Tools for Evaluation of Potential Public-Private Partnership (P3) Projects Patrick DeCorla-Souza, USDOT Build America Bureau World Bank Webinar on PPP Project Screening December 13, 2015

Public-Private Partnership (P3) Toolkit Resources Fact sheets Primers Guides on: P3 Project Financing Risk Assessment Value for Money Benefit-Cost Analysis Analytical tools Qualitative assessment: P3- SCREEN Quantitative assessment: P3- VALUE 2.0 Risk valuation Financial viability Value for money Social welfare

P3-VALUE 2.0 P3 Efficiency Inputs Benefit-Cost Analysis Module to estimate Impacts on Public Welfare Value for Money Analysis Module to estimate Impacts on Agency Budget Inputs Risk Costs Revenue Financing & Tax Net Public Benefits Conv. Delivery P3 Conv. Delivery VfM Difference in Net Public Benefits Cost & Schedule Differences Quality Differences To illustrate the BCA process, this paper presents and evaluates alternatives for a hypothetical project using FHWA’s P3-VALUE 2.0 analysis tool. Practitioners may use the P3-VALUE tool to better understand the concepts, inputs, key assumptions and outputs from evaluations of risk, financial feasibility, "value for money" and benefit-cost analyses used to compare the aggregate financial benefits and costs of a P3 alternative with traditional procurement. It may be used by practitioners for high-level screening evaluation of actual projects. The complexity of the detailed-level analyses required for later stages of project development for specific projects requires that the analyses be done by experts using more detailed modeling. The Benefit-Cost Analysis (BCA) module of the tool assists the user in understanding the potential scale of societal net benefits that may be achieved by delivering a project as a P3, including the benefits from accelerating the project.

Illustrative Example: Impact on Agency Budget ($M in present value)

Illustrative Example: Impact on Vehicle Users ($M in present value)

US DOT Resources Websites: Build America Bureau: https://www.transportation.gov/buildamerica Federal Highway Administration: http://www.fhwa.dot.gov/ipd/p3/ Build America Transportation Investment Center (BATIC) Institute: http://www.financingtransportation.org/ Point of contact: Patrick DeCorla-Souza, P3 Program Manager: patrick.decorla- souza@dot.gov Key Message Another key part of a P3 – in addition to risk transfer, procurement packaging, and financing – is the payment mechanism, or how the concessionaire compensated. The payment mechanism is not separate from risk transfer, but in part reflects risk transfer. Background Information A Toll concession (revenue risk) payment mechanism is where the concessionaire receives compensation through obtaining the right to collect the tolls on a facility; under this model, the concessionaire is accepting the risk that toll or other project receipts will be sufficient to compensate for the costs to repay debt and fund other concessionaire responsibilities such as operations, maintenance and renewal. Referred to as accepting “revenue risk”. Availability payment concessions, where the concessionaire receives a periodic payment from the public partner based on the “availability” of a facility at the specified performance level. Shadow toll concessions, where the concessionaire receives a set payment for each vehicle that uses the facility from the public owner rather than from the actual users. In the U.S., they have been used in public-public agreements in Texas under the term "pass through tolls" to repay local agencies for their up-front investments in a project. Time Allocation A total of 2 minutes.