PUBLIC PRIVATE PARTNERSHIPS FOR HIGHWAY INFRASTRUCTURE: LESSONS LEARNED FROM "PROBLEM" PROJECTS IN THE US

This paper examines four public private partnership projects used to build and manage limited access highways in the United States that failed to meet some or all of their major public policy goals: Pocahontas Parkway (Virginia), Southern Connector (South Carolina), Dulles Greenway (Virginia), State Route 91 Expressways (California). Importantly, each of these projects delivered the infrastructure promised in the agreements, on time and often under budget. They also facilitated the adoption of cutting-edge technology and traffic management tools. These projects fell short of their goals largely through their inability to provide the financial returns expected by the private and public sectors. These experiences suggest several generalizable lessons about PPPs useful in the US, Asia, and elsewhere, including ensuring that the private sector has a significant equity stake in the project, the private sector shoulders substantial risk in the event of failure, willingness on the part of the public sector to allow markets to restructure agreements when they fall short of financial performance goals, and designing projects to avoid "optimism" bias in revenue and traffic forecasts.