Remuneration models and revenue risk mitigation in road public–private partnership projects – a case study from Serbia

As a consequence of renewed interest in attracting private financing for infrastructure investments, public–private partnership (PPP) arrangements are mostly seen as a suitable mechanism for ensuring sound and quicker delivery of transport infrastructure projects. However, a general concern is that expectations of mobilizing private-sector funds have been overestimated in a number of cases. The purpose of this paper is to contribute to the risk analysis of transport PPP projects with substantial exogenous demand risk which could serve as a rationale for choosing the appropriate PPP model. The objective of this paper is to construct an analytical cash flow-based project model to facilitate the choice of the remuneration mechanism suitable for both private investors and public sector. The model provides an indication whether the project should be implemented as a ‘users pay’, a hybrid or an ‘annuity’ PPP model. The proposed methodology is illustrated using a case study from Serbia.     

The effect of institutional factors on public–private partnership success in ports

Port public–private partnerships (PPPs) are considered to be an important emerging mechanism for port development and improvement in port performance especially for developing countries. This paper empirically investigates the effect of institutional factors in the success of port’s PPPs; the latter defined as the attractiveness of the PPP project for private bidders and the market competitiveness of the facility. The empirical investigation of a large sample of ports finds that ‘regulatory quality’, ‘market openness’, ‘ease to start a business’ and ‘enforcing contracts’ are important institutional determinants of port PPP success and may ultimately contribute to port development and economic growth. The results are consistent with and add to the theoretical literature whereas practical implications for port authorities, managers and investors are discussed.     

How Do Governments Support the Development of Public Private Partnerships? Measuring and Comparing PPP Governmental Support in 20 European Countries

Abstract

Taking an institutional perspective, in this article we develop an index of the governmental support for public private partnership (PPP) — a ‘PPP Governmental Support Index’ (GSI) — which aims to measure the extent to which national governments provide an institutional framework that is either conducive or preventive for the introduction and diffusion of PPPs within transport infrastructure and other sectors. First, based on a substantive review of the literature, we define the elements of the PPP GSI, including the policy and political commitment regarding PPPs, the legal and regulatory framework, and the presence/absence of dedicated PPP-supporting arrangements. Second, we calculate the PPP GSI for 20 European countries, cluster them and compare similarities and differences in national governmental support of infrastructure PPPs. Third, we explore the potential link between national institutional index scores and infrastructure PPP activity in the 20 countries. Lastly, we discuss the potential and usefulness of the presented PPP GSI, as well as methodological limitations, and elaborate on how this index might be utilised to strengthen future comparative research on PPP in transport and other sectors.     

Developing Transport Infrastructure in Sub-Saharan Africa through Public–Private Partnerships: Policy Practice and Implications

In contemporary times, Public–Private Partnership (PPP) in transport infrastructure has gained considerable attention in developing regions following its success in the developed countries. However, Sub-Saharan Africa (SSA) is among the developing regions with few transport PPP projects and among the regions with high number of failed projects. Meanwhile the region's transport infrastructure need far exceeds it current provision. This paper therefore aims to examine the project experiences (success and failure factors) of three highly profiled transport PPP projects, namely the Lekki toll road concession project (Nigeria), N4 toll road (South Africa/Mozambique) and Port of Maputo (Mozambique) in order to develop policy measures for effective future implementation. The experiences of the three projects show that transport PPP policy is indeed feasible in SSA. However, to realise its full applicability, proper policy actions and measures must be carefully observed and these include effective and efficient stakeholder management, transparent and competitive tendering process, high participation of local investors, stable macro-economic conditions and strong government commitment and regulatory framework. The projects experiences and policy actions developed are impactful in accelerating transport infrastructure development through PPP approach in SSA. Hence it is hoped that policy-makers and practitioners would be informed on the key strategies to employ in implementing future projects.     

Transport in developing and emerging nations

One perspective on the allocation of transport investments by public authorities is offered by the so‐called ‘pork barrel’ model, whereby politicians and political parties allocate public investment spatially in such a way as to gain electoral support from localities so benefited. The paper introduces this model and discusses its attractions and problems in the case of the transport sector. A review of the modest number of published examples of this approach is offered before a detailed case study considers the case of railway investment in Nelson, New Zealand.     

