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Public-Private Partnerships in Transportation

Although the U.S. is currently behind the curve compared to the rest of the world, the buzz around public-private partnerships (PPPs or P3) is revving up in the field of public transportation financing.

So what is this “new? idea? PPPs are contractual agreements formed between a public agency and a private sector entity that allow for greater private sector participation in the delivery and financing of transportation projects. There has been a reemergence of private-sector involvement in highway construction operation and financing since the late 1980s in order to address the growing need for highly efficient surface transportation systems. This is because motor fuel taxes no longer provide adequate funding for the increasing needs of transportation infrastructure, prompting transportation policymakers to consider alternative ways to finance and deliver transportation projects. PPPs can provide innovative financing mechanisms and initiatives that provide flexibility in the ways projects are delivered. They can also supplement traditional funding sources thereby enabling agencies to accelerate the speed in which a project is typically completed.

The Chicago Skyway and the California State Route 125 are two examples of U.S. PPP projects. The Sydney Harbor Tunnel in Australia and the Country Park Motorway in Hong Kong are two of many international examples of PPP projects.

The websites for the Federal Highway Administration and the National Council for Public-Private Partnerships both have more information and resources regarding PPPs.

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