1
COST Action TU1001
Public Private Partnerships in
Transport: Trends & Theory
P3T3
2013 Discussion Papers
Part II Case St...
2
COST Action TU1001
Public Private Partnerships in Transport:
Trends & Theory
P3T3
2013 Discussion Papers
Part II Case St...
3
Contents
Foreword 7
The COST Programme 8
Preface 9
Introduction 11
Public Private Partnerships in Transport: Case Study ...
4
Case Studies
Roads and Motorways
A19 Dishforth DBFO, England, UK 21
Christopher Boles and Champika L. Liyanage
Attica To...
5
Ports and Airports
Piraeus Container Terminal, Greece 118
Sheila Farrell
Sines Container Terminal, Portugal 129
Sheila F...
6
Terminals and Depots
Cargo Center Graz-Werndorf, Austria 225
Walter Scherrer
Central Public Transport depot of the city ...
7
Foreword
COST Action TU1001 on Public Private Partnerships in Transport: Trends and
Theory (P3T3) is a research network,...
8
The COST Programme
COST- the acronym for European COoperation in the field of Scientific and
Technical Research- is the ...
9
Preface
Private sector involvement in the delivery of major public infrastructure is not
new, but in the past it was eit...
10
oriented PPP approach used for the provision of basic infrastructure in a
traditional landlord port such as Antwerp. Th...
11
Introduction
Public Private Partnerships in
Transport:
Case Study Structure
Athena Roumboutsos
University of the Aegean...
12
is situated in and developed by recognizing patterns of relationships among
constructs within and across cases and thei...
13
Yin (in 2009 and previous publications) has described in detail case
research design. Glaser and Strauss (1967) describ...
14
Table 1: Matching research purpose with methodology
(Extended from Voss et al (2002)
Purpose Research
Questions
Researc...
15
Table 1: Matching research purpose with methodology
(Extended from Voss et al (2002) continued
Purpose Research
Questio...
16
3. P3T3 Case Study Protocol
The development of the P3T3 Case Study Protocol was effected in phases
and elaborated throu...
17
different sub-sectors. This approach concerned the identification of key
variables under each “W” of the “Ws” Framework...
18
Grimsey, D. and Lewis, M.K. (2005) “Are Public Private Partnerships
value for money? Evaluating alternative approaches ...
19
Roads and Motorways
20
Contents
A19 Dishforth DBFO, England, UK
Christopher Boles and Champika L. Liyanage
Attica Tollway, The Athens Ring Roa...
21
A19 Dishforth DBFO
United Kingdom
Christopher Boles
University of Central Lancaster
chris.boles@blueyonder.co.uk
Champi...
22
Project Overview
A19 Dishforth Project Profile, UK
Project Type:
Brownfield 
Greenfield 
Both 
Contract duration:
30...
23
	
  
1 Introduction
The A19 project was one of several PFI road projects let in the mid-1990s as
part of the government...
24
The small size of the project means that, financing could be obtained by the
contractor fairly easily. The original ban...
25
initial capital investment means that the main emphasis is on the maintenance
and operation phases.
Direct tolling was ...
26
The use of shadow tolls exposes the concessionaire to traffic risks.
However revenues are more than covering costs. Fin...
27
A series of voluntary performance indicators offered by the private partner
– including an incident response indicator ...
28
Attica Tollway
The Athens Ring Road
Greece
Bill Halkias
Attikes Diadromes
bhalkias@attikesdiadromes.gr
Athena Roumbouts...
29
Project Overview
Attica Tollway (Athens Ring Road), Greece
Project Type: Brownfield  Greenfield  Both 
Contract dura...
30
	
  
1 Introduction
Attica Tollway in Greece forms part of the Trans European Network, as
planned by the European Commi...
31
The idea of building the Attica Tollway dates back to 1963, when Wilbur
Smith came from the United States to undertake ...
32
2 The Contracting Authority (Public Party)
The Attica Tollway project was planned on a central government level, by the...
33
infrastructure (PwC, 2005). For Greece, this provided funds and off-balance
sheet debt. The Athens Tollway was an oppor...
34
the goal of obtaining the Centennial Olympic Games in 1996 (they marked the
100th anniversary of the modern Olympic Gam...
35
of Greece, Société Generale, European Investment Fund, ABN AMRO Bank
NV, Agricultural Bank of Greece, Alpha Credit Bank...
36
Performance
The Independent Engineer was responsible for evaluating construction
performance, along with the awarding a...
37
Furthermore, Attica Tollway considers carbon footprint assessment to be a
very powerful tool in understanding the impac...
38
Figure5:AtticaTollwayTraffic(RealvsAnticipated)
38
Figure 5: Attica Tollway Traffic (Real vs Anticipated)
39
Coen Tunnel
The Netherlands
Johannes, T. Voordijk
University of Twente
j.t.voordijk@utwente.nl
40
Project Overview
The Coen Tunnel, The Netherlands
Project Type: Brownfield  Greenfield  Both 
Contract duration: 30 ...
41
1 Introduction
The Second Coen Tunnel project is the first and largest (estimated value EUR
300 million NPV) Competitiv...
42
3 The Concessionaire (Private Party)
The Coentunnel Company is a PPP consisting of Dura Vermeer, TBI-Bouw,
Vinci conces...
43
The project falls under the requirements of Annex I of the EU Directive
97/11/EC on environmental impact assessment, an...
44
8 Procurement & Contractual Structure
Tendering
The procurement was divided into five stages: Pre-Qualification; Scheme...
45
Contract Structure
The Coen Tunnel is a DBFM-contract (Design, Build, Finance and Maintain)
with a duration of 30 years...
46
 Traffic forecasts are mostly in line with actual traffic. Penalties are
foreseen with respect to availability.
 Perc...
47
Horgos-Pozega
Toll Motorway Concession
Serbia
Nevena Vajdic
University of Belgrade,
Faculty of Civil Engineering
nevena...
48
Project Overview
Horgos-Pozega Toll Motorway Concession Project, Serbia
Project Type: Brownfield  Greenfield  Both 
...
49
	
  
1 Introduction
The Republic of Serbia has a road network of 40,845 km in total, of which 498
km are tolled motorwa...
50
2 The Contracting Authority (Public Party)
The Government of Serbia announced the public tender for the award of the
co...
51
4 Users
Individual (national and international) users, local industry which extensively
uses freight transport by road,...
52
Sept. 2007: The Government of Serbia rejected the request from the
concessionaire to agree to the cancelation of the co...
53
The public sector contributed with the financing and construction of Lot 3,
whose completion was financed by internatio...
54
The concessionaire was assigned the collection of tolls. Toll tariffs,
however, were to be set by the government. Comme...
55
Ionia Odos Motorway
Greece
Nikolaos Nikolaidis
University of the Aegean
GEK Terna S.A.
nikos.d.nikolaidis@gmail.com
Ath...
56
Project Overview
The Ionia Odos Motorway Concession, Greece
Project Type: Brownfield  Greenfield  Both 
Contract dur...
57
1 Introduction
The “Ionia Odos” concession is a toll motorway concession project consisting
of three sections: A new mo...
58
Based on the terms of the project’s restructuring as announced on April 12th
2013, the amount of Greek State/EU funds w...
59
through the Egnatia Odos motorway). As such, it can be considered as an
international and regional project.
8 Procureme...
60
Greece; these estimates assumed an annual traffic volume growth of 14.4% for
Greece (Source: TEN-STAC Scenarios, Traffi...
61
References
Roadway fatalities: TEN-STAC Scenarios (2003), Traffic Forecasts and
Analysis of Corridors on the Trans-Euro...
62
M6 Toll (BNRR)
United Kingdom
Christopher Boles
University of Central Lancaster
chris.boles@blueyonder.co.uk
Champika L...
63
Project Overview
The BNRR M6 Toll, UK
Project Type: Brownfield Greenfield Both 
Contract duration: 53 years
Budget: ...
64
1 Introduction
The M6 Toll (also known as the Birmingham Northern Relief Road) opened in
2003 as the UK’s first tolled ...
65
the framework for concession agreements between the government and private
groups to design, construct and operate “spe...
66
The private partner is driven by long term considerations. It is developing
the market but also waiting for the governm...
67
1984– Government opens to public scrutiny its first proposal for the
scheme (still a public sector project);
1988– Due ...
68
 BNRR Ltd : Tarmac Construction & Balfour Beatty;
 Midlands Parkway: Alfred McAlpine Construction, RM Douglas
Constru...
69
authority for the whole of the network, and all normal regulations relating to
road construction and operation apply to...
COST Action TU1001  Public Private Partnerships in  Transport: Trends & Theory  P3T3
COST Action TU1001  Public Private Partnerships in  Transport: Trends & Theory  P3T3
COST Action TU1001  Public Private Partnerships in  Transport: Trends & Theory  P3T3
COST Action TU1001  Public Private Partnerships in  Transport: Trends & Theory  P3T3
COST Action TU1001  Public Private Partnerships in  Transport: Trends & Theory  P3T3
COST Action TU1001  Public Private Partnerships in  Transport: Trends & Theory  P3T3
COST Action TU1001  Public Private Partnerships in  Transport: Trends & Theory  P3T3
COST Action TU1001  Public Private Partnerships in  Transport: Trends & Theory  P3T3
COST Action TU1001  Public Private Partnerships in  Transport: Trends & Theory  P3T3
COST Action TU1001  Public Private Partnerships in  Transport: Trends & Theory  P3T3
COST Action TU1001  Public Private Partnerships in  Transport: Trends & Theory  P3T3
COST Action TU1001  Public Private Partnerships in  Transport: Trends & Theory  P3T3
COST Action TU1001  Public Private Partnerships in  Transport: Trends & Theory  P3T3
COST Action TU1001  Public Private Partnerships in  Transport: Trends & Theory  P3T3
COST Action TU1001  Public Private Partnerships in  Transport: Trends & Theory  P3T3
COST Action TU1001  Public Private Partnerships in  Transport: Trends & Theory  P3T3
COST Action TU1001  Public Private Partnerships in  Transport: Trends & Theory  P3T3
COST Action TU1001  Public Private Partnerships in  Transport: Trends & Theory  P3T3
COST Action TU1001  Public Private Partnerships in  Transport: Trends & Theory  P3T3
COST Action TU1001  Public Private Partnerships in  Transport: Trends & Theory  P3T3
COST Action TU1001  Public Private Partnerships in  Transport: Trends & Theory  P3T3
COST Action TU1001  Public Private Partnerships in  Transport: Trends & Theory  P3T3
COST Action TU1001  Public Private Partnerships in  Transport: Trends & Theory  P3T3
COST Action TU1001  Public Private Partnerships in  Transport: Trends & Theory  P3T3
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COST Action TU1001  Public Private Partnerships in  Transport: Trends & Theory  P3T3
COST Action TU1001  Public Private Partnerships in  Transport: Trends & Theory  P3T3
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COST Action TU1001  Public Private Partnerships in  Transport: Trends & Theory  P3T3
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COST Action TU1001  Public Private Partnerships in  Transport: Trends & Theory  P3T3
COST Action TU1001  Public Private Partnerships in  Transport: Trends & Theory  P3T3
