Evaluating Public-Private Partnership Organizational Alternatives for Existing Toll Roads

Public-private partnership (P3) agreements on existing toll roads in the United States have raised critical questions pertaining to the true costs and benefits associated with these agreements for all stakeholders. Of particular concern is an apparent reliance on monetary calculations alone to determine toll road lump-sum value. This primary focus on monetary considerations appears to neglect a number of nonmonetary variables associated with potential benefits and costs. The objective of this paper is to present a four-step process that uses two analytical methods to assess the benefits, costs, and other impacts associated with P3 organizational alternatives. The first analytical method uses cash-flow diagrams to calculate the net present value (NPV) for each P3 alternative. The second method weighs the relative importance of quantitative and qualitative (nonmonetizable) variables. Four distinct groups of variables form the basis of the two analytical methods: monetary, monetizable, quantitative, and qualitative. The last two groups represent variables that are nonmonetizable. It is these variables that can reflect the much larger stewardship role that government plays in society. The primary user of these analytical methods is identified as the public sector decision maker who has been asked to make recommendations regarding different organizational alternatives for toll road operation.