Towards a more equitable distribution of resources: Using activity-based models and subjective well-being measures in transport project evaluation

In this paper, we develop an innovative and comprehensive transport evaluation criterion to better account for equity considerations in transport project evaluation. This work explores transportation benefits from the consumer’s perspective to accessibility as a key benefit generated by any transportation project. To assess the full benefits of transportation project implementation for various consumers and calculate the improvement in accessibility, it is best to use Activity-Based Models (ABM). ABMs have two important advantages for equity analysis, which have not been utilized in the literature so far: first, ability to analyze results by various groups of the population; second, these models can utilize the Activity Based Accessibility (ABA) measure to estimate the overall benefits from transport investments and policies. The ABA measure allows one person to have different accessibilities for different choice situations, depending on his/her characteristics. We suggest including social and spatial factors in social welfare assessment by introducing the concept of accessibility gains to key social activities. Specifically, it is suggested to incorporate subjective well-being consideration into a new evaluation framework “Equity Benefit Analysis” (EBA). we use an alternative measure, “Subjective Value of Accessibility gains” (SVOA), which is based on the ABM accessibility measure as well as on Subjective Well-Being (SWB) measure, as the key benefit taken into account in the evaluation process. The SVOA is not intended to replace the current practice of analyzing equity by comparing various impacts on different groups of the population, but can aid by providing policymakers with a single measure advancing both equity and efficiency considerations and facilitating comparison among alternatives. Initial case study results indicate the SVOA can show higher benefits to policies focusing on the needs of vulnerable social groups that compared traditional measures.     

Renegotiating PPP Contracts: Reinforcing the ‘P' in Partnership

Abstract

The issue of renegotiation is becoming increasingly important as a tool to address uncertainty of public private partnership (PPP) projects and as a mechanism to restore its economic and financial equilibrium. This paper aims to understand how and why renegotiations occur in long-lasting PPP projects and what are the pros and cons of the renegotiation. We depart from a literature review on contract incompleteness and on the determinant factors for the renegotiation of infrastructure concessions. To illustrate the discussion, the case studies of nine European PPP projects are analysed by examining the specific exogenous and endogenous determinant factors that conduce to renegotiating contracts. The implications of contractual renegotiations are explained and summarized through a comparison of our case studies with literature. Although renegotiation, per se, is not a solution for the successful implementation of PPP projects, our findings reinforce the idea of contractual flexibility as a tool that allows adapting to uncertainty. Moreover, effective communication mechanisms allow a better response to unforeseen events, reinforcing the partners’ commitment to deliver a win–win project.     

Passengers’ Perceived Service Quality of City Buses in Taipei: Scale Development and Measurement

Abstract

To understand fully passengers’ perceptions and expectations of the bus service quality in Taipei, business managers and governmental agencies must seek a proper scale that can reflect passengers’ opinions accurately. This study develops and tests a service quality scale designed for a city bus transit system in Taipei. Churchill’s paradigm and a focus group interview were combined into a multistage scale development procedure. Based on the procedure, Taipei city buses were selected as the example, for which a service quality scale was developed. The final scale contains four dimensions and 20 items. These four dimensions are ‘interaction with passengers’, ‘tangible service equipment’, ‘convenience of service’ and ‘operating management support’. Finally, the results of scale development and the managerial applications of the service quality scale for the city transit system are discussed.     

Evaluating choice of traction option for a sustainable Indian Railways

The transport sector is a major contributor of carbon emissions in India. As railways are the most environment-friendly mode of transport we look at the spearheading role of Indian Railway (IR) in bringing about the modal shift from road and airways to rail with a holistic perspective considering India’s development stage and resource situation. India being an emerging economy, faces many other social and developmental challenges, which have to be incorporated in assessing the viability of the solutions. In order to assess the total impact of the transportation sector a ‘wells to wheels’ approach needs to be adopted to quantify the emissions from the production to distribution and final usages alongside its impact to the competing societal goals utilizing the same resources. This study focuses on evaluating IR’s critical policy decision towards providing efficient transport i.e. the choice of traction. It is inferred that until such time the fuel mix of power production in India remains the same, i.e. coal dominated and there is a shortage of electricity in the country, the accumulated carbon footprints of running electric locos will be higher. There should be a judicious mix of both the tractions to achieve a balance in environmental efficacy, sustainability and equity.     

Book review

Abstract

In April 1983, the “Fourth World Conference on Transport Research” was held in Hamburg. For a period of four days, experts from all parts of the world discussed transport research and planning problems. The discussions were divided into eight so‐called ‘sub‐topics’. Fortunately, one of the sub‐topics, ‘Man and his Transport Behaviour’ (chaired by Moshe Ben‐Akiva, U.S.A. and Werner Brog, Federal Republic of Germany) dealt with the individual and his behaviour. This complemented the traditionally supply‐oriented thinking of the transport planners by introducing the demand component which had frequently been neglected in the past. Since the view has become increasingly widespread that transport is meant to serve people and thus that research should emphasize the (potential) users of the transport system, the number of papers submitted and presented on this sub‐topic was especially large.

