Alternative Contractual Arrangements for Urban Light Rail Systems: Lessons from Two Case Studies

Abstract

The need to improve urban transportation systems in order to decrease travel time and increase their reliability while keeping the costs at an affordable level has led governments to develop public-private partnership (PPP) arrangements in urban light rail systems. Many cities around the world have used the PPP model for the construction of urban light rail systems, particularly light rail, since it provides a quicker and easier answer to financing these large investments. However, different models have been adopted. In most cases a typical design–build–operate–transfer model, with long duration (e.g., 30 years), is used, but other innovative models have also been adopted (e.g., a hybrid model with different contracts for infrastructure construction and maintenance—a 20-year contract—and another for the systems operation—a 5-year contract). This paper addresses the advantages and disadvantages of these models, using one case study for each model. The conclusions show that the hybrid model has the potential to decrease the operation costs, but at the same time to mitigate the interface risk (operation <-> infrastructure).