Abstract:
In pursuit of efficiency gains and overcoming fiscal constraints, public-private partnerships (P3s) have gained popularity as innovative procurement approaches for public agencies to continue providing infrastructure services to their citizens. While academic research on this subject has grown over the years from economic, finance, engineering, and other disciplines, a number of policy relevant questions have yet to be fully addressed. The present study inquires P3s primarily in the highway sector from three distinct but related dimensions. First, the relationship between institutional, political, and financial conditions and the use of innovative procurement contracts of U.S. states was statistically analyzed, finding nuanced influence of policy relevant factors. Second, alternative procurement models in terms of bundling project components was modeled to theoretically investigate their effect in terms of the use of innovative investment and social welfare. The model was then extended to analyze procurement scenarios in the context of cross-border road network link where neighboring jurisdictions collaborate or compete in designing the network. Third, initial capital costs of large highway projects in the U.S. were statistically compared between procurement types. The results enhanced the understanding in the literature regarding construction cost overruns and how P3 contracts have included risk premiums and potentially innovative investment in pursuit of lifecycle cost minimization. The results, in addition to their lessons for policy makers, point to the potential of scholarly inquiry into these meaningful questions, identifying a few specific extensions of the analyses conducted herein.
