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PPP in Transport

Transportation Projects via Public-Private Partnership Model

Public-private partnerships (PPPs) can be an effective way to build and implement new infrastructure or to renovate, operate, maintain or manage existing Transportation infrastructure facilities. In both areas PPPs can be a mutually beneficial way to solve critical transportation problems. Reliable road, highway and transit systems are essential to the growth and liveability of today’s expanding cities. Financing the construction and management of transportation projects is an issue of increasing concern, as resources in the Governmental Authorities are depleted or set to expire. A variety of other, innovative funding sources exist and a promising option is the public-private partnership, or PPP. Through a PPP, public agencies partner with a private entity to share responsibility for the completion, management and/or financing of a public project. In some cases, the public agency determines a set contract under which the private partner works. In cases where the private partner contributes financially toward the project, the partner is entitled to a return on the investment, freeing public funding for other uses. In all cases, the public agency relinquishes some control of the project, freeing it to attend to other functions. It is important to note that establishing a PPP is not privatization – the public partner still retains an ownership stake in the project.

transportation

Airports – Airports provide access to and interlink regional, national and international markets. This makes investment in existing or new airport infrastructure essential to economic development. Traditionally, airports were owned, managed and operated by governments but there has been a worldwide trend towards private sector involvement with varying degrees of private ownership and responsibilities, including the use of public-private partnership (PPP) models.

airport-8

Sea Ports – With the majority of global trade carried by sea, developing strong, well-functioning maritime transport infrastructure is a key element of economic growth for many developing and emerging countries. Public-private partnerships (PPPs) in ports have become a means to manage port operations more effectively, traditionally an exclusively government function. Different port management structures are used worldwide but in the majority of large and medium sized ports the landlord port model is used. In this model management responsibilities are delegated to the private sector, while the title in the land and assets remains with the government.

sea-port

Roads – Governments are aware that an underdeveloped road network is likely to be associated with sub- optimal economic performance and quality of life. It is no surprise, therefore, that governments are constantly looking for ways to develop their road networks and other transport links so meet their economic, political and social needs. In some jurisdictions this will mean building brand new roads, in others it will mean focusing on refurbishing, widening and extending existing roads. The nature of road projects varies considerably from project to project and is driven by the local, national or even international factors that make the project a necessity in the first place. New roads are expensive and governments are often unable or unwilling to commit fiscal spending to roads. This is an area where project financing and BOT projects are becoming more and more common.

roads

Railways – Efficient rail transport can be an important catalyst for economic growth and development. Rail transport can stimulate trade, link production sites to regional and international markets, promote the national and cross-border integration of regions and facilitate access to the labour market, education and health services. Rail transport is generally more energy efficient than road or air transport. Investment in rail transport is therefore an important element of a low carbon transport strategy. High-speed lines can substitute long-distance road or air transport. Rail transport is also an energy efficient means to move high volumes of bulk commodities from the centres of production, such as mining and agricultural areas, to ports and airports. PPPs in railways can bring opportunities for investment, operating efficiency and modern and clean technology. PPP railway projects providing for shared use of rail tracks may lead to efficiency gains and an increased revenue basis for states and private investors and make investment in PPP schemes more attractive.

railways

Urban Passenger Transport – As cities grow and traffic congestion increases, governments are looking increasingly for alternatives to encourage a shift from private to public transport. Light rail, tram and metro transit systems as well as bus rapid transit (BRT) projects are alternatives to carbon intense urban individual transport. This section provides information on public-private partnership (PPP) urban transport projects including links to PPP agreements and further reading materials.

  • Urban Passenger Rail
  • Metro (Subway)
  • Trams
  • Light Rail
  • Bus Rapid Transit

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