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Economy
CBO Finds Private Roads (Slightly) Faster and Cheaper
2014-03-10
A handful of studies on public-private partnerships, or P3s, in highway construction suggest that such arrangements “have built highways slightly less expensively and slightly more quickly, compared with the traditional public-sector approach,” a Congressional Budget Office researcher told a special House Transportation & Infrastructure Committee panel on March 5. CBO cautioned, however, that data on P3s in highway projects are scarce, so it’s difficult to conclude definitively that other P3 projects would see similar results.
Right. Only climate scientists can make rock-solid projections based on a little historical data.

The costs of financing a highway project privately “is roughly equal” to the cost of financing it publicly once you factor in costs associated with the risk of project losses – which taxpayers ultimately bear – and the financial transfers made by the federal government to states and localities, Kile told the panel. Any remaining difference in costs results from the effects of incentives and conditions established in the contracts that govern P3s, he said.

Kile also emphasized that private financing increases the availability of highway construction funds only if the state or local government restricts its spending through legal constraints or budgetary limits.
How many of the 57 states have NOT maxed out their highway budgets?

“The reason is that revenues from the users of roads and from taxpayers are the ultimate source of money for highways, regardless of the financing mechanism chosen.”
Pardon me, Mr. CBO guy? The public pays, either way? Are you tellin' me there ain't no sucha thing as a free lunch?

The House T&I Committee established the special panel in January to explore the use of and opportunities for P3s across all modes of transportation, economic development, public buildings, water, and maritime infrastructure and equipment.
Posted by:Bobby

#4  small and minority contractors aren't generally capable of handling large complex projects (like bridges). That's why they're small and minority contractors
Posted by: Frank G   2014-03-10 12:39  

#3  I finished one of these P3s and am working on another, now. In the first. the State loaded up on testing requirements, equating loads of tests with high quality. So we wasted some dollars, which (as the article said), ultimately come from the taxpayer. Five years, $1.5 B, roads and bridges.

The agencies like having the private cash, but - deep down - they believe they could do a better job if only the State would give them the time and money. So the CBO report tends to feed that theory/fantasy.

The biggest "patronage" for the completed project was the 40% goal for the various disadvantaged groups. In the finest 'Chicago' tradition, we were threatened with disbarment if we didn't meet the goal - by far, the highest the state had ever attempted/mandated (not Illinois, BTW). We achieved about 90% of the 'goal' and ultimately got some praise from the agency. Minority goals add some 5-10% to the final cost, but agencies refuse to recognize that.

The current project, just underway, seems a lot more reasonable (10% goals), but the various groups are still jostling for position.

Giant corporations tend to lead the way for mega-projects, but carry a lot of subcontractors with them - minority and otherwise. As long as the state doesn't regulate the P3 concept to death.
Posted by: Bobby   2014-03-10 12:16  

#2  Most of the ridiculous contracting rules which governments impose on themselves are pushed down onto private contractors as well. Makes it hard to realize much in savings when you have to do all the same stupid and wasteful things that the government does.
Posted by: Eohippus McCoy1112   2014-03-10 10:59  

#1  "have built highways slightly less expensively and slightly more quickly, compared with the traditional public-sector approach,"

BFO. No bid contracts to two or three road outfits that corner the market for state (sub-)contracts that include a line item which one way or another is functionally "kick-back patronage [including the state employee union political fund] and nepotism hiring program"
Posted by: Procopius2k   2014-03-10 10:35  

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