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COST Action TU1001  Public Private Partnerships in  Transport: Trends & Theory  P3T3
COST Action TU1001  Public Private Partnerships in  Transport: Trends & Theory  P3T3
COST Action TU1001  Public Private Partnerships in  Transport: Trends & Theory  P3T3
COST Action TU1001  Public Private Partnerships in  Transport: Trends & Theory  P3T3
COST Action TU1001  Public Private Partnerships in  Transport: Trends & Theory  P3T3
COST Action TU1001  Public Private Partnerships in  Transport: Trends & Theory  P3T3
COST Action TU1001  Public Private Partnerships in  Transport: Trends & Theory  P3T3
COST Action TU1001  Public Private Partnerships in  Transport: Trends & Theory  P3T3
COST Action TU1001  Public Private Partnerships in  Transport: Trends & Theory  P3T3
COST Action TU1001  Public Private Partnerships in  Transport: Trends & Theory  P3T3
COST Action TU1001  Public Private Partnerships in  Transport: Trends & Theory  P3T3
COST Action TU1001  Public Private Partnerships in  Transport: Trends & Theory  P3T3
COST Action TU1001  Public Private Partnerships in  Transport: Trends & Theory  P3T3
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COST Action TU1001  Public Private Partnerships in  Transport: Trends & Theory  P3T3
COST Action TU1001  Public Private Partnerships in  Transport: Trends & Theory  P3T3
COST Action TU1001  Public Private Partnerships in  Transport: Trends & Theory  P3T3
COST Action TU1001  Public Private Partnerships in  Transport: Trends & Theory  P3T3
COST Action TU1001  Public Private Partnerships in  Transport: Trends & Theory  P3T3
COST Action TU1001  Public Private Partnerships in  Transport: Trends & Theory  P3T3
COST Action TU1001  Public Private Partnerships in  Transport: Trends & Theory  P3T3
COST Action TU1001  Public Private Partnerships in  Transport: Trends & Theory  P3T3
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COST Action TU1001  Public Private Partnerships in  Transport: Trends & Theory  P3T3
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COST Action TU1001  Public Private Partnerships in  Transport: Trends & Theory  P3T3
COST Action TU1001  Public Private Partnerships in  Transport: Trends & Theory  P3T3
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COST Action TU1001  Public Private Partnerships in  Transport: Trends & Theory  P3T3
COST Action TU1001  Public Private Partnerships in  Transport: Trends & Theory  P3T3
COST Action TU1001  Public Private Partnerships in  Transport: Trends & Theory  P3T3
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COST Action TU1001  Public Private Partnerships in  Transport: Trends & Theory  P3T3
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COST Action TU1001  Public Private Partnerships in  Transport: Trends & Theory  P3T3
COST Action TU1001  Public Private Partnerships in  Transport: Trends & Theory  P3T3
COST Action TU1001  Public Private Partnerships in  Transport: Trends & Theory  P3T3
COST Action TU1001  Public Private Partnerships in  Transport: Trends & Theory  P3T3
COST Action TU1001  Public Private Partnerships in  Transport: Trends & Theory  P3T3
COST Action TU1001  Public Private Partnerships in  Transport: Trends & Theory  P3T3
COST Action TU1001  Public Private Partnerships in  Transport: Trends & Theory  P3T3
COST Action TU1001  Public Private Partnerships in  Transport: Trends & Theory  P3T3
COST Action TU1001  Public Private Partnerships in  Transport: Trends & Theory  P3T3
COST Action TU1001  Public Private Partnerships in  Transport: Trends & Theory  P3T3
COST Action TU1001  Public Private Partnerships in  Transport: Trends & Theory  P3T3
COST Action TU1001  Public Private Partnerships in  Transport: Trends & Theory  P3T3
COST Action TU1001  Public Private Partnerships in  Transport: Trends & Theory  P3T3
COST Action TU1001  Public Private Partnerships in  Transport: Trends & Theory  P3T3
COST Action TU1001  Public Private Partnerships in  Transport: Trends & Theory  P3T3
COST Action TU1001  Public Private Partnerships in  Transport: Trends & Theory  P3T3
COST Action TU1001  Public Private Partnerships in  Transport: Trends & Theory  P3T3
COST Action TU1001  Public Private Partnerships in  Transport: Trends & Theory  P3T3
COST Action TU1001  Public Private Partnerships in  Transport: Trends & Theory  P3T3
COST Action TU1001  Public Private Partnerships in  Transport: Trends & Theory  P3T3
COST Action TU1001  Public Private Partnerships in  Transport: Trends & Theory  P3T3
COST Action TU1001  Public Private Partnerships in  Transport: Trends & Theory  P3T3
COST Action TU1001  Public Private Partnerships in  Transport: Trends & Theory  P3T3
COST Action TU1001  Public Private Partnerships in  Transport: Trends & Theory  P3T3
COST Action TU1001  Public Private Partnerships in  Transport: Trends & Theory  P3T3
COST Action TU1001  Public Private Partnerships in  Transport: Trends & Theory  P3T3
COST Action TU1001  Public Private Partnerships in  Transport: Trends & Theory  P3T3
COST Action TU1001  Public Private Partnerships in  Transport: Trends & Theory  P3T3
COST Action TU1001  Public Private Partnerships in  Transport: Trends & Theory  P3T3
COST Action TU1001  Public Private Partnerships in  Transport: Trends & Theory  P3T3
COST Action TU1001  Public Private Partnerships in  Transport: Trends & Theory  P3T3
COST Action TU1001  Public Private Partnerships in  Transport: Trends & Theory  P3T3
COST Action TU1001  Public Private Partnerships in  Transport: Trends & Theory  P3T3
COST Action TU1001  Public Private Partnerships in  Transport: Trends & Theory  P3T3
COST Action TU1001  Public Private Partnerships in  Transport: Trends & Theory  P3T3
COST Action TU1001  Public Private Partnerships in  Transport: Trends & Theory  P3T3
COST Action TU1001  Public Private Partnerships in  Transport: Trends & Theory  P3T3
COST Action TU1001  Public Private Partnerships in  Transport: Trends & Theory  P3T3
COST Action TU1001  Public Private Partnerships in  Transport: Trends & Theory  P3T3
COST Action TU1001  Public Private Partnerships in  Transport: Trends & Theory  P3T3
COST Action TU1001  Public Private Partnerships in  Transport: Trends & Theory  P3T3
COST Action TU1001  Public Private Partnerships in  Transport: Trends & Theory  P3T3
COST Action TU1001  Public Private Partnerships in  Transport: Trends & Theory  P3T3
COST Action TU1001  Public Private Partnerships in  Transport: Trends & Theory  P3T3
COST Action TU1001  Public Private Partnerships in  Transport: Trends & Theory  P3T3
COST Action TU1001  Public Private Partnerships in  Transport: Trends & Theory  P3T3
COST Action TU1001  Public Private Partnerships in  Transport: Trends & Theory  P3T3
COST Action TU1001  Public Private Partnerships in  Transport: Trends & Theory  P3T3
COST Action TU1001  Public Private Partnerships in  Transport: Trends & Theory  P3T3
COST Action TU1001  Public Private Partnerships in  Transport: Trends & Theory  P3T3
COST Action TU1001  Public Private Partnerships in  Transport: Trends & Theory  P3T3
COST Action TU1001  Public Private Partnerships in  Transport: Trends & Theory  P3T3
COST Action TU1001  Public Private Partnerships in  Transport: Trends & Theory  P3T3
COST Action TU1001  Public Private Partnerships in  Transport: Trends & Theory  P3T3
COST Action TU1001  Public Private Partnerships in  Transport: Trends & Theory  P3T3
COST Action TU1001  Public Private Partnerships in  Transport: Trends & Theory  P3T3
COST Action TU1001  Public Private Partnerships in  Transport: Trends & Theory  P3T3
COST Action TU1001  Public Private Partnerships in  Transport: Trends & Theory  P3T3
COST Action TU1001  Public Private Partnerships in  Transport: Trends & Theory  P3T3
COST Action TU1001  Public Private Partnerships in  Transport: Trends & Theory  P3T3
COST Action TU1001  Public Private Partnerships in  Transport: Trends & Theory  P3T3
COST Action TU1001  Public Private Partnerships in  Transport: Trends & Theory  P3T3
COST Action TU1001  Public Private Partnerships in  Transport: Trends & Theory  P3T3
COST Action TU1001  Public Private Partnerships in  Transport: Trends & Theory  P3T3
COST Action TU1001  Public Private Partnerships in  Transport: Trends & Theory  P3T3
COST Action TU1001  Public Private Partnerships in  Transport: Trends & Theory  P3T3
COST Action TU1001  Public Private Partnerships in  Transport: Trends & Theory  P3T3
COST Action TU1001  Public Private Partnerships in  Transport: Trends & Theory  P3T3
COST Action TU1001  Public Private Partnerships in  Transport: Trends & Theory  P3T3
COST Action TU1001  Public Private Partnerships in  Transport: Trends & Theory  P3T3
COST Action TU1001  Public Private Partnerships in  Transport: Trends & Theory  P3T3
COST Action TU1001  Public Private Partnerships in  Transport: Trends & Theory  P3T3
COST Action TU1001  Public Private Partnerships in  Transport: Trends & Theory  P3T3
COST Action TU1001  Public Private Partnerships in  Transport: Trends & Theory  P3T3
COST Action TU1001  Public Private Partnerships in  Transport: Trends & Theory  P3T3
COST Action TU1001  Public Private Partnerships in  Transport: Trends & Theory  P3T3
COST Action TU1001  Public Private Partnerships in  Transport: Trends & Theory  P3T3
COST Action TU1001  Public Private Partnerships in  Transport: Trends & Theory  P3T3
COST Action TU1001  Public Private Partnerships in  Transport: Trends & Theory  P3T3
COST Action TU1001  Public Private Partnerships in  Transport: Trends & Theory  P3T3
COST Action TU1001  Public Private Partnerships in  Transport: Trends & Theory  P3T3
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COST Action TU1001 Public Private Partnerships in Transport: Trends & Theory P3T3

  1. 1. 1 COST Action TU1001 Public Private Partnerships in Transport: Trends & Theory P3T3 2013 Discussion Papers Part II Case Studies Edited by Athena Roumboutsos Sheila Farrell Champika Lasanthi Liyanage Rosário Macário
  2. 2. 2 COST Action TU1001 Public Private Partnerships in Transport: Trends & Theory P3T3 2013 Discussion Papers Part II Case Studies Edited by A. Roumboutsos, S. Farrell, C. L. Liyanage and R. Macário This publication is supported by COST. Cover by Maria Stafida Original Cover Rail Photos courtesy of Niklas Alm Year of publication: 2013 ISBN 978-88-97781-61-5 © 2013, for the papers by Authors © 2013, for the editing by A.Roumboutsos, S. Farrell, C. L.Liyanage and R. Macário © COST Office, 2013 No permission to reproduce or utilise the contents of this book by any means is necessary, other than in the case of images, diagrams or other material from other copyright holders. In such cases, permission of the copyright holders is required. This book may be cited as: COST Action number- title of the publication. Legal Notice by COST Office Neither the COST Office nor any person acting on its behalf is responsible for the use, which might be made of the information contained in this publication. The COST Office is not responsible for the external websites referred to in this publication.
