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The Virginia Engineer's Guest Articles

PUBLIC-PRIVATE PARTNERSHIPS

June, 2008

PUBLIC-PRIVATE PARTNERSHIPS:
THE VIRGINIA HOT LANES PROJECT
By J. R. Steele

On September 10, 2007, the Virginia Department of Transportation (VDOT) announced an “in-principal” Public-Private Partnership with the joint-venture Fluor Corporation and Transurban (“Flour-Transurban”) to construct the Commonwealth’s interstate 95 and 395 Capital Beltway High Occupancy Toll Lanes project (“HOT Lanes”). Under the Public-Private Partnership, VDOT will own and oversee the lanes, but Fluor-Transurban will construct and, upon completion, be responsible for maintaining and operating the HOT Lanes. This Public-Private Partnership is set to be finalized upon completion of environmental approvals and financial feasibility studies. This article is intended to acquaint Commonwealth businesses with Public-Private Partnerships and specifically highlight the Virginia HOT Lanes Public-Private Partnership.

What is a Public-Private Partnership?
The development of the Public-Private Partnership, or PPP, evolved from the fact that the United States is faced with an aging infrastructure, coupled with the reduction of local, state, and federal government budgets for repair and improvements to older infrastructure. The PPP was developed in order to address this problem and to bring private capital and knowhow to public projects.

In general, a PPP is a contractual agreement between a public agency (federal, state, or local) and a private sector entity. Through the PPP agreement, the assets, skills, and resources of both the public and private entity are shared in order to deliver a service or facility for the general public’s use. With this sharing of resources also comes the sharing of the inherent risks and rewards in the delivery of the service or facility.

The use of a PPP is thought to promote timely, efficient, and less costly construction for both the public and private partners. PPPs allow projects to move more quickly because the project can avoid some of the governmental funding issues that can slow down a traditionally government funded construction project. In addition, a PPP encourages the participating private entity to invest in the state where the project is located. Another important advantage of using a PPP is that the