Seeking Equilibrium between Agency and Contractor in PPP Environment – An Agency Perspective

There is an increasing trend to use Public-Private Partnerships (PPPs) as one of the most successful methods to improve project feasibility and cost effectiveness and generate revenues in rail/transit. In addition to cutting costs and raising new revenue, PPPs can significantly reduce the time it takes to complete a capital project, help the public sector share risks with the private sector that the private sector is better able to manage, and can improve the quality of public infrastructure. The success other sectors have had with PPPs has led transportation agencies to pursue opportunities for applying various types of PPPs to deliver major capital projects. There is ample evidence across the United States that the private sector is interested in increasing its participation in transportation infrastructure projects, including a number of recent transit capital projects structured as PPPs. This paper is the first paper of a two part series. It defines the Public Private Partnership and presents the various modes of PPPs reported to be in use in rail/transit projects. The paper discusses the influencing factors to consider PPP implementation, the variations of the PPP process and cites legislative requirements in the PPP process. Finally, the authors wish to share certain key issues, based on their lessons learned, for achieving potential success in partnering with a PPP contractor. In particular, it will provide Agency perspectives for managing the program by having the Agency’s interests well defined while striving to achieve a balance between the requirements of the Agency, contractor, third-parties, and stakeholders simultaneously with the established schedule and budget constraints, including risk mitigation.