  3. 3. 3 Contents Foreword 7 The COST Programme 8 Preface 9 Introduction 11 Public Private Partnerships in Transport: Case Study Structure Athena Roumboutsos and Champika L. Liyanage
  4. 4. 4 Case Studies Roads and Motorways A19 Dishforth DBFO, England, UK 21 Christopher Boles and Champika L. Liyanage Attica Tollway, The Athens Ring Road, Greece 28 Bill Halkias, Athena Roumboutsos and Aristeidis Pantelias Coen Tunnel, The Netherlands 39 Johannes, T. Voordijk Horgos-Pozega, Toll Motorway Concession, Serbia 47 Nevena Vajdican and Goran Mladenovic Ionia Odos Motorway, Greece 55 Nikolaos Nikolaidis and Athena Roumboutsos M6 Toll (BNRR), England, UK 62 Christopher Boles and Champika L. Liyanage M80 Haggs to Stepps, UK 73 Christopher Boles and Champika L. Liyanage Olympia Odos Motorway, Greece 81 Athena Roumboutsos and Nikolaos Nikolaidis Via-Invest Zaventem, Belgium 90 Martijn van den Hurk and Kit Van Gestel Rail ARN-STO Rail link (Arlandabanan), Sweden 101 Robert Ågren and Stefan Olander FERTAGUS Train, Portugal 108 Rosário Macário, Joana Ribeiro and Rui Couchinho
  5. 5. 5 Ports and Airports Piraeus Container Terminal, Greece 118 Sheila Farrell Sines Container Terminal, Portugal 129 Sheila Farrell Valencia Cruise Terminal, Spain 141 Maria del Carmen Juan Martinez and Eva Pérez García Port of Antwerp Deurganckdock Lock, Belgium 154 Céline van Nieuwenhuysen and Thierry Vanelslander Larnaca and Paphos International Airports, Cyprus 161 Charalambos A. Christodoulou and Christos O. Efstathiades International Airport of Tirana 175 Ali Dedej and Vera Shiko Urban Public Transport Brabo 1, Flanders, Belgium 186 Martijn van den Hurk and Kit Van Gestel The Caen' TVR, France 193 Géraldine Bonnet and Gilles Chomat Metro Sul do Tejo, Portugal 202 Rosario Macário, Joanna Ribeiro and Rui Couchinho The Reims' Tramway, France 208 Géraldine Bonnet and Gilles Chomat SEVICI, Spain 217 Sastre, Julián
  6. 6. 6 Terminals and Depots Cargo Center Graz-Werndorf, Austria 225 Walter Scherrer Central Public Transport depot of the city of Pilsen, Czech Republic 234 Petr Witz
  7. 7. 7 Foreword COST Action TU1001 on Public Private Partnerships in Transport: Trends and Theory (P3T3) is a research network, including over 100 researchers from 29 countries, funded by the EU COST Programme with the aim of developing the theoretical basis for Public Private Partnerships (PPPs) in the transport sector and making the shift from a descriptive approach to a normative one. More specifically, the objective is to develop theoretical models and tools needed to support the implementation of PPPs in the transport sector that take into account the different contexts in which projects are implemented. Research work within the network is conducted through the establishment of working groups, where research is accelerated by combining existing findings and setting common research agendas. Deductive and inductive research is applied within the network for theory building through in-depth analysis and model building to predict and forecast behaviour. Notably, case analysis is a powerful tool for both research approaches, particularly in environments characterized by the growing frequency and magnitude of changes. This is the case of PPPs in transport. The 2013 P3T3 Discussion Papers presented in Part I and Part II comprise a collection of cases following a specifically structured protocol. They are organised in country profiles with respect to PPP development (Part I) and transport projects at various levels of implementation (Part II). P3T3 Action researchers are well aware of the limitations of case research. “Validity” is a major concern, especially in terms of objectiveness and robustness but, also with respect to the timeliness of the information. This publication opens our initial collection to discussion and invites contributions. On behalf of the COST Action TU1001 members Athena Roumboutsos, Action Chair Thierry Vanelslander, Action vice-Chair Nunzia Carbonara, Champika L. Liyanage, Geert Dewulf, Koen Verhoest, and Rosario Macário, Working Group Leaders Web: www.ppptransport.eu
  8. 8. 8 The COST Programme COST- the acronym for European COoperation in the field of Scientific and Technical Research- is the oldest and widest European intergovernmental network for cooperation in research. Established by the Ministerial Conference in November 1971, COST is presently used by the scientific communities of 35 European countries to cooperate in common research projects supported by national funds. The funds provided by COST - less than 1% of the total value of the projects -support the COST cooperation networks (COST Actions) through which, with EUR 30 million per year, more than 30.000 European scientists are involved in research having a total value which exceeds EUR 2 billion per year. This is the financial worth of the European added value, which COST achieves. A “bottom up approach” (the initiative of launching a COST Action comes from the European scientists themselves), “à la carte participation” (only countries interested in the Action participate), “equality of access” (participation is open also to the scientific communities of countries not belonging to the European Union) and “flexible structure” (easy implementation and light management of the research initiatives) are the main characteristics of COST. As precursor of advanced multidisciplinary research COST has a very important role for the realisation of the European Research Area (ERA) anticipating and complementing the activities of the Framework Programmes, constituting a “bridge” towards the scientific communities of emerging countries, increasing the mobility of researchers across Europe and fostering the establishment of “Networks of Excellence” in many key scientific domains such as: Biomedicine and Molecular Biosciences; Food and Agriculture; Forests, their Products and Services; Materials, Physical and Nanosciences; Chemistry and Molecular Sciences and Technologies; Earth System Science and Environmental Management; Information and Communication Technologies; Transport and Urban Development; Individuals, Societies, Cultures and Health. It covers basic and more applied research and also addresses issues of pre-normative nature or of societal importance. Web: www.cost.esf.org
  9. 9. 9 Preface Private sector involvement in the delivery of major public infrastructure is not new, but in the past it was either restricted to financing or long-term provision of services. Returns were achieved either directly from the “consumers” of services or through government payments on behalf of tax payers. “Public Private Partnerships” have become more popular since the mid-1980s, as governments have sought to tap into private sector finance and its technical, management and entrepreneurial skills. Over time infrastructure projects, especially in the transport sector, have become larger and more complex in terms of the activities “bundled” into the contractual arrangements, and the number of parties involved in transactions. So the diversity of PPP projects, even in the relatively small number of cases following, is not surprising: it’s to be expected. Part II of the 2013 P3T3 Discussion Papers includes 24 cases originating from 13 countries in Europe: Albania, Austria, Belgium, Cyprus, Czech Republic, France, Greece, the Netherlands, Portugal, Serbia, Spain, Sweden and the UK. The largest group, nine cases in total, are road and motorway projects: one of the best known application areas for PPPs. Cases presented range from conventional toll motorways in Greece through a road tunnel in the Netherlands financed by availability payments, to an airport access road built by the Flemish Government using a public sector corporate entity and a “shadow” DBFM agreement. Rail projects have found it harder to attract private finance, particularly for track and other basic infrastructure. This has been partly because of the scale of investment required, the complexity of rail networks, uncertainties surrounding the interface with rail services, and the high level of regulations. In this collection of case studies, rail has two representatives, in Sweden and Portugal. Ports and airports often find it easier than roads to attract private finance because of the ease with which profitable terminal operations can be separated from expensive items of infrastructure from which it is difficult to generate revenues, like channels, breakwaters and runways. However, the BOT contract for Larnaca and Paphos Airports in Cyprus and the International Airport of Tirana show that there can be strong private sector interest in “whole” airports when demand is strong and competition limited. The four case studies from the ports sector highlight the difference between the standard approach to terminal concessioning adopted at Sines and Piraeus, and the more public-sector
  10. 10. 10 oriented PPP approach used for the provision of basic infrastructure in a traditional landlord port such as Antwerp. The Valencia Cruise Terminal is included to highlight trends in a new and rapidly growing part of the sector. Urban public transport PPPs have been dominated by franchises or management contracts for bus networks, and schemes involving private investment in metros or light rail, as illustrated by the Brabo 1 tramway system in Antwerp. But the need to improved interoperability has led the French to bundle the entire urban public transport network into one concession, as illustrated by the case studies for Caen and Reims. Bundling can also be used to fund smaller scale initiatives such as the Sevici cycle hire and mobile advertisement scheme in Seville. Small, free-standing projects such as the Graz-Werndorf cargo center in Austria have faced fewer problems in finding private investors, but some like the public transport depot in Pilsen have been difficult for the public to accept. All of the case studies follow a pre-specified structure, which facilitates systematic data collection and cross-comparisons. The introductory paper provides a guide to this structure and explains the specific protocol. The cases are organized by mode of transport. They could have equally well been organized by country, project size, award procedure, or many other different aspects. Part II of the 2013 P3T3 Discussion Papers summarises some of the Transport PPPs we have been looking at, but does not extend as far as their analysis. However, it challenges readers to identify clusters of similar approaches, the underlying reasons for their development, and their suitability for application elsewhere. They have been set up to answer the “why”, “what”, and “which-way” issues of Public Private Partnerships in transport. They also highlight the need to continue observing cases as they evolve over their contract life cycle, influenced by external events such as the economic crisis and internal events such as changes in ownership. Sheila Farrell Athena Roumboutsos
  11. 11. 11 Introduction Public Private Partnerships in Transport: Case Study Structure Athena Roumboutsos University of the Aegean athena@aegean.gr Champika Liyanage University of Central Lancaster CLLiyanage@uclan.ac.uk 1 Introduction Usage of the Public Private Partnership (PPP) model for project delivery, especially for infrastructure projects, has increased over the past decades. Along with PPPs’ growing economic importance for society, research interest has equally grown over the past decades reflecting on both the understanding of relationships and their cause-and-effect phenomena and resulting in theory building and theory testing (Tang et al, 2010). Case study analysis has been an important part of this research. Notably case research is a powerful research method, particularly in the development of new theory, in environments characterized by the growing frequency and magnitude of changes (Lewis, 1998). This has been equally significant for PPPs in transport. In many instances, the central notion is to use case studies as the basis from which to develop theory inductively. The theory is emergent in the sense that it
  12. 12. 12 is situated in and developed by recognizing patterns of relationships among constructs within and across cases and their underlying logical arguments. According to Eisenhardt and Graebner (2007) a major reason for the popularity and relevance of theory building from case studies is that it is one of the best (if not the best) of the bridges from rich qualitative evidence to mainstream deductive research. The challenge is in developing theoretical constructs that are derived and could be tested through case research completing a circle of inductive theory building from cases and deductive theory testing by using cases to test theory. This discussions series is based on an on-going project funded by COST. The targets of this project, i.e. COST TU1001 on “Public Private Partnerships in Transport: Trends & Theory” (P3T3), include the identification of clusters of similar approaches and their underlining reasons of development and suitability for knowledge transfer but also the testing of theory developed. Therefore, sample cases for case research had to be developed so as to both serve for inductive and deductive research. The challenges of this task are presented in the following section. The proposed case “protocol” is presented in the third section. This paper concludes with a discussion on the validity and applicability of this protocol over time. 2 Addressing the Case Study Challenges in Transport PPPs According to Yin (2009), case studies are the preferred research strategy when, ‘a “how” or “why” question is being asked about a contemporary set of events, over which the investigator has little or no control’. Case research may be on a single case (see Flyvbjerg (2006) for an interesting reference to Galileo pg. 225) or multiple cases. In this sense each case serves as a distinct experiment that stands on its own as an analytic unit. Like a series of related laboratory experiments, multiple cases are discrete experiments that serve as replications, contrasts, and extensions to the emerging theory (Yin, 2009). Taylor et al. (2009) suggest that case study research should attempt to achieve depth by including multiple, polar cases and including multiple, analytically similar cases. What is achieved through this approach is the element of verification or testing of theory as it shifts from deductive to inductive or the need to apply replication logic (Eisenhardt, 1989). Scholars over the years have identified the challenges facing case research, especially as research relying on rich qualitative data is becoming more common and, thus, care is needed in drawing generalisable conclusions from a limited set of cases and in ensuring rigorous research.
  13. 13. 13 Yin (in 2009 and previous publications) has described in detail case research design. Glaser and Strauss (1967) described the grounded theory method. Eisenhardt (1989) brought together much of the previous work on building theory from case research. Voss et al (2002) provide a roadmap for designing, developing and conducting case-based research. The present work draws on that of Yin (2009) and Voss et al (2002). According to the latter it is important to identify when to use case research. The authors propose a template to guide researchers. In table 1, their proposal is extended to address P3T3 working group (WG) and auxiliary working group (AWG) objectives. Transferability of results (table 2) is an additional feature required and addressed in the proposed approach. More specifically, WG1 addresses decision making within PPPs in transport, WG2 identifies Key performance indicators and links them to PPP success factors, WG3 identifies the impact of institutions and market drivers, AWG1 reviews findings with respect to country/national perspectives and, finally, AWG2 reviews and tests theory developed in the various WGs with respect to PPP implementation in the various modes of transport infrastructure and service. Based on table 1, P3T3 research objectives require and could be based on case research. However, the challenge is for all working groups to benefit from the similar data sets that can be compared against each other. The next important challenge is developing the design of case studies (Yin, 2009) or otherwise the research framework, constructs and questions (Voss et al, 2002). This challenge includes the study questions, its propositions, its unit(s) of analysis, the logic linking the data and, finally, the criteria for interpreting the findings. This ultimately leads to developing a theory with respect to the subject under study or identifying the basic “factor” connecting the various actors and elements of the study. In PPPs there is substantial institutional, archival and popular literature and debate concerning the political, social and economic acceptance of the scheme. The latter has been generally focused in varying forms around the issue of Value for Money (VfM), loosely defined as the optimum combination of life cycle costs and quality to meet user requirements (Grimsey and Lewis, 2005; Akintoye et al., 2003; Debande, 2002). However, at the heart of it, there remains a risk-sharing problem between two (or more) risk-averse agents. In PPPs this has been the “factor”. This “factor” is identified in both research (cf Tang et al, 2010) as well as in basic policy documents (cf. EU Green Paper; EIB, 2005). Furthermore, it is also important to consider the specificities of transport PPPs with respect to risk (Roumboutsos et al, 2011).
  14. 14. 14 Table 1: Matching research purpose with methodology (Extended from Voss et al (2002) Purpose Research Questions Research Structure P3T3 needs Exploration Uncover areas for research and theory development Is there something interesting enough to justify research? In-depth case studies Unfocused, longitudinal field study Potential similarities and differences between country and modal applications of PPPs. Changes over time and with respect to external events (e.g. economic crisis) [WG2, WG3, AWG1 and AWG2] Theory building Identify/describ e key variables Identify linkages between variables Identify ``why’’ these relationships exist What are the key variables? What are the patterns or linkages between variables? Why should these relationships exist? Few focused case studies In-depth field studies Multi-site case studies Best-in-class case studies Identify such key factors is the primary objective of WG2 and AWG1 Finally, case research needs to be based on constructs, internal and external validity and reliability. These issues are addressed in the structure protocol of the case studies as presented in the next section. Notably, extra rigor is placed on this item, as cases are collected within different environmental contexts and comparability of cases is challenged both on the subject (various modal applications of PPPs) and cultural perception level of the actual application and its investigators.
  15. 15. 15 Table 1: Matching research purpose with methodology (Extended from Voss et al (2002) continued Purpose Research Questions Research Structure P3T3 needs Theory testing Test the theories developed in the previous stages Predict future outcomes Are the theories we have generated able to survive the test of empirical data? Did we get the behaviour that was predicted by the theory or did we observe another unanticipated behaviour? Experiment Quasi- experiment Multiple case studies Large-scale sample of population The primary scope of WG1 is theory building. Cases should provide adequate cases and data to test theories over time. Theory extension/ refinement To better structure the theories in light of the observed results How generalisable is the theory? Where does the theory apply? Experiment Quasi- experiment Case studies Large-scale sample of population All WGs and AWGs should be able to test theories through case sets. Table 2: Transferability as an additional need Purpose Research Questions Research Structure P3T3 needs Transferability To identify the extent that theories may be applied to other sectors and/or subject areas Under which conditions to theories apply in other sectors or subjects Experiment Quasi- experiment Multiple case studies Large-scale sample of population Input from other PPPs sector applications and output from transport PPPs to other sectors. The same applies for countries and/or regions.
