Evaluating financial options with public or private funds in delivering transportation infrastructure projects

摘要

Public-Private Partnerships (PPP) have become a distinctively favored way ofdelivering transportation infrastructure projects, since such investments can berealized mostly by national and foreign private capital, while at the same timepreserving the public interests. Nevertheless, despite their worldwide acceptance,there is still considerable debate as to whether a PPP scheme will most likely performbetter than the traditional way of project delivery with exclusive public financing.Several approaches have been developed to effectively assess which of these twooptions is preferable for the public’s interest. The paper performs a review of theseapproaches and, with the scope to overcome their limitations, proposes a novelevaluation framework with the flexibility to be adapted to different types oftransportation infrastructure projects. This provides for a direct comparison of the twooptions for project delivery, that is, private financing through PPP and publicfinancing with conventional procurement, assuming that the implementation of thespecific project has already been decided. The proposed three-step frameworkprovides for risks and Public Sector Comparator assessment, and combines cost51effectiveness analysis with a Multi-criteria approach employing suitable indicators,such as Cost Effectiveness Ratios (CER), to reflect public interests. The finalselection is based on the lower weighted CER. An application of the proposedmethodology is carried out for “Egnatia Odos”, the largest road infrastructure projectin Greece. The proposed framework can provide useful guidance in terms oftransparency, validity, reliability and precision to the decision-making of othercountries considering the PPP option for their transportation infrastructure projects.