search for a Pareto-optimal solution where all stakeholders are better-off. Our results indicate that such a solution can be achieved through a mixed private and public ownership scheme, and this solution provides the highest social welfare unless the weight of users is substantially lower or the weight of residents is dramatically lower than other stakeholders’ weights.

14-2678 - Policy Lessons for Regulating Public-Private Partnership Tolling Schemes in Urban Environments

Omid M. Rouhani (corresponding), Cornell University    H. Oliver Gao, Cornell University    Raymond Richard Geddes    Hossain Zarei,

Abstract: Public Private Partnership (P3) projects are likely to fundamentally impact entire transportation systems. However, few studies have examined the impacts of P3s on real-size transportation networks. Most studies are focused on system modeling rather than policy analysis. Policy guidance into devising and administering P3 contracts to improve transportation system performance while maintaining profitability is lacking. We develop mathematical models that consider alternative approaches to profit maximization and system cost minimization for urban transportation networks using Fresno, California as a case study. We offer specific recommendations for policy makers to design and promote successful P3 projects in urban environments: (i) even though tolls (i.e., higher travel costs) on a few roads helps reduce travel demand they may, counter-intuitively, lead to higher total travel cost for the transportation system as a whole; (ii) lower limit(s) for tolls, along with upper limit(s), may be required to enforce system-optimal toll rates and avoid undercutting; (iii) a variable (temporal and spatial) tolling scheme significantly reduces congestion and increase profits relative to flat tolls; (iv) urban settings with relatively high toll collection costs favors the use of privately-run tolling schemes since the private sector’s cost of toll collection is significantly lower; and (v) public officials should provide a comprehensive plan regarding past, current, and future P3 projects along with detailed system-wide impact analysis of project implementation in order to promote a more sustainable transportation system. Keywords: Public private partnership projects, Road pricing, Transportation networks, Public policy, Congestion pricing, Externalities, Fresno, California.

14-2941 - Complex Governance System Issues to be Addressed in Public-Private Partnerships

Kelly Strong (corresponding), Colorado State University    Sereyrithy Chhun, Colorado State University    Jennifer S. Shane, Iowa State University

Abstract: The use of public-private partnerships (PPP) is growing in the United States in response to reductions in funding combined with an aging highway transportation infrastructure. Many other countries have longer experience with PPPs and have begun to solve some of the governance issues related to this effective approach to project financing, development and delivery. The main governance issues to be addressed in PPPs deal primarily with risk-sharing, relationship management, contracts and legal frameworks, and the lack of standardization within dedicated organizational units. These governance issues are examined in the context of a case study for the U.S. 36 Phase II public PPP in Colorado. The findings of the case study suggest that governance issues are resolved through more relational forms of governance rather than prescriptive contractual language. While Colorado has established a dedicated organizational unit to facilitate the use of PPPs, there are currently no standardized systems or best practices in the United States for procurement, concession terms, or risk-sharing. Further research is required to move toward standard definitions and general procurement systems.

14-3885 - A Mechanism Design Approach to Modeling, Implementing and Evaluating Improved Investment Public-Private Partnership in a Multi-Leader-Multi-Follower Stackelberg Game

Bingyan Huang (corresponding), Cornell University    H. Oliver Gao, Cornell University

Abstract: Highway system is vital in current transportation network. Operating, maintaining and financing of existing highway (a.k.a. brownfield highway) are increasingly important. The Investment Public Private Partnership (IPPP) is a brand new and promising idea in such field. It suggests government to lease brownfield highway to private sectors, preserve a portion of the revenue from road pricing, found a public trust fund, permanent fund, and pay dividend to local residence. However, quantitative analysis is needed to manifest the exact effect and performance of IPPP. In this paper, we improve IPPP idea using mechanism design, model it mathematically as a Stackelberg game, derive the implementability in dominant strategy equilibrium in Stackelberg game and then prove the feasibility of our model through these results. This model could predict the behavior of both private investors and public travelers under IPPP, and help government make precise and optimal decision in highway regulatory and project management. Another benefit brought by mechanism design is that it could reduce the financial risk compared with original IPPP. We apply our model to Sioux-Falls network for illustration and verification. We discover that the improved IPPP method has many advantages over traditional methods and original IPPP, such as achieving potential Pareto-improvement, obtaining public support, better regulating the road pricing, and reducing project risk.

14-3912 - Public-Private Partnerships in China’s Rail Mass Transit: The Case of Shenzhen

Jiawen Yang (corresponding), Peking University, China

Abstract: Chinese cities have embarked on a task to construct rail mass transit systems on an unprecedented scale. Little has been reported on how China’s municipalities have managed to secure funding for capital investment and operational subsidy, particularly concerning how private or overseas investors have gotten involved. Using Shenzhen as a case study, this paper reveals how Hong Kong’s Mass Transit Railways Corporation Ltd, the only overseas transit operator in China’s booming rail mass transit industry, has collaborated with Shenzhen Municipal Government, and how China’s existing institutions and policies have shaped the specifics of this public-private partnership.

14-4022 - Ppp Supply Market: Building Expertise Or Pure Concentration?