  16. 16. 16 3. P3T3 Case Study Protocol The development of the P3T3 Case Study Protocol was effected in phases and elaborated through a continuous process of irritations and piloting in order to address the needs of its working groups at their various levels of research development. One of the key challenges, as may be identified from table 1 above, is the different levels of analysis and data coding needed to understand all issues investigated. “The devil is in the detail” was an expression commonly used to describe the importance of in-depth descriptions of cases. However, numerical data were required to verify theoretical developments. Roumboutsos (2010) presented a contextual framework based on the transport PPP context for risk analysis in order to compare and identify the potential of knowledge transfer between the road and port transport subsectors. This contextual framework based on a set of “what”, “why”, “who”, “whom”, “whichway”, “where”, “when” and the “whole” compromise the proposed “contextual Ws Risk Analysis Framework” (figure 1) and forms the basis of the P3T3 Case Study Protocol. The framework taken to reflect a PPP case, allowed for a structured “story telling” description necessary to WGs and AWGs undertaking research on an “exploration level”. Figure 1: Contextual Ws Risk Analysis Framework (source: Roumboutsos, 2010) In order to apply the framework to the next levels of research, a linguistic (pre-fuzzy analysis) approach was undertaken by Vaneslander et al (accepted article) in order to address the comparison of transport PPP case studies from
  17. 17. 17 different sub-sectors. This approach concerned the identification of key variables under each “W” of the “Ws” Framework and their qualitative quantification on a Likert Scale. These sets of “variables” have been further elaborated in the P3T3 Case Study Protocol and set under the fundamental headings of the PPP setup. This work was further advanced to include “narratives”, in order to provide the required detail and justify the assessment of respective variables. In addition, one more element of PPP importance is added: performance, how it is measured and how it is monitored (ex-ante, ex-post and on-going). 4. Conclusions and Further Research The process described in this introduction reflects on the structure of the cases presented in Part II of the 2013 P3T3 Discussion Papers, where some cases of the Transport PPPs P3T3 Action is studying are summarised. They have been set up to answer the “why”, “what”, and “which-way” issues of Public Private Partnerships in transport. They also highlight the need to continue observing cases as they evolve over their contract life cycle, influenced by external events such as the economic crisis and internal events such as changes in ownership. References Akintoye, A., Beck, M., Hardcastle, C. (2003) Public-Private Partnerships: Managing Risks and Opportunities, Blackwell Science, Oxford COM (2004) 327 final, Green Paper on Public-Private Partnerships and Community Law on Public Contracts and Concessions Debande O. (2002) “Private Financing of Transport Infrastructure: An Assessment of the UK Experience” Journal of Transport Economics and Policy 36(3):355-387. European Investment Bank (2005) Evaluation of PPP Projects Financed by the EIB. EIB Publications. Eisenhardt, K. M. (1989) Building theories from case study research. Academy of Management Review, 14, 532–550. Eisenhardt K. M. and Graebner M. E. (2007) Theory Building from Cases: Opportunities and Challenges, Academy of Management Journal, 50(1), 25-32 Flyvbjerg, B. (2006) Five Misunderstandings About Case-Study Research, Qualitative Inquiry, 12 (2), 219-245
  18. 18. 18 Grimsey, D. and Lewis, M.K. (2005) “Are Public Private Partnerships value for money? Evaluating alternative approaches and comparing academic and practitioner views” Accounting Forum 29:345–378 Lewis, M.W. (1998), Iterative triangulation: a theory development process using existing case studies, Journal of Operations Management, 16, 455-69. Roumboutsos, A. (2010) A Ws Contextual Risk Analysis Framework: Mapping knowledge transfer potential between Road and Port Public Private Partnerships, CIB World Congress, The Lowry, Salford Quays, United Kingdom Roumboutsos A., Pellegrino, R., Vanelslander, T. and Macario, R. (2012) Risks and Risk Allocation in Transport PPP projects: a literature review In Roumboutsos Α. and Carbonara, N. COST Action TU1001, Public Private Partnerships: Trends & Theory, 2011 Discussion Papers, ISBN 978-88-97781- 04-2 Taylor, J., Dossick, C. and Garvin, M. (2009) Conducting research with case studies, in Proceedings of the 2009 Construction Research Congress, Seattle, WA, ASCE, Reston, VA, 5–7 April. Tang, L. Y., Shen, Q., Cheng E. W. L. (2010) A review of studies on Public–Private Partnership projects in the construction industry, International Journal of Project Management, 28 (7), 683–694 Yin, R. K. (2009) Case study research: design and methods (4th ed.). Applied social research methods V.5, SAGE Publications Inc.
  19. 19. 19 Roads and Motorways
  20. 20. 20 Contents A19 Dishforth DBFO, England, UK Christopher Boles and Champika L. Liyanage Attica Tollway, The Athens Ring Road, Greece Bill Halkias, Athena Roumboutsos and Aristeidis Pantelias Coen Tunnel, The Netherlands Johannes, T. Voordijk M80 Haggs to Stepps, UK Christopher Boles and Champika L. Liyanage Horgos-Pozega, Toll Motorway Concession, Serbia Nevena Vajdican and Goran Mladenovic Ionia Odos Motorway, Greece Nikolaos Nikolaidis and Athena Roumboutsos M6 Toll (BNRR), England, UK Christopher Boles and Champika L. Liyanage Olympia Odos Motorway, Greece Athena Roumboutsos and Nikolaos Nikolaidis Via-Invest Zaventem, Belgium Martijn van den Hurk and Kit Van Gestel
  21. 21. 21 A19 Dishforth DBFO United Kingdom Christopher Boles University of Central Lancaster chris.boles@blueyonder.co.uk Champika L. Liyanage University of Central Lancaster CLLiyanage@uclan.ac.uk
  22. 22. 22 Project Overview A19 Dishforth Project Profile, UK Project Type: Brownfield  Greenfield  Both  Contract duration: 30 years (including construction period) Budget: GBP 29,4M Cost to upgrade to the prescribed standard Project time Line Tender: 1995; Contract award: 14 October 1996; Construction start: 24 February 1997; Start of operations 02 September1998. Highways Agency. (n.d.). A19 Dishforth to Tyne Tunnel Design, Build, Finance and Operate (DBFO) Contract. Retrieved 04 30, 2013, from Highways Agency.gov.uk: http://www.highways.gov.uk/our-road-network/managing-our-roads/private-finance-initiatives- design-build-finance-and-operate-dbfo/a19-dishforth-to-tyne-tunnel-design-build-finance-and- operate-dbfo-contract/ Figure 1: A19 PPP road as part of the area network
  23. 23. 23   1 Introduction The A19 project was one of several PFI road projects let in the mid-1990s as part of the government’s Tranche 1A PFIs (Partnership UK, 2009). This tranche was more sophisticated than its predecessors, with scope for the private partner to improve the road through innovation and better service delivery. The road is 118km in length and consists of 2 and 3 lane carriageways. The project is a DBFO scheme within the existing A19 carriageway alignment. The project upgrades and maintains a vital economic link to Tyneside in the North East of England. The areas of Newcastle, Sunderland and Middleborough are major conurbations, and the A19 provides the main link between them. The road required upgrading to meet capacity targets and industrial needs. The project also provides an alternative route to the more important A1(M), which is part of the East Coast route to Scotland. 2 The Contracting Authority (Public Party) The government department with controlling responsibility is the Department of Transport. The regulatory body responsible for contractual aspects on behalf of the government is the Highways Agency. Following the formal inception of road PFIs by the Highways Agency in 1992 - initially for the maintenance and upgrading of existing road infrastructure - the Design, Build, Finance and Operate (DBFO) procurement model was adopted in 1994 (Highways Agency, 2012). The Highways Act 1980 and the New Road and Street Works Act 1991 allow the award of concessions for road infrastructure, and also permit tolling, although this was deemed to be impractical in this case. As this was a wholly private investment, the Government’s role is that of the regulatory and legislative authority for the project. The Highways Agency has no stake in the special purpose vehicle (SPV). 3 The Concessionaire (Private Party) The current owner of the SPV is Sir Robert McAlpine Ltd., although the original consortium included a number of companies.
  24. 24. 24 The small size of the project means that, financing could be obtained by the contractor fairly easily. The original bank lenders were CIBC Bank from Canada and IBJ Bank from Japan. 4 Users Both domestic and commercial traffic use this road, which links the smaller conurbations in the region. This gives better access to the network and an alternative route to Newcastle and the A1(M). 5 Key Purpose for PPP Model Selection Value for money was the main driver for adoption of the PPP solution 6 Project Timing The early 1990s were a period of recession to which this area of the UK was particularly sensitive. The road upgrade was therefore needed to ensure that there was no barrier to the manufacturing base that dominated the area. The call for tenders was issued in 1995, and the time from initial call to signing of the contract was 15 months. 7 Project Locality and Market Geography This project is significant from a local and regional perspective. The road network in this area is dominated by the A1(M) trunk road, and the A19 supports this route by providing additional capacity. The A19 also serves a number of communities within the North East with local traffic needs which cannot be met by the A1(M). 8 Procurement & Contractual Structure Tendering The contract was tendered based on performance objectives and bidders’ requirements for shadow tolls. Contract Structure The contract is fully privately financed and covers upgrading works, operations and maintenance. Although the project is a DBFO scheme, the small size of the
  25. 25. 25 initial capital investment means that the main emphasis is on the maintenance and operation phases. Direct tolling was seen as inappropriate (Local government chronicle, 1993), so shadow tolling was used as the mechanism for repayment of the concessionaire. Revenues from shadow tolls are based on vehicle-km travelled, with penalty measures related to availability and safety performance. The contract period was set at 30 years. This is longer than the estimated break-even period of 20 years needed to recover costs and repay debt, and includes a “cushion” to protect the investor against lower than expected returns if vehicle numbers fail to reach anticipated levels. The issue of changes to the financial position of the SPV and its shareholders was not explicitly incorporated into the contract, although there are review processes, which give some protection to the government. However there was no provision for the Government to share in any “windfall profits” brought about by refinancing, which as in the case of the M6 Toll led to an enquiry by Parliament. Risk Allocation Design and construction risks - Local authorities have explicit funds and responsibilities for improving the roads within their jurisdiction, which includes sections of the network not covered by the DBFO. This restricts the ability of the private partner to make innovative improvements to the network. Risks ⇐ ⇒ Design & construction  Maintenance  Exploitation  Commercial/ revenue  Financial  Regulatory  Force majeure TotallyPrivate  TotallyPublic Figure 2. Risk Allocation The main element of the contract is the maintenance of the road. Maintenance risks are borne mainly by the private partner, but affected by the actions of neighbouring local authorities. Operating risk is complex, as the private sector can gain increased net income when local authorities are assisting with the cost of maintenance.
