PPPs in the rail sector - A review of 27 projects

Dehornoy, Julien (2012): PPPs in the rail sector - A review of 27 projects.

Abstract

PPPs in the rail sector have become increasingly common in the last two decades. They have been praised and criticized for a variety of reasons. This paper provides a comprehensive study of all rail PPPs to date, in order to observe long term trends and to quantify to potential of failure or success of such PPPs. Our key finding is that optimization of risk management explains two major trends : (i) projects are moving from integrated, stand-alone systems toward sub-systems with complex interfaces with other networks or sub-systems, (ii) moral hazard, incomplete contracts and strategic bahaviors create an incentive for concessionaires to make over-optimistic ridership forecasts and explain why most traffic-based concessions failed.

• Item Type: MPRA Paper
• Language: English
• Keywords: railways ; public-private partnerships ; ridership forecasts
• Subjects: H - Public Economics > H5 - National Government Expenditures and Related Policies > H54 - Infrastructures ; Other Public Investment and Capital Stock; L - Industrial Organization > L9 - Industry Studies: Transportation and Utilities > L92 - Railroads and Other Surface Transportation

References

Allen Consulting (2007), “Performance of PPPs and Traditional Procurement in Australia”, report to Infrastructure Partnerships Australia, 63 p.

Coux, P.-D. (2012), “Concession de la LGV Sud Europe Atlantique Tours – Bordeaux : un succès qui en appelle d’autres”, Infrastructures & Mobilité 115 (January 2012), p. 30-34

de Abreu e Silva J., Silva D., Sussman J. (2011), “The Portuguese HSR Network – Relating Financing to Strategic and Operations Issues”, ESD Working Paper , MIT, 17 p.

Dutzik, T., Schneider J., Baxandall P. (2011), “High-Speed Rail : Public, Private or Both ? – Assessing the Prospects, Promise and Pitfalls of Public-Private Partnerships”, US PIRG Education Fund report, available online, 40 p.

Flyvbjerg B., Skamris Holl M., Buhl S. (2006), “Inaccuracy in traffic forecasts”, Transport Reviews, Vol.26, No. 1, 1 – 24, January 2006

KPMG (2010), “Rail at high speed – Doing large deals in a challenging environment. Lessons learned from Portugal’s first HSR PPP project”, 12p.

National Audit Office (2009), “Performance of PFI Construction”, 40 p.

Nilsson J.-E., Hultkrantz L., Karlström U. (2008), “The Arlanda Airport Rail Link: Lessons Learned from a Swedish Construction Project“, Review of Networks Economics, 7:1 (March 2008), p. 77-94.

Omega Centre, Bartlett School of Planning, Case studies on Arlanda Express (2011a), Channel Tunnel Rail Link (2011c), HSL-Zuid (2011h), Omega Centre for Mega Projects in Transport and Development, available online

Painvain N. (2010), “High Speed Rail Projects : Large, Varied and Complex”, Global Infrastructure & Project Finance, FitchRatings, 19 p.

Spoehr J., Whitfield, J.D., Quiggin J., Sheil C., Davidson K. (2002), “Partnerships, privatisation and the public interest”, Centre for Labour Research, University of Adelaide (September 2002), 54 p.

TERA International Group (2006), “Best practices for private sector investment in railways”, raport to the Asian Development Bank and The World Bank Group, 112 p.

Willams R., Greig D., Wallis I. (2005), “Results of Railway Privatisation in Australia and New Zealand”, The World Bank Group, Transport Paper 7 (September 2005), 70 p.