Key Considerations for States Seeking to Implement Public-Private Partnerships for New Highway Capacity

Implementation of a public-private partnership (PPP) for new highway capacity by a public agency involves issues from enabling legislation through identification, evaluation, negotiation, and management of PPP projects. Public agencies will need (a) a legal framework to establish and enforce long-term PPP agreements; (b) policies, processes, and tools to guide policy decisions; (c) technical skills to identify, develop, and evaluate PPP projects and to negotiate agreements; and (d) skilled staff to manage and oversee projects over the long term. This paper explores key considerations involved in implementing a PPP project at a state department of transportation or other public agency. Public agencies seeking to facilitate the delivery and stewardship of PPP projects may consider whether to establish a PPP program or develop PPP projects on a project-by-project basis. PPP programs establish policies and processes that enable the fair and efficient evaluation, procurement, and oversight of PPP projects. Specifically, PPP programs include planning processes that facilitate the selection of appropriate projects as potential PPPs; evaluation processes that assist decision makers in structuring commercially viable PPP agreements that achieve policy goals, optimally allocate risks, and bring value to the investment; fair and competitive procurement processes that allow the public agency to select the best partner and negotiate a final agreement that is transparent and protects the public interest; and processes that help the public sector take on the new role of performance-based contract manager.