  26. 26. 26 The use of shadow tolls exposes the concessionaire to traffic risks. However revenues are more than covering costs. Finance is totally privately sourced, with the private partner bearing the whole of the risk. Changes to the regulatory framework could impact upon the private sector. The government accepts this and indemnifies the private sector against it. Risk is allocated as depicted in the figure 2. Performance The A1 portfolio of road PFI projects has a series of technical requirements related to: Availability; Safety; Compliance with legislation; Environmental constraints. Figure 3: Income generation (Bain, 2008) Between 1996-2006 revenues totalled GBP 136M compared with the initial capital investment of GBP 29.4M. Core requirements have to be achieved on a monthly basis, and there are penalties for failure. The contractual requirements are said to have been always achieved. The limited availability of other published indicators makes it difficult to evaluate performance from a user perspective, and there is no measure of maintenance performance which is complicated by local highway authorities’ involvement in maintenance schemes. 0   5   10   15   20   25   96   97   98   99   0   1   2   3   4   5   6   GBP  m  
  27. 27. 27 A series of voluntary performance indicators offered by the private partner – including an incident response indicator - led to an amendment to the contract in 2009. Financial performance has fluctuated significantly during the project’s 12 years of operation. Revenues were highest in the period 1998 to 2001, then fell considerably between 2001-3. There has been some recovery, but revenues have not yet returned to their 2001 level. References A One Integrated Highway Services. (2012). About area 14. Retrieved 09 12, 2012, from A One: http://www.aone.uk.com/File/ourprojects.asp Bain, R. (2008). PRIVATE FINANCE RATES OF RETURN:EVIDENCE FROM THE UK’S PFI ROADS SECTOR. University of Leeds, Institute for Transport Studies. Leeds UK: RB Consult Ltd. HA knowledge Centre. (2012). A brief history of our roads. Retrieved 08 05, 2012, from Highways Agency Website: http://www.highways.gov.uk/knowledge/1813.aspx Highways Agency. (2012). DBFO payment mechanisms. Retrieved 07 21, 2012, from Highways Agency Government website: http://www.highways.gov.uk/roads/33513.aspx Highways Agency. (2012, 08 10). DBFO -Value in Roads. Retrieved 08 29, 2012, from The National Archives: http://webarchive.nationalarchives.gov.uk/20120810121037/http://www.highw ays.gov.uk/roads/2987.aspx Highways Agency. (2012). Private Finance Initiatives - Design Build Finance and Operate (DBFO). Retrieved 08 15, 2012, from HA. Gov: http://www.highways.gov.uk/our-road-network/managing-our-roads/private- finance-initiatives-design-build-finance-and-operate-dbfo/ HM Government. (1980). Highways Act . London UK: Parlimentary Press. HM government. (1991). New Roads and Street Works Act. London: Parlimentary Press. Local Government Chronicle. (1993, May 28). Paying for better Motorways . Retrieved 09 20, 2012, from LGC: http://www.lgcplus.com/lgc- news/paying-for-better-motorways/1653117.article Partnership UK . (2009). Advanced Search - roads. Retrieved 06 30, 2012, from PartnershipUK.org: http://www.partnershipsuk.org.uk/PUK-Projects- Database-advanced-search.aspx
  28. 28. 28 Attica Tollway The Athens Ring Road Greece Bill Halkias Attikes Diadromes bhalkias@attikesdiadromes.gr Athena Roumboutsos University of the Aegean athena@aegean.gr Aristeidis Pantelias University College London a.pantelias@ucl.ac.uk
  29. 29. 29 Project Overview Attica Tollway (Athens Ring Road), Greece Project Type: Brownfield  Greenfield  Both  Contract duration: maximum of 25 years or earlier if the maximum Return on Equity has been reached. Budget: EUR 1300M This budget includes Project Development Costs Project Time Line Conception: 1963; Tender: 1992; Contract Award: March 1996; Date of contract ratification: 23/5/1996 Law 2445/1996; Financial Close: 6 of March 2000; Open to traffic (1st section): March 2001 to serve the new Athens International Airport; Open to traffic (2nd section) and Project Completion: August 2004 in time for the Athens Olympic Games; Works Completion Certificate (WCC) issued: Dec. 2004. Photo Courtesy of Attica Tollway Figure 1: Overview of Attica Tollway (detail)
  30. 30. 30   1 Introduction Attica Tollway in Greece forms part of the Trans European Network, as planned by the European Commission. It extends along 70 km and connects the 30 municipalities of the Attica basin. It actually constitutes the backbone of the entire transport network of the metropolitan area of Athens and it meets the transportation needs of millions of people on an annual basis. Attica Tollway is an urban motorway, with three traffic lanes in each direction and an emergency lane. In the centre, it has a special traffic island, reserved for the operation of the suburban railway that has been constructed and is operated by another entity. Attica Tollway has full control of its access points through toll stations and consists of three sections:  The Elefsina – Stavros – Spata A/P motorway (ESSM), extending along approximately 52 km;  The Imittos Western Peripheral Motorway (IWPM), extending along approximately 13 km; and  The Egaleo Western Peripheral Motorway (EWPM), extending along approximately 5 km. Photo from http://www.trg.soton.ac.uk/prime/attiki_odos/descr1.htm Figure 2: Attica Tollway sections
  31. 31. 31 The idea of building the Attica Tollway dates back to 1963, when Wilbur Smith came from the United States to undertake the first ever regional traffic planning study for the city of Athens and its metropolitan area. Sprawling development to the north of Athens over the years, the decision in the late 1970’s to build the new airport in its present location at Mesogeia and the decision to build a city connector road along the foothills of the Mountain of Imittos in the early 1990’s departed from the concept of a “ring” road, and transformed the Attica Tollway into an urban tollway that serves the heart of the city. In addition, the Attica Tollway during its construction and operation introduced a number of innovations to the Greek construction and motorway operation sector. More specifically, construction within urbanized area under adverse geotechnical conditions called upon employing vibration recorders to restrict peak particle velocity below 6mm/sec in open-cast mining excavations; the ΝΑΤΜ (Drill & Blast) method, the tunnel construction method using Roadheader machinery was also applied to reduce vibrations (the peak particle velocity was limited to 0.7 mm/sec) and to avoid using explosives in areas of historical interest (monuments, churches etc.) for tunnel construction; the Incremental Launching System has also been used for constructing the superstructure of bridges; road pavement was constructed using the latest construction methods and mechanical equipment, reliable materials and specialized laboratory measurements and tests to ensure durability over time. A deep level sewer installation, employing a trenchless technology method (pipe- jacking) was used for the first time to drive sections over 200 m in length under the city. (Sofianos et al, 2004). In operations, the Attica Tollway was the first to introduce in Greece an electronic toll collection system. Finally, the project was constructed in parallel with flood protection works (contract value of EUR 791M), as the Attica Tollway passes through the three large hydrographic basins of Attica (Thriasio Pedio, Athens basin and Mesogeia) and interrupts the surface runoff coming from the Parnitha, Penteli and Imittos mountains to the sea. The morphology of the aforementioned areas, now featuring minimum natural receptors, the exponential expansion of the land use and the various types of human interventions had rendered the construction of substantial extensive flood protection works within the scope of the Attica Tollway implementation imperative. The flood protection works constructed were dimensioned to be adequate for the existing and future land use.
  32. 32. 32 2 The Contracting Authority (Public Party) The Attica Tollway project was planned on a central government level, by the Ministry of Development, Competiveness, Infrastructure and Transport Networks (previously called Ministry of Environment, Physical Planning and Public Works). Ε.Υ.D.Ε. / L.S.E.P is the special agency of the Ministry which undertakes the supervision of the motorway’s operation and maintenance. 3 The Concessionaire (Private Party) Initially, the project sponsors were 14 different construction companies: Aktor SA, Attikat, Egis Projects SA, Ergas, Meton SA, Sarantopoulos, TEV, Alte, Arax, Elliniki Technodomiki, Etheth, Pantechniki, TEG, and Zeus. Currently, the project sponsors are Ellaktor (60%), J&P AVAX (30%) and Piraeus-ATE Bank (10%). The Concessionaire has established contracts back to back with the Concession Agreement with “ATTIKI ODOS CONSTRUCTION JOINT VENTURE” for the project construction and with “ATTIKES DIADROMES S.A.” (also known as Attica Tollway Operations Authority) for the operation and maintenance of the project. 4 Users Attica Tollway serves mainly passenger cars and the main purpose of travel of its users is commuting. It provides links to the Athens International Airport and to the two main National Roads (NR Athens –Thessaloniki and NR Athens- Corinth-Patras). In addition, many large logistics centers have emerged or relocated to the western part of the Tollway, since this location combines large open spaces and quick access to ports, railway and National Roads. The Average Annual Daily Traffic (AADT) rose from 231,000 entries on the motorway in 2004 to a peak of 307,000 in 2009 prior to onset of the financial crisis in Greece. In 2010, traffic levels were just off to 281,000 AADT, which corresponds to approximately 6-10 % of the total traffic in the Athens metropolitan area (Harito and Morello, 2011). 5 Key Purpose for PPP Model Selection The Greek Authorities and the European Commission had agreed within the framework of the Community Support Framework 1994 -1999 (CSF II) to maximize private sector partnerships in the development of transport related
  33. 33. 33 infrastructure (PwC, 2005). For Greece, this provided funds and off-balance sheet debt. The Athens Tollway was an opportunity. The hybrid structuring of the project was essential to the project’s success. The public sector, the Greek Government, wanted to allocate most of the project risks to the private sector. It was clear from the beginning, however, that due to several factors (e.g. this was the first PPP in the road sector in Greece, construction difficulties were envisaged, and help was needed in dealing with 30 local authorities), the project required strong state help. This financial help was necessary because, at that time, sponsors considered that the road traffic levels and the tolls the users were prepared to pay were not enough to provide an adequate return on the investment they were required to make. Figure  3.  Attica  Tollway  Concession  Structure   6 Project Timing       After the 1960’s, decades passed by without any attempts to start the road project, mainly due to the lack of funding, coupled with its expected high cost. The project’s real advancement began in 1985, when it became part of the official transportation infrastructure plans for metropolitan Athens, along with
  34. 34. 34 the goal of obtaining the Centennial Olympic Games in 1996 (they marked the 100th anniversary of the modern Olympic Games). It was in the early 1990’s that the Greek Ministry of Public Works adopted the method of co-financing the road through a Build–Operate–Transfer contract. The construction work started in 1997 and the motorway was given to traffic in sections. The first one opening to traffic was in March 2001, achieving the milestone of serving the new Athens International Airport. The last section was opened to traffic in 2004. Attica Tollway was built on time and within budget and it met the crucial deadline for the Athens Olympics Games in 2004. 7 Project Locality and Market Geography Attica Tollway is part of the Tran European Network (TEN) and it connects the 30 municipalities of the Attica basin, allowing quicker access to areas, which, before its construction, required a great amount of travel time. 8 Procurement & Contractual Structure Tendering An international tender was announced in 1992 and in March 1996, the project was awarded to the lowest bidder of the three international consortia that participated in the process. The Concession Contract was ratified by law by the Greek Parliament on the 23rd of May 1996. The Concession Agreement provides a maximum toll rate that can be charged. It also includes a safety mechanism, securing the interests of the Greek State through a maximum Return on Equity. The Concession period will extend for a maximum of 25 years (including construction period), or it will end earlier, in the case that the maximum Return on Equity (13.1%) has been reached. Contract Structure The project financing has been ensured through State contributions including EC Structural Cohesion Funds, private equity and loans. Construction cost of about EUR 1300 M was covered as follows: 33% Greek State contribution; 16% private equity and 51% loans (9% Commercial Banks loans and 42% EIB loans). Commercial banks involved include: Bank of Tokyo-Mitsubishi, HypoVereinsbank, Commercial Bank of Greece, HSBC Athens, National Bank
  35. 35. 35 of Greece, Société Generale, European Investment Fund, ABN AMRO Bank NV, Agricultural Bank of Greece, Alpha Credit Bank, Banca Monte dei Paschi di Siena (London), Bank of Scotland, De Nationale Investeringsbank NV, Piraeus Bank Greece, European Investment Bank, ING Bank NVand Ergobank. Expropriation cost was undertaken entirely by the Greek State. Loan guarantees were provided by the concessionaire during construction and by the State for the operations phase. Risk Allocation A project of such scale met significant difficulties during its realisation. The financial close was delayed, mainly because of uncertainties surrounding the project. These uncertainties increased the risks for the banks, delaying the signing of the financial agreement and forcing the public sector to provide funds to the sponsors to begin construction before financial close was reached. Other difficulties were due to variation orders issued by the State, mainly for environmental reasons, which involved significant design changes. Furthermore, the concession contract did not include mechanisms for extensions of time and delay make-up in case of State-instructed variations. Solutions were found after extensive negotiations between all parties involved, and amendments to the concession contract were introduced, leading to the satisfaction of the banks and reaching financial close. Risk allocation is depicted in Figure 4. Risks ⇐ ⇒ Design & construction  Maintenance  Exploitation  Commercial/ revenue  Financial  Regulatory  Force majeure  Land acquisition  Environmental TotallyPrivate  TotallyPublic Figure 4: Risk allocation