Athena Roumboutsos (corresponding), University of the Aegean, Greece     Robert Ågren, Lund University, Sweden     Ancor Suárez-Alemán, Universidad de Las Palmas de Gran Canaria, Spain

Abstract: Public Private Partnerships (PPPs) have become a favoured instrument in the delivery of major public infrastructure and services. Over the years, the average value of PPP projects has grown. The construction sector responded to the public offer for PPPs. In the early 90’s the sector was fragmented and characterised by poor productivity. Now, this sector seems to have gained momentum; while, typically, nationally bound, large international actors have emerged and mergers and acquisitions, as well as contractual step-outs reveal a dynamic market. The scope in this paper is to examine if the market dynamics described above develop expertise in construction and building which is beneficial for society; or if this behaviour is a sign of pure market concentration strategies. It is also important to identify how the strategies impact efficiency in terms of original “investments”. A common assumption is that payoff defines the decision to enter or leave a partnership. However, this view disregards other priorities held by the parties that may guide their selection of strategy. The present research reverts to institutional theory to identify other “rationalities” defining the behaviour of construction firms in the PPP sector. Respective pay-offs are conceptualised formulating a conceptual model to guide understanding and assess impact on PPP investment quality. Model findings are compared to market statistics for verification and validation of estimates. A discussion of findings, their impact on the quality of PPP delivery and critic of the tendering process, accompanied by conclusions and suggestions for further research end the paper.

14-4412 - A Preliminary Framework of Government Learning in Public-Private Partnerships

Eric Boyer (corresponding), Georgia Institute of Technology

Abstract: This study draws from semi-structured interviews and archival analysis to evaluate the types of knowledge associated with government learning for designing and implementing public-private partnerships for infrastructure (PPP). Research indicates the pressing need for public sector knowledge on partnership management as more and more state and local governments pursue PPPs for infrastructure. The extant literature explains a great deal about how to align learning activities (such as training, learning forums, or on-the-job experience) with specific kinds of knowledge (such as that which derives from practice or that which is related to intrinsic, abstract values), yet there is little understanding of the learning activities of greatest value to public managers learning to work on partnerships. By drawing from theories of organizational learning and case studies of two state-level agencies, this study explores the importance of practice-based knowledge and abstract knowledge in respect to activities for designing and implementing PPPs, and presents a framework for guiding employee development for working on this particular form of cross-sector collaboration. The overall conclusions suggestion that while formal, top-down approaches to employee training are valuable, more bottom-up approaches to knowledge creation among public sector staff, their advisory consultants and outside public sector officials is likely to improve their learning on PPPs.

14-4518 - Financing Infrastructure Projects Through Public Private Partnerships In India

RAMAKRISHNAN T S (corresponding), Indian Institute of Management, Ahmedabad     Poojan Paresh Chokshi, Indian Institute of Management, Ahmedabad

To achieve and sustain economic growth of 9% in India in the impending years, the widening gap between supply and demand of infrastructure has to be drastically reduced. Indian government perceives Public Private Partnership (PPP) model as the preferred mode to fill this gap and has initiated several measures in this regard. PPP offers advantages like reduced cost overrun, reduced economic distortion, production and allocation efficiency, economic and social efficiency, fiscal prudence and encouraging entrepreneurship by leveraging available funds. This paper discusses the basic features of PPP, its most common formats, types of infrastructure finance, its characteristics and how PPP works in India. This paper further outlines projects under PPP model, emerging trends in PPP and issues in financing and reforms needed for PPP in India. The paper concludes with a study of how PPP can be spearheaded in the social infrastructure sector based on the lines of physical infrastructure sector.

14-4692 - Using Linear Regression and DEA to Analyze P3 funding

Shanjiang Zhu, George Mason University     Meredith Jackson Morgan (corresponding), George Mason University

Abstract: In today economy and financial climate, infrastructure investments can be infeasible for many local and state municipalities. These governments are turning more to the private sector to help make projects both large and small to be built. It has been suggested that private-public partnership (P3) projects can run more efficiently, be finished under budget and ahead of schedule and can have cheaper life cycle costs. In many cases non-traditional funding sources used in both P3 and traditional projects can make a project more expensive over the pay back period of the loans however in the United States (US) this has not been well studied. This paper models many contributing factors to whether or not a P3 can be used in projects and how different modeling a P3 versus a traditional project is and will use two forms of analysis to describe the cost per lane mile. The first, linear regression, uses the variables of P3, lane mileage, cost (both true cost and construction), financial close, contract type and tolling. However many of these variables will not be very good indicators and only three will be used for the most useful models. The second model used is Data Envelopment Analysis. This model finds a frontier and envelops all the data to show which projects are most efficient and which cannot be. With these two sets of models this paper starts to illustrate the effects of P3.

