Challenges and Enablers for Private Sector Involvement in Delivery of Highway Public–Private Partnerships in the United States

Involvement of the private sector in financing and delivery of highway public–private partnerships (P3s) in the United States has experienced various limitations and challenges. The implementation of existing P3 project delivery frameworks by the public sector have neglected the private sector’s interests and have resulted in lack of alignment among public and private sector stakeholder institutions across P3 project planning, procurement, and administration. Further, the public sector’s variability in P3 program maturity and P3 implementation have entangled the emerging U.S. P3 market into a challenging environment. The purpose of this study is to determine and analyze the underpinnings of private sector involvement in U.S. P3s in the following areas: (1) the major issues and challenges faced by private sector stakeholders in the U.S. P3 market due to the variability in public agencies P3 project delivery process and (2) solutions and strategies for enhancing alignment of public and private sectors and standardizing the public sector’s P3 project delivery process. Following a comprehensive content analysis process, 25 P3 experts are identified and selected from organizations that are active in the U.S. P3 market. A structured and consistent interview protocol is utilized to conduct interviews and document the study results. Results indicate that among the identified challenges, regulatory uncertainty and inability of the private sector to be involved in predevelopment phases of transportation projects, lack of a programmatic approach for P3 project development in the public sector, significant transaction costs for P3 projects that involve private financing, and slow shift in mindset and required business processes in transitioning from conventional project delivery to P3 were recognized as primary issues hindering private sector involvement in highway P3s. Among the identified enablers, establishing a P3 program/unit with adequate project finance and procurement expertise, incorporating alternative funding and innovative financing considerations in the planning phase, allowing the use of factoring and asset-based financing methods, and utilizing appropriate performance bond vehicles were recognized as primary recommended opportunities for the U.S. P3 market. The outcome of this study can help state departments of transportation (DOTs), transportation planners, contractors, and financial institutions make more informed decisions when engaging in P3 arrangements.