PPP Case Studies on Transport Projects Across Europe

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

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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.

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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

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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
M80 Haggs to Stepps, UK 73
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

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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
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

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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

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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

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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

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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

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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

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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

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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.

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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).

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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.

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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.

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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

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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

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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.

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Contents
A19 Dishforth DBFO, England, UK
Attica Tollway, The Athens Ring Road, Greece
Bill Halkias, Athena Roumboutsos and Aristeidis Pantelias
Coen Tunnel, The Netherlands
M80 Haggs to Stepps, UK
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
Olympia Odos Motorway, Greece
Athena Roumboutsos and Nikolaos Nikolaidis
Via-Invest Zaventem, Belgium

21
A19 Dishforth DBFO
United Kingdom
Christopher Boles
chris.boles@blueyonder.co.uk
Champika L. Liyanage

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

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
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
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
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
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
Attica Tollway
The Athens Ring Road
Greece
Bill Halkias
Attikes Diadromes
bhalkias@attikesdiadromes.gr
Athena Roumboutsos
athena@aegean.gr
Aristeidis Pantelias
University College London
a.pantelias@ucl.ac.uk

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

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
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
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.
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).
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
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
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.
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.
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
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 ⇐ ⇒
Maintenance 
Exploitation 
Financial 
Regulatory 
Force majeure 
Land acquisition 
Environmental
TotallyPrivate

TotallyPublic
Figure 4: Risk allocation

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
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
Figure5:AtticaTollwayTraffic(RealvsAnticipated)
38
Figure 5: Attica Tollway Traffic (Real vs Anticipated)

39
Coen Tunnel
The Netherlands
University of Twente
j.t.voordijk@utwente.nl

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
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.
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
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.
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
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.
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
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
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 ⇐ ⇒
Maintenance 
Exploitation 
Financial 
Regulatory  
Force majeure
TotallyPrivate

TotallyPublic
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
 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
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
Project Overview
Horgos-Pozega Toll Motorway Concession Project, Serbia
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

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
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.
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
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.
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
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.
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
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 ⇐ ⇒
Maintenance 
Exploitation 
Commercial/ revenue  
Financial 
Regulatory
TotallyPrivate

TotallyPublic
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
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
Ionia Odos Motorway
Greece
Nikolaos Nikolaidis
GEK Terna S.A.
nikos.d.nikolaidis@gmail.com
Athena Roumboutsos
athena@aegean.gr

56
Project Overview
The Ionia Odos Motorway Concession, Greece
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
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.
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.
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
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.
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.
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
through the Egnatia Odos motorway). As such, it can be considered as an
international and regional project.
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
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 ⇐ ⇒
Maintenance 
Exploitation 
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
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
M6 Toll (BNRR)
United Kingdom
Christopher Boles
chris.boles@blueyonder.co.uk
Champika L. Liyanage

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
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.
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
the framework for concession agreements between the government and private
groups to design, construct and operate “special roads”.
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
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.
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
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.
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.
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
 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
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 ⇐ ⇒
Maintenance 
Exploitation 
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.

PPP Case Studies on Transport Projects Across Europe

PPP Case Studies on Transport Projects Across Europe

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PPP Case Studies on Transport Projects Across Europe