Comparison of Public–Private Partnerships and Traditional Procurement Methods in North American Highway Construction

Abstract

The number of public–private partnership (P3) projects in North America has increased significantly since the early 1990s, as policy makers and transportation officials seek alternative methods to supplement traditional funding sources to finance and deliver projects. Scholars have compared the cost and schedule overruns of P3 projects against publicly funded projects in mature P3 markets in Europe, but not in the North American market. This paper begins filling that gap by comparing the cost- and schedule-overrun results of 12 completed large-scale (greater than ~US$90 million) P3 highway projects in North America with previous research studies reporting on large-scale design–bid–build (DBB) or design–build (DB) highway projects. P3 project performance data were collected through interviews with project executives, and then findings were used from previous studies of traditional projects for comparative benchmarking data. Research results indicate that the P3 sample cost overruns averaged 0.81% and schedule overruns averaged 20.30%, compared with 1.49% cost overruns and 11.04% schedule overruns for DB projects and 12.71% cost overruns and 4.34% schedule overruns for publicly financed large-scale DBB highway projects. With a relatively small universe of completed construction phase efforts to examine, it is premature to draw explicit conclusions, yet results reported in this study point to tighter control of highway construction costs and delivery schedules when projects are delivered by the P3 method. Findings from this study provide empirical evidence for various theoretical advantages and limitations of P3 projects, as well as serve as a reference tool to compare the appropriateness of different project delivery methods.