Funding and Finance Analysis of Public–Private Partnership Highway Projects: Exploratory Study

Abstract

Public–private partnership (PPP) agreement as a response to funding shortage and population increase has been adopted and employed slowly in the United States with its aging infrastructure. Due to the lack of research on highway projects, there are still areas to be addressed regarding the PPP delivery method. These are the distribution of funding and finance sources, and the extent of the public and private sectors’ contributions to highway projects thus far in the US. To fill this gap in the body of knowledge, the authors collected the funding, cost, and schedule data of all completed PPP highway projects in the US, including design-build-finance-operate-maintenance (DBFOM) and design-build-finance-maintenance (DBFM). For the available number of projects, this exploratory study’s results showed that funding sources from the private and public sectors are different for these PPP agreements, which may be attributable to the difference found in the cost performance. The study also found that cost growth was better on DBFM projects compared to DBFOM. In addition, it was found that the cost growth of PPP projects with less than 35% private funding, was better than the cost growth of projects with greater private funding. Therefore, this exploratory study showed that types of PPP arrangements and funding sources had an effect on the cost performance of PPP highway projects.