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PPP 4 BRT: Getting your money's worth?

PPP 4 BRT: Getting your money's worth?. Yogyakarta, 14 December 2006. "My mind rebels at stagnation”. Arthur Conan Doyle (1859 - 1930). Asian cities face a twin problem: road congestion and air pollution Improved public transport: part of the solution Urban planners face duel question:

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PPP 4 BRT: Getting your money's worth?

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

  2. 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 Introduction: the challenge

  3. 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 My claim

  4. BRT: the concept and its current practice PPP: economics 101 PPP 4 BRT: some food for thought The next 12 minutes

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

  6. 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. BRT: the concept ...

  7. Division of responsibilities and accountabilities Create a range of interface problems, both: between different components of the system; and, across time. BRT: ... its current practice 3. Fare collection 4. System Management 1. Buslanes & stations . 2. Bus Services Conventional works contract Concessions Public Authority

  8. 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. PPP: Economics 101

  9. Principle 1: involve the private sectorin 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 PPP: Economics 101 Yes: performance risk construction, maintenance risk Maybe: revenue risk toll roads versus utilities No: political risk policy changes

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

  11. 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] PPP: Economics 101 Advertisement Convenience Stores Real Estate Development

  12. 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] PPP: Economics 101

  13. 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! PPP 4 BRT: some food for thought

  14. Contact “Only connect." E.M. Forster Rebelgroup Advisory BV Wijnhaven 3-O, 3011 WG Rotterdam, the Netherlands Tel +31 10 2755995 Fax +31 10 2755999 www.rebelgroup.nl geertjan.engelsman@rebelgroup.nl

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