Public Private Partnerships in Transport, Trends & Theory (P3t3) Value Models in Addressing Uncertainty COST Action TU 1001



Public Private Partnerships in Transport, Trends & Theory (P3t3) Value Models in Addressing Uncertainty COST Action TU 1001

Authors

A Roumboutsos, University of the Aegean, GR

Description

The present contribution describes the work in COST Action TU1001 on Public Private Partnerships in Transport: Trends & Theory (P3T3) with respect to decision models; critical success factors and key performance indicators; and addressing incompleteness i

Abstract

SHORT ABSTRACT
Public Private Partnership (PPP) models are used in many countries to deliver transport infrastructure and services, exploiting project finance to progress EU transport policies. Whilst long-term complex arrangements, they have been addressed ad hoc using short-term knowhow. The P3T3 COST Action aims at streamlining research conducted to produce normative and theoretic scientific tools on this subject and address the uncertainty. Within this “think tank” of almost one hundred researchers the economic downturn and its impact on new and existing transport projects is central.

The present contribution describes the work in COST Action TU1001 on Public Private Partnerships in Transport: Trends & Theory (P3T3) with respect to decision models; critical success factors and key performance indicators; and addressing incompleteness in a modal and national context. Considering the impact of the economic downturn, it takes a future outlook proposing the structure of value models to address present and future social, economic and financial needs.

Keywords: Public Private Partnerships, Transport sector, decision models, Flexibility, KPIs, Value Models

EXTENDED ABSTRACT
The economic value of accessibility renders transport infrastructure an indispensable asset in a modern city, region or country and an integral part of European cohesion. In addition, the large sunk costs encountered in transport infrastructure development and the demand on public budgets from competing sectors have made Public Private Partnerships (PPPs) an attractive model for the introduction of private investors, largely stimulated by EU deregulation policy and the support of development funds. In this context, the popularity of PPPs grew steadily over the past 20 years in Europe and elsewhere in the world “seen by governments as a means to launch investment programmes, which would not have been possible within the available public-sector budget, within reasonable time”.

However, these arrangements are characterised by the complexity of the risk-sharing problem, typically, between two (or more) risk-averse agents, constrained by bounded rationality, stemming from the uniqueness of the undertaking, the considerable investments incurred and resulting in the length of the contractual agreement, which stretches a few decades into an unforeseeable future. Addressed purely as contractual agreements and project finance, research on the topic has been largely fragmented and descriptive focused on reporting on “experiences”. The credit crunch of 2008 and then the economic crisis has highlighted the fact that this is approach has many shortcomings.

The scope of the COST Action TU1001 on “Public Private Partnerships in Transport: Trends & Theory” (P3T3), initiated in 2011, is to develop the theoretical basis for PPPs in the transport sector (a shift from descriptive to normative approach). Key objectives that are being addressed on a national and modal perspective by P3T3 working groups are: (i) the decision making process for selection, implementation and operation of PPP transport projects considering “sustainable procurement”, “value propositions” and “flexibility”; (ii) Identification of critical success factors, test criteria, knowledge-bases and key performance indicators for improved PPP performance; and finally, (iii) the implications of the financing arrangement with respect to the changing environment. Findings are cross-studied by auxiliary working groups focusing on the national context and the modal (urban, surface and port) context, respectively. Action goals are addressed by streamlining individual research agendas and collaborating within working groups.

The present contribution gives an overview of the issues addressed by the working groups, the theories and the research approach selected by working teams to progress on objectives as initially proposed. The impact of the economic downturn is considered in the developments.

Within this “think tank” of almost one hundred researchers the economic downturn and its impact on new and existing transport projects is central. Stemming from the work underway, as conducted with the framework of the COST Action TU1001 MoU, and considering the needs as generated by the economic downturn, the present contribution goes further in describing new value propositions to extend the value basis for decision making, development, monitoring and re-negotiating of PPP contracts.

The “Value Model” take into account the impact the economic downturn has on both the financing and the revenue side and describes, contextually, the holistic approach needed in addressing PPPs in the transport sector. The “Value Model” identifies the research areas needed to address the present and future social, economic and financial needs. These are described in the presentation as the way forward.

Keywords: Public Private Partnerships, Transport sector, decision models, Flexibility, KPIs, Value Models

Publisher

Association for European Transport