The Emerging Role of Public Private Partnerships in Mega-Project Delivery

Abstract

As civil infrastructure projects have grown in scale and scope, their cost has increased accordingly. As a result, we have entered what has been termed the era of the infrastructure mega-project; those that typically cost more than US $1 billion (oftentimes much more) and also have major impacts on communities, the environment, and public finance. Although constructed works of enormous cost and impact have existed since ancient times and have often been financed by the private sector, what distinguishes the modern mega-project is its unfortunate association with huge delays in delivery time and large cost overruns. This paper examines some of the reasons why mega-projects have become synonymous with poor cost and schedule performance and suggests that innovative project delivery methods, broadly termed public private partnerships (PPP or P3), have the potential to improve project performance by better integration of the project delivery organization in the allocation and management of risk.

Keywords: infrastructure, public private partnerships, mega-projects

JEL Classification: D23, D73, D81, H42, H72, L90