  36. 36. 36 Performance The Independent Engineer was responsible for evaluating construction performance, along with the awarding authority, which is responsible for evaluating operating performance during the operations period. Table 1 below shows the performance indicators set out in the Operation and Maintenance Agreement with the Attica Tollway Operation Authority. Attica Tollway Operations Authority (Attikes Diadromes S.A.) has adopted an integrated monitoring system, based on measured Key Performance Indicators (KPIs). The system consists of 35 indicators covering all the major aspects of operation, such as traffic management, toll operation, infrastructure maintenance, human resources, violation enforcement, etc. The results of the KPIs are widely used for the continuous improvement of the operation and the services provided to the Tollway users (Tyrogianni et al, 2012). Table 1: Attica Tollway Performance Indicators Ref. Item Planned Level of Service 1 Response time in case of incident 20 minutes 2 Repair time for damage of equipment causing danger to users Action shall start within 12 hours 3 Repair time for other serious damage of equipment Action shall start within 24hours 4 Average waiting time in each Toll Station Level A: waiting time between 0 and 120 seconds Level B: waiting time above 120 seconds Waiting Time Level B must not exceed 90 hours per year, unless due to exceptional circumstances outside the control of the Operator 5 Standards for money handling: Maximum Accepted Toll Collection Discrepancy (MATCD) between the system and the amount deposited in the Banks MATCD as per the Manuals Phase B
  37. 37. 37 Furthermore, Attica Tollway considers carbon footprint assessment to be a very powerful tool in understanding the impact of the tollway’s operational activities on global warming. In this context, the company has installed measuring devices and carries out calculations of its carbon footprint (Mandalozis et al, 2012). Finally, the tollway holds one of the best safety records in the world (Papaioannou, 2006). It serves over 250,000 users daily for short and long trips and has exceeded its forecasts by more than 30% (see figure 5). References Attiki Odos Contract, Greek Law 2445/1996 of the Official Gazette. Halkias, B., Tyrogianni, E., “PPP projects in Greece: The case of Attica Tollway” Routes/Roads PIARC, April 2009. Halkias, B., Tyrogianni, E., Kitsos, D., “A significant infrastructure project within the urban environment of Athens: The case of Attica Tollway” IABSE September 2008 Harito, J. and Morello, S. (2011) Performance Plus, ITS International, 17(3) 44-45 Mandalozis, D. Halkias, B., Tyrogianni, H. Kalfa, N. (2012) The Carbon Footprint of Attica Tollway, TRA-Europe 2012, Prodedia- Social and Behavioural Sciences, 48, 2988-2998 Papaioannou, P. (2006) Recent Experience on Success and Failure Stories from Funding Large Transportation Projects in Greece, 1st International Conference on Funding Transportation Infrastructure, Banff, Alberta, Canada, 2-3 August 2006 Papandreou, K., Tyrogianni, E., “Level of Service in Concession Motorway Projects” XXXV ASECAP Study and Information Days PricewaterhouseCoopers (2005) Delivering the PPP promise*: A review of PPP issues and activity, PricewaterhouseCoopers LLP Sofianos, A.I., Loukas, P., Chantzkos, Ch. (2004) Pipe jacking a sewer under Athens, Tunnelling and Underground Space Technology, 19(2), 193-203 Tyrogianni, H., Halkias, B. Politou, A., Kotzampassi, P. (2012) The Attica Tollway Operations Authority KPI Performance System, TRA-Europe 2012, Prodedia- Social and Behavioural Sciences, 48, 2999-3008 www.aodos.gr
  38. 38. 38 Figure5:AtticaTollwayTraffic(RealvsAnticipated) 38 Figure 5: Attica Tollway Traffic (Real vs Anticipated)
  39. 39. 39 Coen Tunnel The Netherlands Johannes, T. Voordijk University of Twente j.t.voordijk@utwente.nl
  40. 40. 40 Project Overview The Coen Tunnel, The Netherlands Project Type: Brownfield  Greenfield  Both  Contract duration: 30 Years (2008-2037) Budget: EUR 571 M This is the initially planned budget. Project Time Line Plans were initiated in the early 1980s; PPP Model Government Decision 2004; Call for Tender: Sept. 2005; Competitor alternative solutions: 2006; Final selection: 2007; Contract Approved: April 2008; Financial Close: June 2008; Construction is due to be completed in 2013 An audit was carried out by the rating agency VIGEO in 2007. Figure 1: Overview of the Coen Tunnel Project-- the existing tunnel (left) and the new tunnel (right)
  41. 41. 41 1 Introduction The Second Coen Tunnel project is the first and largest (estimated value EUR 300 million NPV) Competitive Dialogue (CD) procured service-led infrastructure project in the Netherlands. It involves the maintenance of an existing, forty-year old tunnel and the construction of a second tunnel alongside the current one. More specifically, the project concerns the widening of approximately 14 km of highways at the north and south entrances to the existing Coen Tunnel, and expanding the tunnel’s capacity from two lanes to three in each direction plus two further reversible lanes, enabling five lanes of traffic in one direction during peak hours. The road works (and subsequently operations and maintenance) consists of reconstructing one interchange, the main motorway, access roads, emergency lanes, an infrastructure fuel station, and parking facilities. The project used innovative technology (the RotorTug concept) to transport the tunnel elements from construction site to tunnel location, significiantly improving the maneuverability of tunnel elements which benefits the safety of the tunnel elements and all surrounding objects. The Project is the cornerstone of a series of infrastructure capacity enlargements aimed at improving access to the main road network of the Northern Conurbation of the country (Noordelijke Randstad) and addresses daily bottleneck problems, which affect security on the road as well as having a negative impact on the environment. Discussions to increase the capacity of the tunnel were initiated in the early 1980s. These plans were not further developed until 2000, partly due to a lack of funds. In 2000, extra funds were made available for improving the national infrastructure, enabling the Coen Tunnel’s capacity to be expanded. Formally there was a governmental agreement in June 2004 that the Coen Tunnel contract would be a PPP. 2 The Contracting Authority (Public Party) The Dutch Highway Agency – Rijkswaterstaat- was the authority responsible for contracting on behalf of the public sector and, following this, the implementation of a new project monitoring system. The project was procured as a Public Private Partnership to design, build, finance and operate. The PPP contract was awarded under the competitive dialogue procedure in accordance with the Directive 2004/18/EC of 31 March 2004 on the coordination of procedures for the award of public works contracts, public supply contracts and public service contracts.
  42. 42. 42 3 The Concessionaire (Private Party) The Coentunnel Company is a PPP consisting of Dura Vermeer, TBI-Bouw, Vinci concessions, Besix Group, CFE, Arcadis, and Dredging International. Construction was carried out by Dura Vermeer, TBI-Bouw, Arcadis, Vinci Grand Projects, and Besix Dredging International, and a key subcontractor was Croon Maintenance. Financing is achieved through senior debt (EUR 550M) provided by Fortis, Bayern LB, Royal Bank of Scotland, Bank Nederlandse Gemeenten (BNG), KfW IPEX-Bank and the European Investment Bank (EIB). Mezzanine-loans (EUR 21M) were provided by Fortis and BNG. Equity bridge-facility was offered by Fortis. 4 Users The Coen Tunnel is a major road link and open to all road traffic (private users, public transport, cyclists and freight transport). Olympia Odos serves private passenger and freight traffic. Freight transport is related to the Amsterdam and IJmuiden ports’ connections to the hinterland. 5 Key Purpose for PPP Model Selection The government assumed the potential for advantages in terms of finance, and innovativeness before procurement of the PPP. This was in the context of the central government’s policy of transferring tasks and financial responsibilities from the public to the private sector. The Coen Tunnel project is not included in TEN-T but certain aspects of the network are. These include:  2008-EU-90001-S: Study on the external costs and charging for terrestrial modes on the Paris-Amsterdam corridor;  2010-NL-93302-S: Implementation study to prepare a Public Private Partnership to improve maritime access to the TEN-T network at Amsterdam. 6 Project Timing Constructing the Second Coen Tunnel and the new Westrandweg (A5) ensures better accessibility to the northern part of the Randstad (the urban agglomeration of the western Netherlands) and better access to the western port area of Amsterdam. The importance of environmental impact is stressed.
  43. 43. 43 The project falls under the requirements of Annex I of the EU Directive 97/11/EC on environmental impact assessment, and has been the subject of a full EIA including public consultation. (The EIA process followed fully meets the relevant requirements of EU Directive 97/11/EC. Further, the Birds Directive (79/409/EEC) and Habitats Directive (92/43/EEC) are incorporated into Dutch law through the “Natuurbeschermingswet”). The contract has been set at 30 years, from 2008 to 2036. The competitive dialogue was less promising than expected due to the risk aversion demonstrated by the parties involved. 7 Project Locality and Market Geography The Second Coen Tunnel is located in the northern part of the Dutch Randstad. Furthermore, Amsterdam port’s connections to the hinterland have had to be continuously upgraded and refined, introducing minor and major adaptations and innovations on a regular basis. Figure 2: The site of the tunnel, at the north side of Amsterdam
  44. 44. 44 8 Procurement & Contractual Structure Tendering The procurement was divided into five stages: Pre-Qualification; Scheme of Action; Consultation; Dialogue; and Tender Submission. The three middle stages together form what amounts to the actual competitive dialogue (CD) stage according to the European Directive. The Dutch Minister of Transport decided to apply the CD procedure because of the technical and financial complexities of the project. Five consortia met the qualifications criteria and were therefore invited to participate in the dialogue. Important elements covered in the dialogue were the Scheme of Action, Critical Aspects, Risks and Optional Requirements. At the end of the Scheme of Action stage, the five candidates each had to submit an initial dialogue product (an assignment): namely, their Action Schemes for carrying out the project. Based on evaluations by both project employees and external judging committees, the five candidates were reduced to a shortlist of three who were invited to move forward to the Consultation stage. Finally, one candidate was chosen. The overall procedure took approximately 46 months. Figure 3: The tender approach of the competitive dialogue
  45. 45. 45 Contract Structure The Coen Tunnel is a DBFM-contract (Design, Build, Finance and Maintain) with a duration of 30 years and a total value of approximately € 500M. Coen Tunnel is responsible for design, building and maintaining the construction of the Second Coen Tunnel with access roads and facilities. The Dutch State (through Rijkswaterstaat) will continue to own and manage the asset. The banks financing the project are repaid through availability fees and a one-off transfer fee when the project is completed. Rijkswaterstaat is the guarantor for the banks. The contract contains re-negotiation terms resulting from the economic crisis. Risk Allocation The public sector kept most of the risks in this contractual agreement (see figure 4). Serious problems in exploitation are expected to lead to renegotiation. Regulatory and force majeure risks were also discussed before being allocated. Risks ⇐ ⇒ Design & construction  Maintenance  Exploitation  Commercial/ revenue  Financial  Regulatory   Force majeure TotallyPrivate  TotallyPublic Figure 4: Risk allocation Performance A matrix has been developed based on the impact of different measures and the level of road users’ satisfaction with these measures. Most attention is devoted to high impact, low satisfaction measures. These include:  Lane availability in relation to the number of maintenance days;  Stability of the existing infrastructure (old tunnel tubes);  Air quality inside the tunnels.
  46. 46. 46  Traffic forecasts are mostly in line with actual traffic. Penalties are foreseen with respect to availability.  Perceptions of road users on safety, quality of the pavement, the quality of traffic information and daily maintenance are regularly measured by the Dutch Highway Agency. References Hoezen, M., Voordijk, H., Dewulf, G. (2012) Contracting dynamics in the Competitive Dialogue procedure. Built Environment Project and Asset Management 2 (1), 6-24. Hoezen, M., Rutten van, J., Voordijk, H., Dewulf, G. (2010) Towards better customized service-led contracts through the competitive dialogue procedure. Construction Management and Economics 28(11), 1177-1186. Hoezen, M., Voordijk, H., Dewulf, G.P.M.R., Procuring Complex Projects using the competitive dialogue, International Journal of Project Organization and Management (forthcoming).
  47. 47. 47 Horgos-Pozega Toll Motorway Concession Serbia Nevena Vajdic University of Belgrade, Faculty of Civil Engineering nevena.vajdic@gmail.com Goran Mladenovic University of Belgrade, Faculty of Civil Engineering gmlad2003@yahoo.com
  48. 48. 48 Project Overview Horgos-Pozega Toll Motorway Concession Project, Serbia Project Type: Brownfield  Greenfield  Both  Contract duration: 25 Years Budget: EUR 1200 M Estimated total project cost out of which construction cost was EUR 800M Project Time Line Tender: Oct. 2005; Contract Award: March 2007; Planned start of construction: April 2009; Contract Cancelled: December 2008 Figure 1. Main and regional roads in Serbia Source: Public Enterprise Roads of Serbia, 2013
  49. 49. 49   1 Introduction The Republic of Serbia has a road network of 40,845 km in total, of which 498 km are tolled motorways and 136 km are tolled semi-motorways. The toll motorway project Horgos – Pozega is 323 km in total length. It included financing and construction of a new motorway section, financing and construction of the second carriageway on the existing semi-motorway section, and the take-over of an existing motorway section. The project was, hence, divided into three lots (Figure 1): Lot 1 Belgrade (Ostruznica interchange) – Pozega: the E-763 motorway has a length of 148 km. This is the new section connecting Serbia to Montenegro and to Bosnia and Herzegovina. The package for this lot included financing, design, construction, operation and maintenance services. Lot 2 Horgos – Novi Sad: the E-75 motorway is 107 km in length with one existing (right) carriageway. This lot included financing, design, construction, operation and maintenance of a new, left carriageway and operation and maintenance of the right carriageway. Lot 3 Novi Sad – Belgrade (Batajnica brick factory): the E-75 motorway is 68 km in length. Lot 3 included operation and maintenance of the existing right carriageway and a newly built left carriageway. In September 2006, prior to the tender opening, the Autonomous Province of Vojvodina officials raised the question of granting the right to the concessionaire to collect tolls on the highly profitable motorway section from Horgos to Belgrade (estimated AADT 19,000 vehicles per day), whose construction costs the citizens of Vojvodina already had paid. This section was originally financed from foreign loans between 1970 and 1988, and the province administration had paid those loans back. Thus, province officials stated that the concession was not in the interest of Vojvodina citizens. As part of the construction financing was generated by toll collection on the brownfield section, this internal political debate weakened the project’s risk profile. In the end, Deutsche Bank suspended projects in Serbia due to the political risk increase in the country during 2008. This lead to the concessionaire’s failure to provide bank guarantees for the project. The contract was canceled at the end of 2008.
