Maintenance incentives under different infrastructure regimes

Abstract

An increasing issue in privatised infrastructure is the appropriate incentives needed to ensure adequate maintenance of the infrastructure as a public resource. This paper explores the implications of some of the insights from theories of regulation and contracts for optimal management of transport infrastructure maintenance with respect to the interests of different stakeholder groups: contractors, owners, regulators, governments (subsidy providers or guarantors) and users. Evidence is taken from two UK examples: the major road network and the rail network. The former is seen to be largely a successful involvement of private capital through PFI-style DBFO deals, which has had positive impacts on service quality and cost to the public budget, though arguably less than could have been achieved. The rail network privatisation is seen as a failure in which maintenance was sacrificed in the interests of short-term profit. However, it can also be argued here that the real mistake was to underestimate the quality of the network inherited from British Rail. The paper concludes with some lessons and recommendations taken from the analysis of these two sets of cases.