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Guidebook for Performance Metrics for P3 Projects

Description:

The infrastructure in the United States, as in many other countries, is aging and limited public funds are available to maintain the current infrastructure and foster future growth. A potential mechanism to fund a portion of the ongoing transportation infrastructure needs is public-private partnership (PPP), which is defined as a contract between the public and private sectors for the delivery of a project or service in which the private partner provides the majority of the necessary financing. There are several examples of successful PPPs in the United States and in many parts of the world, and PPP has been acknowledged by many as an innovative approach to the procurement of public projects. In recent years, establishment of the 2015 Build America Transportation Investment Center (BATIC) and legislation that facilitates implementation and financing of PPP projects have given increased traction for implementing PPP projects in the transportation sector. One of the early requirements in carrying out PPP projects is to develop metrics to measure project performance.

Performance metrics in PPP projects should address the public client’s overall strategic plan and mission objectives, the private sector’s long-term development and payoff strategy, and the general public’s requirements for quality public facilities and services. Thus, in PPP projects, performance metrics are more concerned about what customers’ desire, such as reliable travel times, a safe travel environment, comfortable ride, etc., and typically are used to manage safety, heavy vehicles, congestion, winter weather conditions, and toll collection times, as well as other elements. Common performance metrics that have been used in previous projects are: (1) lane availability (e.g., deductions for lane closed, deductions based on a delay cost model); (2) route performance (e.g., assessment over specific routes); and (3) condition criteria (e.g., deductions for lanes seriously affected by snow or ice). Despite the importance of performance metrics, knowledge is limited about the best practices for selecting metrics for PPP projects in the United States. To address this knowledge gap, the proposed project will entail an investigation into the performance measures of PPP highway transportation projects. Based on the results of this study, a guidebook will then be developed to provide information on practices that may assist in selecting key performance measures in PPP highway projects.

The proposed research should address the following questions:

· What are the key performance metrics for PPP projects? How can they be measured? How effective are they?

· How can DOTs tie performance metrics to payment mechanisms (i.e. lane availability, route performance, condition criteria, safety performance, unplanned events, etc.) to the PPP contractor?

· If the PPP contractor is not in compliance with performance standards, what actions (e.g., nonconformance reports, penalty point notices, etc.) should be taken?

· If the PPP contractor maintains or exceeds the level of performance specified for the majority of the contract term, what incentives should be provided?

· What techniques have been used to avoid and resolve disputes? Which have been most effective and which have been less effective?

· What impact do the structural aspects of the project organization have on construction and operation performance metrics?

Objective:

The purpose of this project is to (1) examine performance metrics for PPP projects used by DOTs, as well as other countries that actively solicit and involve the private sector in the delivery of highway infrastructure; (2) document lessons learned; and (3) make implementation recommendations that will improve U.S. policy and practice. This project will produce an empirical guide based on effective DOT practices regarding selection of performance measures for PPP projects, and provide guidance on best practices for implementing those performance measures. The guidebook will help state departments make key decisions to monitor and control PPP projects.

Related Research:

Federal Highway Administration (2009). “Public-private partnerships for highway infrastructure: Capitalizing on international experience.” International Technology Scanning Program.

Yuan, J. F., Zeng, A. J. Y., Skibniewski, M. J., and Li, Q. M. (2009). “Selection of performance objectives and key performance indicators in public-private partnership projects to achieve value for money.” Constr. Manage. Econom., 27(3), 253–270.

Yuan, J., Skibniewski, J., Li, Q., & Zheng, L. (2009). “Performance objectives selection model in public-private partnership projects based on the perspective of stakeholders.” Journal of Management in Engineering, 26(2), 89–104.

Tasks:

Specific tasks of the research to accomplish the main objective include:

· – Conduct comprehensive literature review of studies related to PPP performance measurement.

· – Benchmark the state-of-the-practice, across the various DOTs and transportation agencies, related to establishing project performance metrics for PPP projects.

· – Prepare a research work plan that describes the details of the research methodology and methods for identifying effective practices and developing conclusions.

· – Conduct representative detailed case studies on current and completed PPP projects to identify effective practices and lessons learned.

· - Execute the research work plan and prepare an interim research report that articulates the data collection and analysis, as well as emerging conclusions, effective practices, lessons learned; develop a proposed outline for the guidebook, the case study report and draft language.

· - Publish the guidebook to assist DOTs in selecting performance measures in PPP highway projects and implementing best practices.

· - Prepare a final research report detailing the complete results of the research.

Implementation:

During the construction and operation phases of a project, performance metrics will be compared with established performance objectives that serve as a baseline, to determine how successful organizations have been in attaining their objectives. The payoff of this research will be significantly improved administration and control of PPP projects, which ultimately will result in higher public satisfaction. The guidelines will become available through the TRB/NCHRP libraries and websites. Journal papers and conference presentations will spread the information to appropriate industry groups, including the DOTs and other transportation agencies.

Sponsoring Committee:AFH15, Project Delivery Methods
Research Period:24 - 36 months
Research Priority:High
RNS Developer:Behzad Esmaeili, Ghada Gad, Darryl VanMeter
Date Posted:11/07/2017
Date Modified:12/28/2017
Index Terms:Performance measurement, Public private partnerships, Disputes, Incentives, Construction projects, Contract administration,
Cosponsoring Committees: 
Subjects    
Highways
Administration and Management
Construction
Finance

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