PPP 4 BRT: Getting your money's worth

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PPP 4 BRT Getting your money's worth?
Yogyakarta, 14 December 2006
"My mind rebels at stagnation. Arthur Conan
Doyle (1859 - 1930)
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Introduction the challenge

• Asian cities face a twin problem road congestion
  and air pollution
• Improved public transport part of the solution
• Urban planners face duel question
• What type of public transit system?
• Bus rapid transit BRT system good alternative
• How to implement the system efficiently?
• This presentation deals with this second question
  

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My claim

• Few, if any, existing BRT systems create maximum
  value-for-money
• "it's economics, stupid!
• Public-private partnerships PPP is economic
  theory in practice
• The Dutch experiences with PPP provide excellent
  examples for integrated transport systems

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The next 12 minutes

• BRT the concept and its current practice
• PPP economics 101
• PPP 4 BRT some food for thought

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BRT the concept ...
4. System Management
3. Fare collection
2. Buses
1. Buslanes stations
Components
INTERFACE
INTERFACE
INTERFACE
Phase
INTERFACE
INTERFACE
a. Planning design
b. Construction
c. Operations Maintenance
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BRT the concept ...

• BRT system - more than the sum of its parts.
• This requires smoothly running interfaces, for
  example
• The bus lanes and stations need to be able to
  physically accommodate the selected buses.
• The traffic control and safety system needs to
  match the system design and the planned velocity
  of the buses.
• The routing needs to meet the demands of
  commuters.
• The design of infrastructure hardware bus lanes
  and stations, and the selection of construction
  materials, influence the maintenance profile and
  costs.

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BRT ... its current practice
4. System Management
3. Fare collection
2. Bus Services
1. Buslanes stations .
Conventional works contract
Concessions
Public Authority

• Division of responsibilities and accountabilities
• Create a range of interface problems, both
• between different components of the system and,
• across time.

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PPP Economics 101

• Can PPP provide the answer i.e. give you your
  money's worth?
• My answer yes, very likely so.
• Based on three key principles of PPP economics
  ...
• ... and the one thing PPP economics is not
  about.

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PPP Economics 101

• Principle 1 involve the private sector in a
  smart and deliberate way
• The private sector is well-equipped to design,
  build, operate and maintain infrastructure
  services.
• But private sector is not willing to do anything
  i.e. take up any risk.
• PPP is about a division of labor between public
  and private sector based on comparative advantage

Yes performance risk construction,
maintenance risk
Maybe revenue risk toll roads versus
utilities
No political risk policy changes
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PPP Economics 101

• Principle 2 PPP is about taking an integrated,
  lifecycle approach to the project
• PPP is about finding the optimal balance between
  different parts of the system across time

Design, location, and control
Costs, revenues, risks, and quality
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PPP Economics 101

• Principle 3 PPP is about exploiting the
  commercial potential of a system
• Commuters are also consumers and businessmen
• Especially at transfer terminals i.e. large
  volume of commuters

Advertisement
Convenience Stores
Real Estate Development
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PPP Economics 101

• Principle 4 who pays the bill is, in PPP
  economics, not important.
• End-users user fees tolls, bus tickets
• Government "availability payments"
• Payment scheme can be tailor-made based on
• Willingness to pay of end-users
• The ability to collect user fees
• Public versus private good i.e. existence of
  externalities

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PPP 4 BRT some food for thought

• In moving forward BRT plans, actively consider
• Transfer risks for delivering both the
  infrastructure hardware and transport services to
  private sector.
• Design an appropriate incentive scheme with
  reward and penalties
• Allow private consortium to the take an
  integrated, lifecycle approach to designing and
  managing the BRT system.
• Allow entrepreneurship to exploit the commercial
  potential of the system
• Far more likely to create maximum
  value-for-money!

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Contact
Only connect." E.M. Forster
Rebelgroup Advisory BV Wijnhaven 3-O, 3011 WG
Rotterdam, the Netherlands Tel [phone]
Fax [phone] www.rebelgroup.nl
geertjan.engelsman_at_rebelgroup.nl