1. How a Value for Money Analysis is Integral to Your P3 Project Allan T. Marks Partner Milbank Tweed Hadley & McCloy LLP July 20, 2015

2. Drivers for Public Private Partnerships Increased infrastructure demands for mobility needs, economic growth, and quality of service Stressed government budgets and limited debt capacity for public agencies Availability of private capital to be invested in public infrastructure (including equity) as an increasingly mature asset class Public policy incentives: tax attributes of projects, federal incentives, innovative state laws

3. Risk Transfer In performance-based infrastructure projects, public sector can shift risks to the private sector while retaining ownership and control of the asset Contractual framework creates accountability and standards for safe and reliable design and operation Flexibility along spectrum of potential risk transfer depending on commercial and governmental priorities, project economics, and innovative deal structures

4. Greenfield Project With Market Risk Brownfield Asset Privatization Brownfield Asset Expansion Availability Based Concession Greenfield or Brownfield GreenfieldBrownfieldBrownfield plus Expansion Greenfield Construction Risk YesNoPartialYes Operating RiskYes Traffic and Revenue Risk Yes No Government Availability Payments No Yes Payment to Government Excess profit sharing Upfront paymentNo Optionality in Risk Transfer to Private Sector

5. Value for Money – Challenges Life cycle costs are misunderstood Public budgets for capex and opex are determined independently Value of risk transfer not easily quantified Deferred maintenance increases future costs, reduces capacity and quality of service Electoral cycles skew incentives

6. Value for Money – Private Sector View Value for Money assessment key to building broad stakeholder support Long-term political support key to project success Level playing field – both in fact and as perceived by sponsors, lenders, and the public

7. For Further Information Allan T. Marks Partner Global Project Finance Milbank, Tweed, Hadley & McCloy, LLP 601 South Figueroa Street, 30 th Floor Los Angeles, CA 90017 +1-213-892-4376 amarks@milbank.com www.milbank.com