American Association of State Highway and Transportation Officials

Special Committee on Research and Innovation

FY2023 NCHRP PROBLEM STATEMENT TEMPLATE

Problem Number: 2023-D-15

Problem Title

Guidebook for Developing Effective P3 Project Performance Metrics.

Background Information and Need For Research

NCHRP Synthesis 51-19: P3 Performance Metrics identified a gap in the body of knowledge regarding the implementation of transportation infrastructure public-private partnerships (P3). A P3 is defined as a contract between the public and private sectors for the delivery of a project or service in which the private partner provides the majority of the necessary financing. The synthesis found that no definitive guidance exists on how to quantifying asset performance. The literature reviewed determined that an effective metric is focused on outcomes rather than merely outputs. At the theoretical level, this seems like a simple difference. However, in the world of complex megaprojects, the sheer magnitude of the requirement to develop and deploy metrics that cover everything from administrative procedures to reasonable residual lives for a plethora of asset classes is daunting. Therefore, practical guidance is needed to provide for differentiating between an output and an outcome. The objective of this project is to sample successful P3 projects and determine the types of metrics in use and their relative effectiveness in quantifying asset performance.

The effort would likely consist of sampling a variety of performance metrics for common elements of a given asset, like pavements or incident response, from a variety of P3 projects. The actual performance of each of these would then be measured against the standards found in the concession agreement and the actual payment adjustments to provide a measure of efficacy. Simultaneously, both the agency and concessionaire would be surveyed to furnish perceptional data that could be compared to the quantitative data to identify trends and potential disconnects between actual and perceived effectiveness. In recent years, establishment of the USDOT Build America Bureau and enabling legislation in many states have facilitated implementation of P3 projects in the transportation sector. However, the selection of P3 implementation, just like any other project delivery methods is driven primarily by the goals and objectives of the DOT and the specific project. DOTs are still faced with many challenges in aligning these goals and objectives to the delivery methods of choice. In addition, once a project delivery selection is made, monitoring project performance over the length of the project, given this decision becomes vital for assessing and improving future projects’ performance and delivery decisions.

Performance metrics in P3 projects should address the public client’s overall strategic plan and mission objectives, overall quality and performance of a given asset, and possibly market-specific outcomes that indicate sustainable delivery models. These performance metrics should include key indicators that might include travel time reliability, safety, overall project physical condition, as well as other project/contract elements. Despite the importance of performance metrics, knowledge is relatively limited about the most effective practices for selecting metrics, setting metrics performance levels, and reasonable approaches to deductions and/or point systems for failure of the Concessionaire to meet contract requirements, that ultimately align with the DOT’s goals and objectives.

The proposed research should address at a minimum the following questions:

• What are the different arrangements of P3s used in the transportation industry? What are the key selection parameters for each, in light of DOTs’ project goals and objectives?

• What are the key performance metrics for P3 projects? How can they be measured? How effective are they?

• What are effective ways to tie performance metrics to payment mechanisms (i.e. lane availability, route performance, condition criteria, safety performance, unplanned events, etc.) to the P3 contractor?

• If the P3 concessionaire does not comply with performance standards, what actions (e.g., nonconformance reports, penalty point notices, etc.) should be taken?

• If the P3 concessionaire maintains or exceeds the level of performance specified for the majority of the contract term, what incentives, if any, should be provided?

• What techniques have been used to avoid and resolve disputes? Which have been most effective and which have been less effective?

• What risk sharing approaches appear to have best partnership outcomes?

Literature Search Summary

Gransberg, D.D., DeWitt, S. and Touran A. (2020), P3 Performance Metrics, NCHRP Synthesis 51-19, NAS.

Federal Highway Administration (2009). “Public-private partnerships for highway infrastructure: Capitalizing on international experience.” International Technology Scanning Program.

Yuan, J. F., Zeng, A. J. Y., Skibniewski, M. J., and Li, Q. M. (2009). “Selection of performance objectives and key performance indicators in public-private partnership projects to achieve value for money.” Constr. Manage. Econom., 27(3), 253–270.

Yuan, J., Skibniewski, J., Li, Q., & Zheng, L. (2009). “Performance objectives selection model in public-private partnership projects based on the perspective of stakeholders.” Journal of Management in Engineering, 26(2), 89–104.

Research Objective

The objective of this project is, thus, to develop a structured decision-making model for DOTs on implementing an effective P3 project from inception to operations, that is driven by the DOT goals and priorities, and assessed by performance metrics pertinent to the selected P3 arrangement (from availability payments, to sharing revenue, to full privatization, among others). The decision-making model should take into consideration factors such as various P3 arrangements and financing options and resources and time constraints. Based on the results of this study, a guidebook will then be developed to provide information on practices that may assist in selecting various P3 arrangements, as well as assessing the project using key performance metrics that align with the project goals and objectives.

The purpose of this project is to (1) investigate the different P3s arrangements and risk sharing models used in the transportation industry, and link them to DOTs’ project goals and objectives, (2) examine performance metrics for P3 projects used by DOTs, as well as other countries in the delivery of transportation infrastructure; (2) document lessons learned; and (3) make implementation recommendations that will improve U.S. policy and practice. This project will produce an empirical guide based on effective practices regarding selection of performance measures for P3 projects, and provide guidance on selecting different P3 arrangements/structures given DOT goals and objectives, as well as effective practices for implementing performance measures.

Specific tasks of the research to accomplish the main objective include:

• Task 1 – Conduct comprehensive literature review of studies related to P3 arrangements.

• Task 2 – Benchmark the state-of-the-market and practice, across the various transportation agencies, related to P3 selection choices and establishing project performance metrics.

• Task 3 – Prepare a research work plan

• Task 4 – Conduct representative detailed case studies

• Task 5 - Execute the research work plan and prepare an interim research report

• Task 6 - Publish the guidebook performance metrics

• Task 7 - Prepare a final research report detailing the complete results of the research.

Urgency And Potential Benefits

During the development and operation phases of a project, performance metrics will be compared with established performance objectives that serve as a baseline, to determine how successful organizations (and the Private sector partner) have been in attaining project objectives. The payoff of this research will be improved decision making for DOT on various P3 arrangements, as well as administration and control of P3 projects, which ultimately will result in higher public satisfaction. Another benefit is relating to support of P3 Market aspects. The guidelines will become available to transportation agencies through the traditional NCHRP distribution processes.

Implementation Considerations

Outcome will benefit current and future Transportation P3 investments.

Recommended Research Funding and Research Period

The estimated project budget is $500,000 and the period is 24 - 36 months.

Problem Statement Author(S): For each author, provide their name, affiliation, email address and phone.

Darryl D.VanMeter, P.E., Georgia DOT and several member volunteers of AKC20, Project Delivery Methods

dvanmeter@dot.ga.gov

404-694-3511

Potential Panel Members: For each panel member, provide their name, affiliation, email address and phone.

AKC20, Project Delivery Methods

Darryl D. VanMeter, Georgia DOT, dvanmeter@dot.ga.gov

Person Submitting The Problem Statement: Name, affiliation, email address and phone.

Darryl D. VanMeter, P.E., GDOT Asst. P3 Director and State Alternative Delivery Administrator

Georgia DOT

dvanmeter@dot.ga.gov | M 404-694-3511

600 West Peachtree St. NW

19th Floor

Atlanta, GA 30308