14-4855 - THE ROLE OF PUBLIC ASSISTANCE IN DELIVERING ECONOMICALLY VIABLE, FINANCIALLY UN-VIABLE PUBLIC PRIVATE PARTNERSHIPs

Morteza Farajian (corresponding), Virginia Department of Transportation     Qingbin Cui, University of Maryland, College Park

Abstract: Many countries, including the US, are struggling with a widening gap between expenditures and revenues. Among the different options that can be used to bridge this gap, Public Private Partnership (P3) has got special attention not only because of its power to leverage public resources, but also due to the benefits of having access to the efficiency and innovation of the private sector. This innovative delivery model can be used to make the delivery of economically viable but financially un-viable projects possible. This paper identifies different types of public assistance that can be provided to P3 projects in order to fill the funding gap or enhance the bankability of the project so more debt can be raised or more equity can be attracted at a lower rate of return. The paper categorizes the public assistance into “Direct Financial Assistance” and “Credit Enhancements” and discusses the pros and cons of different mechanisms that can be used under each category. The paper also discusses how those mechanisms may affect bankability of P3 project through filling the funding gap, increasing debt capacity or attracting additional equity. The US Route 460 Corridor Improvements project in Virginia has been studied to demonstrate how public assistance can make the delivery of an economically viable, but financially UN-viable project possible. This paper helps practitioners and decision makers to better understand the possible public assistance packages that can be utilized to enhance commercial and financial structure of economically viable P3 projects that otherwise may not be financially viable. The research also concludes that there is a need for additional research to better understand accounting and debt affordability implications of different public assistance packages as the use of public assistance packages increases.

14-5098 - Impact of Leadership in Public-Private Partnerships in Public Transportation

Hindy L. Schachter, New Jersey Institute of Technology     Janice R. Daniel (corresponding), New Jersey Institute of Technology

Abstract: This paper examines cases of public private transportation partnerships and analyzes the impact of leadership on the success of the partnership. Looking at both successful and unsuccessful partnership, the research provides a comparison of the PPPs in terms of who initiated the project, what is the project's structure, financing mechanisms, political and legal framework, project impacts as well as the role of leadership. The aim is to compare projects along these dimensions and make preliminary hypotheses on how leadership impacts PPS and which factors in these domains are conducive to project success. Using case studies, the research reviewed two cases where the role of leadership in the development and sustainability of the partnership either contributed to the success of the partnership or was a factor in the partnership being unsuccessful. This paper summarizes these cases demonstrating how essential effective leadership is to promote public-private partnerships and the need for governmental agencies to ensure leaders understand the importance of this role.

14-5333 - Public Private Partnerships in the U.S. Transportation Sector: Stakeholder Perceptions

Sergio Martinez (corresponding), The University of Texas at Austin

Abstract: The use of public-private partnerships (PPPs) for transportation infrastructure delivery has increased in the U.S. A long held view is that these partnerships offer benefits to project partners and to society at large; however, concerns and opposition to these transactions exist due to a variety of factors. This paper explores the perceptions that a wide variety of PPP stakeholders have about PPP usage to deliver transportation infrastructure in the U.S., including stakeholders from fields at times overlooked in PPP literature, but that are key to these transactions, such as professionals in legal, banking and finance, and concessionaire organizations. The paper reports the results from a survey taken by 101 professionals with responses classified based on different aspects of the respondents backgrounds. Results indicate that stakeholders’ perceptions about benefits, barriers, and valuation of PPPs vary —at times greatly— depending upon the respondent’s work type, location, and experience with PPPs. While this is not entirely surprising, in some cases, such variations in perceptions were unexpected in both type and magnitude. Also of interest was to note the conflicting views of respondents about certain topics such as the evaluation of PPP proposals. Furthermore, it is understandable that some misperceptions still exist among PPP stakeholders due to various reasons. Yet, some responses showed deep misunderstandings, fears, or unrealistic expectations about PPPs. The fact that respondents were targeted because of their assumed familiarity with these transactions is worrisome and it indicates the need to educate decision-makers, the general public, and public sector staff about PPPs.

14-5564 - Funding Small-Scale Highway Projects Through The Public-Private Partnership Method

Cindy Vuong (corresponding), Los Angeles County Metropolitan Transportation Authority     Lan Saadatnejadi, Los Angeles County Metropolitan Transportation Authority

Abstract: Public-Private-Partnerships (P3s) have traditionally been used as a means of funding mega-scale projects such as a rail or bridge in the transportation industry. As state departments and regional agencies look for solutions to their funding shortfalls, the Los Angeles County Metropolitan Transportation Authority (Metro) offers a different approach to traditional P3 practices. With the growing need to increase mobility, improve transportation infrastructure and increase accessibility, the regional public agency struggles to find money to fund projects requested by the residents of Los Angeles County. As a bundle of six highway projects located in different cities throughout Los Angeles County, the Accelerated Regional Transportation Improvements (ARTI) package seeks funding through the P3 method. By consolidating six small-scale, low risk and construction ready projects under one P3 contract, Metro challenges the tradition of using P3 to fund singular billion dollar projects and instead tries to procure one source of funding for six projects. ARTI makes a compelling argument that can alter the use of the P3 model for transportation infrastructure development. This paper will provide an overview of how Metro came to bundle six projects into one for the purpose of delivery via the P3 method, and argue why the P3 method should be considered even for small-scale highway projects.

 

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