  50. 50. 50 2 The Contracting Authority (Public Party) The Government of Serbia announced the public tender for the award of the concession and was responsible for the tendering process. The Government appointed the Ministry of Infrastructure as the entity responsible for the procedure of concessioning. The advisor of the Public Partner was Louis Berger (France). The fact that central government held the procedure was a cause of friction with the provincial government (Vojvodina). The tendering procedure was prepared and implanted in accordance with the 2003 Concession Law. The decision to award a concession for the construction, operation and maintenance of the Horgos-Pozega motorway was made in 2005. 3 The Concessionaire (Private Party) The Spanish-Austrian consortium of FCC Construction S.A. and Alpine Mayreder Bau GmbH won the tender. FCC Construction S.A. (Spain), as a member of the winning consortium, asked the Serbian government for additional clarification before signing the contract. After the deadline for contract verification expired, FCC stepped out allowing the second best bidder, PORR (Austria), to get involved in negotiations with the government about its participation in the project. This lead to a new consortium created by Alpine Mayreder (owned by FCC) and PORR, which signed the contract for the project concession. FCC is one of Spain’s largest construction companies and operates projects worldwide. It offers a range of services for infrastructure projects and services in the concession management area. PORR is a large international construction company and provides services in the construction, engineering and development area. Alpine is part of the FCC group and is the second largest construction company in Austria. FCC is the owner of 79,27 percent of Alpine Mayreder Bau GmbH (Austria), which formally allowed FCC to stay involved in the project. The concession contract allowed parties in the consortium to change their share and to eventually transfer it to a third party. The SPV, Sever-Jug Autoput d.o.o., Beograd, was under joint control of FCC Construcción SA and Allgemeine Baugesellschaft - A. PORR Aktiengesellschaft
  51. 51. 51 4 Users Individual (national and international) users, local industry which extensively uses freight transport by road, and transport companies were the main potential users of the new motorway. The proposed motorway would have provided a fast connection for passengers and goods from western Serbia to Belgrade and northern Serbia and vice-versa. It would also have provided a better connection to Montenegro and the Adriatic coast. 5 Key Purpose for PPP Model Selection The primary objective of this project was to obtain finance for Lot 1 (the Belgrade – Pozega section) and for the second carriageway in Lot 2 (Horgos – Novi Sad). Lot 3 and the existing semi-motorway section in Lot 2 were “in- kind” contributions to support the financial feasibility of the project and increase the probability of international financial institution co-financing. This was important as the State has been saturated with credit obligations and limited by the IMF in obtaining new loans, so further road projects must be financed from other sources – one of them being public private partnerships. 6 Project Timing The existing two-lane road, especially in the motorway corridor of Lot 1, is extremely congested. Some sections have AADT above 15,000 vehicles per day. However, the timeline of the events leading to contract cancelation is as follows: June 2005: The Serbian Government announced the public tender for the concession for Horgos-Pozega project. Jan. 2007: The Spanish-Austrian consortium of FCC and Alpina was announced as the best bidder. The procedure for concessioning was delegated to the Minister of Infrastructure. April 2007: The President of the AP Vojvodina Parliament publicly proclaimed that the Autonomous Province of Vojvodina was to revoke the Horgos-Pozega PPP contract. March 2007: In the press, the government appeared to be delaying in delivering to the concessionaire the documentation regarding land expropriation. Sept. 2007: The Minister of Economy suggested to the government that the PPP contract should be revoked because the concessionaire’s failure to provide bank guarantees for the entire project.
  52. 52. 52 Sept. 2007: The Government of Serbia rejected the request from the concessionaire to agree to the cancelation of the contract. Dec. 2008: The Concessionaire canceled the contract and accused the Government of Serbia of violation of the contractual provisions. 7 Project Locality and Market Geography Since Serbia is not a member of the EU, the project is not included in TEN-T priorities. However, Lots 2 and 3 of the project (Horgos - Novi Sad - Belgrade) are within the European Transport Corridor X connecting Serbia, Montenegro, Hungary, Croatia, FYR Macedonia, Bulgaria, Austria and Greece. The remaining part of the project (Belgrade – Pozega) is part of the connection to Montenegro and the Adriatic coast. Significant industry (for local market conditions) is located in northern and western parts of Serbia. There is still significant local traffic that would continue to use a non-tolled road. The new motorway would also have been used by tourists going to the Adriatic coast. 8. Procurement & Contractual Structure Tendering International competitive procurement was carried out in full compliance with international financial institutions’ requirements. A two stage tender procedure took place. The number of bidders in the first stage is unknown. The number of bidders in the second stage was four. The total procedure took 18 months. Contract Structure The concessionaire was to design, finance, build, operate and maintain the motorway. More specifically, the obligations with respect to the Lots were as follows: Lot 1 Belgrade (Ostruznica interchange) – Pozega: financing, design, construction, operation and maintenance. Lot 2 Horgos – Novi Sad: financing, design, construction, operation and maintenance (operation and maintenance of the right, existing, carriageway). Lot 3 Novi Sad – Beograd (Batajnica brick factory): operation and maintenance.
  53. 53. 53 The public sector contributed with the financing and construction of Lot 3, whose completion was financed by international financial institutions (the road was delivered by the end of 2008). The foreseen repayment method was through user tolls. However, the private partner was obliged to pay a concession fee to the public partner during the concession period. Risk Allocation Risks varied depending on the section (Lot) of the motorway. With respect to design and construction works: Lot 1 (Belgrade – Pozega) was a Greenfield type of project (148 km) and therefore design and construction risks were applicable for the whole section. Lot 2 (Horgos – Novi Sad) (107 km) considered only the left carriageway for new construction, and therefore, these risks are partially applicable for this Lot. Lot 3 (Novi Sad – Belgrade) (68 km) included only operation and maintenance, thus these risks were not applicable for this section. Risks ⇐ ⇒ Design & construction  Maintenance  Exploitation  Commercial/ revenue   Financial  Regulatory TotallyPrivate  TotallyPublic Figure 2: Risk allocation In addition, the concessionaire was obliged to give priority to domestic companies for design and construction services. While maintenance risks were assigned to the concessionaire for all three sections, Lot 2 and Lot 3 were existing sections with some historical data for maintenance activities, which reduced the magnitude of this risk for the whole project. Again, the concessionaire was obligated to give priority to domestic companies for maintenance services.
  54. 54. 54 The concessionaire was assigned the collection of tolls. Toll tariffs, however, were to be set by the government. Commercial risk was, therefore, shared. Finally, the Government was responsible for the land acquisition administration process, while the concessionaire was obliged to pay the fee. Performance The contract was cancelled and, therefore, the project may be considered a failure. However, preparatory works included a cost-benefit analysis tested against the World Bank “Highway PPP toolkit” model software. It is considered that the traffic in the pre-feasibility study for Lot 1 (new section) seems to be significantly overestimated if compared to the current traffic on existing two lane roads within the motorway corridor for Lot 1. References Cuttaree, V., Humphreys, M., Muzira, S. and Strand, J-P. (2009). Private Participation in the Transport Sector: Lessons from Recent Experience in Europe and Central Asia, Transport Papers TP-24, The World Bank Group, Washington D.C. Cocic, N. (2009). Failure of the Public-Private Partnership in Serbia, Horgos-Pozega PPP Case. Master Thesis, School of Management and Governance, University of Twente. Ministry of Capital Investments, Republic of Serbia. (2005). The Invitation to tender for giving concession for the building, usage and maintaining of the Horgos-Pozega motorway, available at: https://www.google.rs/url?sa=t&rct=j&q=&esrc=s&source=web&cd=1&ved =0CDQQFjAA&url=http%3A%2F%2Fwww.media.srbija.gov.rs%2Fme dsrp%2Fdokumenti%2Foglas_koncesija_horgos_pozega.doc&ei=UPwb UdzYNuuL4gSznoG4AQ&usg=AFQjCNE4y4Xnn7QbuYfH6spyTnXP TZd9_g&sig2=kLjI- M7XbMM5XkLdfpVwWQ&bvm=bv.42261806,d.Yms
  55. 55. 55 Ionia Odos Motorway Greece Nikolaos Nikolaidis University of the Aegean GEK Terna S.A. nikos.d.nikolaidis@gmail.com Athena Roumboutsos University of the Aegean athena@aegean.gr
  56. 56. 56 Project Overview The Ionia Odos Motorway Concession, Greece Project Type: Brownfield  Greenfield  Both  Contract duration: 30 Years (including Design & Construction) Budget: EUR1200 M This budget (nominal prices) includes Design & Construction, Financing Costs and Construction period operating expenses. Project Time Line Studies were initiated prior to 1998; Call for Tender: 2001; Contract Approved: 19 Dec 2006; Financial Close: 19 Dec 2007;Date of contract ratification: 16/4/2007 Law 3555/2007 Works halted/commencement of contract renegotiations: Spring 2010 Announcement of agreement on basic renegotiation terms: 12 April 2013 Figure 1: Overview of the Ionia Odos Motorway Concession Project  
  57. 57. 57 1 Introduction The “Ionia Odos” concession is a toll motorway concession project consisting of three sections: A new motorway of 160 km in length, located in Western Greece; an adjacent 30 km bypass of the city of Agrinio, where no toll collection is applied and a 175 km brownfield motorway section along the PATHE (Patra – Athens – THEsaloniki) motorway. The project’s construction is funded by debt and equity capital, state and EU funds, as well as tolls received during the construction period from the brownfield motorway section constructed by the Greek state under a traditional public works procurement scheme. The new motorway is designed to allow a journey speed of 120 km/h and its typical cross section consists of a dual carriageway of two lanes, divided by a New Jersey barrier, and an emergency lane. The project includes over 42 interchanges and over 7 km of tunnels. 2 The Contracting Authority (Public Party) Ionia Odos is a project that was planned and approved by the Ministry of Environment, Physical Planning and Public Works, as part of a ‘bundle’ of five motorway concession projects – parts of the EU TEN-T network and partially funded by EU funds. These projects were titled ‘axes of development’, as they were expected to have a great impact on growth. The concession agreements for these projects became laws of Greece, after ratification by the Greek Parliament. As such, these contracts cannot be amended without approval from both the EU and the Greek Parliament. 3 The Concessionaire (Private Party) Project sponsors for Ionia Odos are Ferrovial (33.34%), ACS (33.33%) and GEK Terna (33.33%). Ferrovial and ACS are major international players in the construction/concession market. GEK Terna is a major infrastructure group based in Greece. Both the Concession SPV (“Nea Odos S.A”) and the Construction SPV (“Euroionia”) are owned by the respective Sponsors. The Lenders group includes both international (mainly Spanish) and Greek banks. The project cost totaling EUR1200 M is financed as follows: Shareholders’ Equity (EUR190M); Debt Capital (EUR110M); Greek State/EU (EUR360M) and Tolls received during construction (EUR560M).
  58. 58. 58 Based on the terms of the project’s restructuring as announced on April 12th 2013, the amount of Greek State/EU funds will increase to cover part of the construction funding shortfall. 4 Users The motorway users include both freight traffic and passenger traffic. Through its connection of the Antirrion bridge to Ioannina, the project also serves international freight and passenger traffic. The brownfield section is one of the busiest motorways in Greece. 5 Key Purpose for PPP Model Selection The PPP model was selected mainly due to restrictions in increasing the country’s sovereign debt levels. Financing and traffic risks were transferred to the private sector via a DBFO scheme. Completing the project on time and achieving an increased construction/operational quality were also key factors for the selection of the PPP model. 6 Project Timing The need to complete the project was high at the time of initial tendering, mainly due to the lack of proper roadway infrastructure to connect Western Greece to the rest of the country. Macro figures at the time (e.g. debt ceiling and GDP forecasts) also justified the project’s implementation, as the highest bidder offered to return to the state an average of 85% of the toll revenues received over the operational period via annual payments. Greece’s sovereign debt crisis has had a severe impact on the project, decreasing the traffic revenues that were necessary to fund its construction. As such, the Lenders imposed a draw stop and the project’s construction was ceased in early 2010. The SPV and Greek State entered renegotiation talks at the time and announced an agreement on key terms in April 2013. These include, inter alia, increased state participation in the construction financing in order to partially cover the funding gap. The annual payments are also expected to be recycled into the project in order to cover operational expenses, debt and shareholder repayment. 7 Project Locality and Market Geography The project connects two major import/export nodes: the Port of Patra (via the Antirrion bridge) and the Port of Igoumenitsa (via its connection to Ioannina
  59. 59. 59 through the Egnatia Odos motorway). As such, it can be considered as an international and regional project. 8 Procurement & Contractual Structure Tendering A two-phase process was applied for the project’s tendering: a prequalification (announced and tendered in 2001) and a final bid phase (tendered in 2005). Seven (7) groups expressed interest during the first phase and two (2) out of the four (4) which prequalified finally submitted bids for the second phase. The project’s concession agreement was signed in late 2006 between the highest bidder (a consortium composed by GEK Terna, ACS and FERROVIAL) and the Greek State. Contract Structure The contract follows a typical concession structure via DBFO. The project is partially financed (€360M) by Greek State and EU Structural and Cohesion funds of the 2007-2013 programming period. Shareholders and Lenders also participate in the construction funding via €190Mof equity and €110M of debt, to be repaid during the operation period. The project also includes a brownfield section to be upgraded and operated during the construction period. Tolls received during this time are to be used solely for the construction funding. Toll rates are specified in the contract (fixed), and gradually reach their limit (0.04 €/km in real 2003 prices) via the achievement of construction milestones. Due to high volumes of expected traffic, the contract included payments to the State at a rate of 85% (a critical part of the tender’s award formula) of toll revenues received over the operational period. Risk Allocation Risk allocation also follows DBFO standards: traffic, financing, construction and operation/maintenance risks are transferred to the private party, while the State maintains the ownership of legal/regulatory risks. The severe impact of the Greek sovereign debt crisis on traffic volumes has affected the traffic risks as perceived by the private sector, and is expected to have a decisive role on the final renegotiated contract structure, mainly through the amendment of the toll revenue sharing mechanism during the operational period. Initial forecasts made prior to the project’s implementation indicated an annual GDP growth rate of 3.8% and a motorization growth rate of 0.74% for
  60. 60. 60 Greece; these estimates assumed an annual traffic volume growth of 14.4% for Greece (Source: TEN-STAC Scenarios, Traffic Forecasts and Analysis of Corridors on the Trans-European Transport Network - 2003). Land Acquisition risk is also a major point of argument during renegotiation, as land acquisition has caused major delays in the project’s progress. This is mainly attributed to unrealistic expectations by the State for the time needed to acquire the required land. Delays in land acquisition, as well as environmental claims, have been a main source of claims against the State in the project so far. It needs to be noted that environmental claims have also caused works to stop in key project areas. Risk is allocated as depicted in figure 2. Risks ⇐ ⇒ Design & construction  Maintenance  Exploitation  Commercial/ revenue  Financial  Regulatory  Force majeure  Land Acquisition  Environmental Risk TotallyPrivate  TotallyPublicFigure 2 Risk allocation Performance As the Independent Engineer is mainly responsible for evaluating construction performance, in conjunction with the Awarding Authority, there are no Key Performance Indicators (KPIs) during either the construction or the operational period. Performance during the latter is monitored by the Awarding Authority, which is responsible for evaluating operational performance following the construction period. However, the financing agreements, considered as annexes to the concession agreement, include several key metrics that are used to evaluate the viability of debt repayment, such as the debt service coverage ratio (DSCR) and the loan life coverage ratio (LLCR). It needs to be noted that decreased levels in these metrics can become grounds for project default.
