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Pages 40-45

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From page 40...
... 40 C H A P T E R 6 6.1 Study Objectives The objective of this study was to review the implications of the use of private equity in highway P3s in the United States using a literature review, individual project information, and interviews with staff at state DOT P3 offices. A review was conducted of the state of the highway P3 industry in general and the particular role that equity has played in transportation projects.
From page 41...
... Conclusions and Identified Research Needs 41 risks of infrastructure development and management to a private partner, but they also introduce a new set of incentives that public sponsors must manage in procurement. 6.2.2 Ex-Post Equity Return Projections Are Not Used to Evaluate P3 Proposals None of the agencies surveyed for this study evaluated project proposals based on the expected profits of the bidders competing for the contract.
From page 42...
... 42 Leveraging Private Capital for Infrastructure Renewal potential for an extreme outcome or the public perception of one. These mechanisms are most relevant to demand risk projects since these projects entail greater risk in the highway sector.
From page 43...
... Conclusions and Identified Research Needs 43 equity sale change the control of the SPV. These approval requirements were generally strict during the early stages of the concession (especially during construction)
From page 44...
... 44 Leveraging Private Capital for Infrastructure Renewal comprehensive, such a program would need to monitor the profits of every entity involved in a given project as service providers or parent companies, and this is simply not feasible. 6.3.2 Implications of Transaction Costs in P3 Procurement Additional research could examine the degree to which transaction costs drive up required equity returns and create barriers to entry for the P3 industry.
From page 45...
... Conclusions and Identified Research Needs 45 A similar study of secondary equity sales could compare the conditions under which ownership changes occur in the P3 equity market and, potentially, equity return compression across the project life cycle. 6.3.4 Operational Reporting of U.S.

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