In the aftermath of the nineties the Dutch government took a cautious step towards private finance of transport (PFI). Demonstrating economic and financial value added of PFI compared with other ways of project implementation was given much emphasis, revealing economic rationality rather than ideology as a basis of PFI policy. The paper provides an analysis of the first results of the PFI route for roads in the Netherlands. The authors have been involved as financial advisors to the Government for both the A59 and the N31 projects. They provide an economic analysis focusing not only on efficiency but equally on quality of service. The design, build, finance and maintain (DBFM) concept introduces private finance of roads as opposed to the longstanding practice of public finance. For the Netherlands, this is an entirely new way of looking at the road infrastructure sector and road management. It is suggested that only limited efficiency gains are actually made from DBFM. These gains can be measured by the Public Sector Comparator, a financial and economic benchmark for private bids on PFI contracts. An operator must strike a balance between (partially) closing the road for maintenance and thus losing on availability and the cost of maintenance. For efficient maintenance contracting may be at the expense of road availability. The A59 and N31 project show that this results in a new organization of road maintenance and renewal. Putting a value on road availability also presents a new element in the Dutch budgetary process. For the covering abstract see ITRD E126595.
Abstract