However, the number of papers which could be included in the ‘Conference Proceedings’ was limited and this would have meant that a number of interesting documents could not be published. Therefore, papers on four special areas within this sub‐topic are to be published in four consecutive issues of Transport Reviews. The areas which will be dealt with are ‘Telecommunications’, ‘Non‐Motorised Transport’, ‘Special Problems in Third World Countries’ and ‘Fare Structures in Public Transport’. The papers were selected strictly according to their contents. A brief commentary in each issue explains in turn the reasons for choosing each of the four subject areas.     

Characterisation of and reflections on the synergy of bicycles and public transport

The bicycle is often understood as a disjointed ‘feeder’ mode that provides access to public transport. We argue that combined use of the bicycle and public transport should be understood in a broader perspective, especially where bicycles link to higher speed and higher capacity public transport, such as the train. Cycling and public transport can have a symbiotic relationship forming a hybrid, distinct transport mode, which should be reflected in transport planning. The bicycle is as a way to soften the rigid nature of public transport and thus accommodate diverse individual travel needs and situations. Public transport can be seen as a means to dramatically extend cycling’s speed and spatial reach. We combine a system perspective with conceptual analysis to explore how, why and when this reconsideration is important. We use the Netherlands as illustrative case because of the relative maturity of its bicycle–train connections. The case shows that the synergy between rather opposite yet highly complementary aspects, high speed of the train, high accessibility of the bicycle and flexibility in combining both sub-modes, are the fundamental characteristics to understand the functioning of this system in a wider spatial context. In our conclusion we propose a research agenda, to further explore the relevance of this system for land-use and transport planning and distil wider implications for the international debate.     

Calculation of external costs for freight transport

Abstract

The negative impacts of transport are in general associated with costs. These costs are usually denoted as ‘external costs’ or ‘externalities’. This paper presents a tool for calculating external costs for freight transport together with its application to a number of case studies. The categories considered include: air pollution, greenhouse gases, noise, accidents and congestion. Results are presented for a number of different transport alternatives as total costs and divided into categories. The uncertainties in the results are discussed. The assessment of these costs is essential for predicting future transport costs.     

Addressing transport policy challenges through Policy-Packaging

Policy packaging is not a new concept and hardly anyone would dispute the merit of strategically considering and deploying several policy measures in combination to address transport policy issues. Yet the concept of policy packaging remains largely vague, and how to ‘package’ policies is not really considered or suggested. Policy packaging in most cases remains just a term. The Optimal Policies for Transport in Combination (OPTIC) project aimed to start advancing state-of-the-art in the design of policy packages. The project objective was to turn policy packaging into a well-established approach to policy making, with solid theoretical and methodological foundations that can also be practically applied in the field. This editorial to the special issue on Policy Packaging serves to first define and explain the main principles of policy packaging and the goals it strives to achieve: increasing effectiveness, implementability and thus efficiency. It then describes the main contribution of each of the papers in the special issue to research and practice of policy packaging and it outlines some avenues for further research. The paper concludes by setting a few criteria to distinguish a policy package from a ‘list’ of policies and by arguing that only through case studies and application in practice that state-of-the-art policy packaging can be really advanced.     

Man and his transport behaviour Part 4. Fare strategies for public transport—a problem outline

Abstract

In April 1983, the “Fourth World Conference on Transport Research” was held in Hamburg. For a period of four days, experts from all parts of the world discussed transport research and planning problems. The discussions were divided into eight so‐called ‘sub‐topics’. Fortunately, one of the sub‐topics, ‘Man and his Transport Behaviour’ (chaired by Moshe Ben‐Akiva, U.S.A. and Werner Brög, Federal Republic of Germany) dealt with the individual and his behaviour. This complemented the traditionally supply‐oriented thinking of the transport planners by introducing the demand component which had frequently been neglected in the past. Since the view has become increasingly widespread that transport is meant to serve people, and thus, that research should emphasize the (potential) users of the transport system, the number of papers submitted and presented on this sub‐topic was especially large.

However, the number of papers which could be included in the ‘Conference Proceedings’ was limited and this would have meant that a number of interesting documents could not be published. Therefore, papers on four special areas within this sub‐topic are to be published in four consecutive issues of Transport Reviews. The areas which will be dealt with are ‘Telecommunications’, ‘Non‐Motorised Transport’, ‘Special Problems in Third World Countries’ and ‘Fare Structures in Public Transport’. The papers were selected strictly according to their contents. A brief commentary in each issue explains in turn the reasons for choosing each of the four subject areas.

Parts 1–3 appeared in Transport Reviews, 4, 99–113, 173–212, 273–298.     

Demandeur pays: The EU and funding improvements in South Asian ship recycling practices

Questionable practices for dismantling end-of-life ships or ‘ship recycling’ on South Asian countries’ shores have elicited unease given their dominance of this unevenly regulated global industry. International efforts to establish enforceable regulations have met with limited success so far, and yet this limited success may be further eroded as different interests promote their own preferred arrangements—or ignore them altogether. This paper focuses on narrowing differences between the European Union and South Asian ship recycling nations over regulating this trade by sequentially detailing its economic rationales, environmental regimes and relevant sustainability principles. These tasks performed, I deductively build a case for an aid-based, ‘demandeur pays’ approach to meaningfully address this impasse after considering other options to fund improved ship recycling practices in South Asia.     

