The Challenge of Public–Private Partnerships

The Challenge of Public–Private Partnerships

Learning from International Experience

Edited by Graeme A. Hodge and Carsten Greve

The aim of the book is to investigate how PPP reforms function in comparison to the more traditional methods of providing public sector services and infrastructure and who typically experiences the successes and failures of these reforms.

Chapter 9: North American infrastructure P3s: examples and lessons learned

Anthony E. Boardman, Finn Poschmann and Aidan R. Vining

Subjects: economics and finance, public sector economics, politics and public policy, public policy


Anthony E. Boardman, Finn Poschmann and Aidan R. Vining1 INTRODUCTION This chapter summarizes the experience with infrastructure public–private partnerships (P3s) in Canada and the USA, which we call North America for convenience. While projects with partnership characteristics began to emerge in the late 1980s, it was not until the mid-1990s that P3s really began to take hold. Since that time P3 infrastructure projects have taken root in many areas. A range of public–private relationships have been labelled as P3s.2 For our purposes, a classic infrastructure P3 requires an explicit contract – between a government entity and one or more private sector firms, under which the private sector entity agrees to finance, build and operate some facility for a specific period of time after which ownership is transferred to the public sector.3 Such projects are frequently referred to as a BOT. The public sector entity is sometimes the (intermediate) customer for the project’s output. For example, in prisons and some wastewater projects, the government itself pays the user fees. In other cases, toll roads for example, the public partner negotiates the contract and specifies unit prices, but users pay directly. Perhaps the critical distinguishing feature of a P3 is that it is a partnership – that is, an ongoing contractual relationship between a public sector entity and a private sector entity with some degree of joint decision-making and risk-sharing. As in marriages, the allocation of decision-making and risk-sharing in P3s can vary widely. But if decision-making authority and risk-bearing...

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