  61. 61. 61 References Roadway fatalities: TEN-STAC Scenarios (2003), Traffic Forecasts and Analysis of Corridors on the Trans-European Transport Network The Ionia Odos Contract, Greek Law 3555/2007 of 19 Dec 2007 of the Official Gazette. www.neaodos.gr
  62. 62. 62 M6 Toll (BNRR) United Kingdom Christopher Boles University of Central Lancaster chris.boles@blueyonder.co.uk Champika L. Liyanage University of Central Lancaster CLLiyanage@uclan.ac.uk
  63. 63. 63 Project Overview The BNRR M6 Toll, UK Project Type: Brownfield Greenfield Both  Contract duration: 53 years Budget: GBP 900 M Asset value as described by the main equity holder. Construction costs were calculated as GBP 485M (M6 Toll, 2008) Project Time Line Project conceived: 1980; Public Inquiry: 1988; Decision to use PPP financing: 1989; Tender: 1990; Contract award: 1992; Second Inquiry: 1994; Legal challenge: 1997; Financial close: 2000; Start of operations: 2003.   Figure 1: M6 Toll route (BBC.co.uk, 2003)
  64. 64. 64 1 Introduction The M6 Toll (also known as the Birmingham Northern Relief Road) opened in 2003 as the UK’s first tolled motorway. The premise of using a PPP was decided at a very early stage and the BNRR was an entirely private DBFO, although the government provided funding for network connections to the M42. The motorway was conceived in 1980 to relieve congestion on the existing M6 motorway hub in Birmingham, and to service local residential areas and business development. The scheme also supported integration into the wider European network for commercial traffic. The existing M6 motorway was in need of investment and its position as the main arterial route between the south, midlands and north west of England meant that the volume of traffic would soon outstrip its capacity. Alternative routes were required to provide the additional capacity needed. The original M6 motorway remains in operation as a free parallel alternative route a few miles to the south of the M6 Toll motorway. The scheme was originally conceived as a traditional publicly-procured road 43km in length. During an inquiry held in 1988, objections into the public road scheme were investigated. The outcome of this inquiry was not disclosed as in the following year the UK government decided to use the road as an initial trial for a private finance initiative (PFI) (University College London, 2011). The government at the time encouraged the use of DBFO and the solution of tolling was seen as acceptable. However the proposed scheme was not received favourably from a user and society stakeholder perspective. This meant that the process of developing the road took approximately 23 years from the original proposal submitted in 1980 to the opening in 2003. 2 The Contracting Authority (Public Party) The government department with controlling responsibility for the project is the Department of Transport. The regulatory body responsible for contractual aspects on behalf of the government is the Highways Agency. This is responsible for the management of the main road infrastructure in England. The Highways Agency monitors and reports on performance, manages alternative routes (including the M6) and promotes competition. The tolling agreement is covered by two laws: the Highways Act 1980 and the New Road and Street Works Act 1991 (Butcher, 2010). This has eliminated the need for specific legislation on a project-by-project basis. The Acts laid out
  65. 65. 65 the framework for concession agreements between the government and private groups to design, construct and operate “special roads”. 3 The Concessionaire (Private Party) The private partner is called Midland Expressway Ltd. (MEL). The principal equity holder within the SPV is Macquarie Infrastructure Group. In 2008 the M6 Toll project represented 30% of the asset value of the equity holder’s portfolio (M6 Toll, 2008). The historical investment structure of the project differs greatly from the present position. The original concession was held by a consortium of Trafalgar House (Kvaerner) and Italstat (Autostrade). The Kvaerner share passed to Macquarie when Kvaerner was restructured in 1999. Macquarie then bought out the Autostrade share when the project was refinanced in 2006. The refinancing was a contentious issue for the public sector as it released a large amount of money for the equity provider. The short-term banks loans, which financed the original construction work were replaced with a debt instrument that schedules payments of principal and interest so that they correspond more closely to future toll revenues. The previous GBP 620m debt facility was replaced with loans of GBP 1.03bn and new rate swaps secured against MEL itself. The new loans are due to be paid off in 2015, but have already allowed funds of GBP 392m to be released to Macquarie as the owner of the project. Construction was carried out under contract to the SPV by a group of companies known as CAMBBA. This relationship was not without issues, and led to disputes between the SPV and its construction sub-contractor. The SPV has a high degree of autonomy in how it sets the levels of tolls. The frequency and percentage of toll changes are outlined in the agreement, but there is no mechanism for review by the public sector to reflect changed social and macro-economic conditions. This means that the SPV is allowed to increase tariffs even in a period of economic decline. Monitoring of performance is carried out by the SPV and the data are then shared with the public sector agency. This means that value perception can be distorted, and that the public agency has to utilise other measures to obtain a good overall picture of usage of the road; these include measuring traffic flows on routes under the agency’s direct control (M6) and the feeder network. Transparency is poor, as communications with other stakeholder groups must be agreed between the SPV and the public sector agency.
  66. 66. 66 The private partner is driven by long term considerations. It is developing the market but also waiting for the government to create a more mature market to which it can provide services. 4 Users The road is for the use of private and commercial road traffic. The domestic market is made up of private car journeys predominantly from the north west of the country to the main corridor to the south. These journeys fall into two groups: leisure travel and journeys to work or on business. The commercial market is for the transport of goods between manufacturers, distributers and purchasers. The present economic climate in the UK has reduced traffic by 10% (Macquarie general report, 2011). Other stake holders with an input into the performance of the project, and on whom the project has a bearing, include Midland Regeneration, a government regional organization tasked with improving the economic situation in the Midlands, and local authorities with a statutory responsibility to maintain the road infrastructure in their areas. Although MEL holds the concession and is responsible for maintenance, it is still the responsibility of the elected authorities to ensure that the road is fit for purpose. 5 Key Purpose for PPP Model Selection The reasons for introducing a PPP structure were largely political. The government at the time was carrying out a review of the assets in public ownership and privatizing large swathes of these assets such as utilities. The M6 Toll was therefore a test-bed for reducing the direct cost to government of operating and maintaining infrastructure which could be better and more efficiently managed by the private sector. The main objective was reducing the cost to the Treasury budget. Utilizing private sector expertise can provide better service, but was not the prime motivator. 6 Project Timing The existing M6 was struggling with capacity constraints and was in need of development and maintenance. A case for the construction of the new road had been made prior to the government decision to build it as a PPP. During the 1980s there was a recession in the UK, and a further recessionary period took place in the late 1990s, both of which coincided with the project’s time line:
  67. 67. 67 1984– Government opens to public scrutiny its first proposal for the scheme (still a public sector project); 1988– Due to public objections to the scheme a first Public Inquiry takes place; 1990– Project is tendered as a PPP; 1992- Contract is awarded to the winning bidder; 1994– Second Inquiry as the controversial concession agreement goes ahead; 1997– Legal challenges are launched by the Alliance Against the Birmingham Northern Relief Road; 1999- All legal challenges are cleared ( High Court case no: CO/4553/98). The construction and start of operations for the scheme occurred during a period when the economy was stable and there was confidence in economic growth. 7 Project Locality and Market Geography The project is of regional importance, and is part of the wider national motorway network focused on the Midlands region of England. It is in effect a by-pass, and so does not directly connect any conurbations of significant interest. Birmingham has always been seen as the intersection between road networks in the north and south of the country, with its famed “Spaghetti Junction”, and the M6 Toll provides an alternative route through this intersection. 8 Procurement & Contractual Structure Tendering Innovation was encouraged by the government and led to a variety of options from the bidding parties. The design of the road was left open to the bidders to decide, as well as the tolling system (toll levels, and variations by vehicle type and tolling period - weekdays/ weekends etc). Although the process was not originally intended to be a competitive dialogue, the diversity of the tenders meant that a numerical analysis of the bids was impossible and a more subjective analysis had to be used to evaluate the proposed schemes. There were three bidders:
  68. 68. 68  BNRR Ltd : Tarmac Construction & Balfour Beatty;  Midlands Parkway: Alfred McAlpine Construction, RM Douglas Construction, Manufacturers Hanover Bank and the French toll road operator Cofiroute;  Midland Expressway (MEL): Trafalgar House Construction and the Italian toll road operator Italstat (later to become Macquarie Infrastructure Group and Autostrade). From these, MEL emerged as the favored service provider. Contract Structure The concessionaire has the right and obligation to carry out the design, construction and completion of the works, and financing, operation and maintenance of the project facilities, together with associated Motorway Service Areas, during the concession period. It is expected to do this at its own cost and risk, without recourse to Government funds or guarantees. The concessionaire may, if it thinks fit, improve the project facilities subject to the provisions of the Concession Agreement. (Section 2.1, Concession Agreement v3) Risk Allocation The schedules attached to the contract are very prescriptive, including the levels of management to be employed and the monitoring procedures for compliance throughout the concession period (The Secretary of State for Transport, 2000). The Government retains the right to change the concession in the event that the operator cannot fulfill its obligations. The repayment method is based on direct tolls. The government originally considered toll reviews every twelve months; however Section 2.2.2.2 of the concession agreement specifies that tolls are to be reviewed on a six- monthly cycle. The toll charges are to ensure that the project is self-financed. The recipient of the revenues is the SPV. The Government also pays an availability fee to the private partner as set out in Schedule 8 of the concession agreement. Design and construction risks - Section 2.1 of the concession agreement states that design, construction and operation, including maintenance, is at the concessionaire’s own cost and risk, without the aid of government funds or guarantees. However Section 27.3 states that the Government will bear the risk of claims made by the concessionaire and its associates with regard to changes made by public bodies during the design and construction phase. Operating risk is borne largely by the SPV. The Government remains the regulatory
  69. 69. 69 authority for the whole of the network, and all normal regulations relating to road construction and operation apply to this scheme. Finally, the concessionaire must indemnify the government against any third party claims by users of the road. Risk is allocated as depicted in figure 2 below. Risks ⇐ ⇒ Design & construction  Maintenance  Exploitation  Commercial/ revenue  Financial  Regulatory  Force majeure TotallyPrivate  TotallyPublic Figure 2: Risk Allocation Performance The performance criteria for the ex-ante evaluation of the project are laid out in the form of a Public Sector Comparator, which was heavily influenced by Government’s desire to adopt a Private Finance Initiative (PFI) solution. The ex-post evaluation took the form of a Post Opening Project Evaluation (POPE) report carried out by the regulatory authority after five years of operation. The performance measures used were:  Traffic volumes, which are measured over time and compared against the alternative free route;  Strategic screen lines – impacts on other roads in the network;  Journey times;  Vehicle usage – types and volumes of commercial and private users;  Safety trends – accidents on the toll road and the reduction of accidents on the M6 and nearby A-class roads;  Environmental impacts – noise & air quality, landscape, biodiversity, heritage and water quality. There is no evidence to suggest that these KPIs are measured as part of the contract, and there are no penalties for non-compliance. There is, however, an availability payment linked to the road being accessible to users.

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