Attitudes to transport modes for shopping purposes in Singapore

A review of the retailing and transportation literature shows that there is an apparently large research gap in the understanding of shoppers’ attitudes towards transport modes for shopping purposes. In particular, not many studies have been done to examine shoppers’ detailed and disaggregated attitudinal image structures of the various transport modes for shopping purposes. Using Singapore as a study area, this paper has attempted to investigate shoppers’ image structure of transport modes and their comparative perception ratings for the various modes of transportation for shopping purposes. Using principal component analysis, the research has unveiled the perceptions of five transport modes for shopping purposes. While some of the factors are unique to certain transport modes, other factors, namely ‘suitability’, ‘practicality’, ‘ease of travel’ and ‘cost’, are common to all modes of transportation. By way of the weighted‐factor rating, the study found that the car recorded the highest overall perception rating while the bus rated the lowest. In addition, the shoppers have reasonably good perception of public transport modes in Singapore.     

Urban transport in Germany: providing feasible alternatives to the car

With the second highest level of car ownership in the world, and the third highest population density in Europe, Germany has adopted a range of policies to balance the many private benefits of car use with its serious social and environmental problems. In order to ‘tame’ the car, most German cities have implemented a twofold strategy of expanding and improving pedestrian, bicycling and public transport alternatives simultaneously with restricting car use and making it more expensive. That has increased political acceptability since the car‐restrictive measures are not perceived as mere punishment of car drivers. The results of this coordinated urban transport strategy have been impressive. Germany, as a whole, has managed to increase public transport use and to stabilize the car share of modal split. Some cities, of course, have been more successful than others, and this paper examines three of the most successful cities: Münster, Freiburg and Munich. In each of the cities, the percentage of travel by bicycling, walking and public transport has been raised over the past 20 years, while the car's share of modal split has fallen. This article documents the range of policies used to restrict car use, both in Germany as a whole, and in the three case‐study cities in particular. The key to success is found to be mutually reinforcing transport and land‐use policies. It is the combination of a whole set of coordinated policies that explains the dramatic success in changing travel behavior.     

Methodology to determine service delivery levels for public transportation

When designing transit services, the Level-of-Service concept has been widely used by transport planners and service providers to assess the service quality of an existing transit system. In addition to the service quality assessment, service providers also need to estimate the service levels that will satisfy a maximum number of users and potential users, across all socio-economic groups, so as to maximize patronage. This paper demonstrates a method using the concept of ‘user satisfaction levels’ and their ‘zone of tolerance’, along with total utility and marginal utility for service providers, to provide a range of service delivery levels for individual transit service attributes in the city of Kolkata. This range of service levels provides a guideline for service providers within which they can consider making an improvement in service level. However, the final decision on service improvement is an outcome of both financial and infrastructural feasibility.     

Allocating Revenue Risk in Transport Infrastructure Public Private Partnership Projects: How it Matters

Abstract

Transport infrastructure public private partnership (PPP) projects are very diverse and complex in nature not only because of their mode-specific intricacies but also because of their inherent economic characteristics that relate to the scope of involvement of the private sector in the project, the large sunk costs incurred, and ultimately, the competition to which these projects are exposed. The allocation of revenue risk is of paramount importance for the successful implementation of such projects and a sub-optimal allocation may lead to project structuring that is unnecessarily expensive and vulnerable to failure. At the same time, the revenue risk depends critically on the remuneration model used (user-based versus budget-based) and may, in turn, take the form of demand risk, counterparty risk or combinations of the two. This review explores the issues related to revenue risk allocation for transport infrastructure PPP projects. Overarching principles for the allocation of revenue risk that transcend mode-specificity are identified and compared to case studies generated in the context of the COST Action TU1001. The results show that theory and practice are divergent, leading to sub-optimal structuring and exposing projects to potential failure.     

Risk Management in Motorway PPP Projects: Empirical-based Guidelines

Abstract

This paper deals with the topic of risk management in Public Private Partnership (PPP). The analysis of the related literature reveals that risks must be analyzed and managed on a context-specific approach, and that there is a lack of a comprehensive study on the appropriate risk mitigation strategies for each risk embedded in PPP projects. Focusing on the transport sector, based on the results of a Delphi survey, the paper provides guidelines for both public and private parties in defining a list of significant risks in PPP motorway projects, and identifying for them both the effective allocation and the suitable mitigation strategies. Results of the Delphi survey have been compared with the common practices on risk management applied in eight real motorway PPP projects.