Abstract
The benefits associated with infrastructure privatization occur primarily in the selection/design and operation/maintenance stages, not in the construction stage. The benefits are usually the result of private sector innovation and cost efficiencies. Innovation is likely to provide benefits in the selection/design stage and both innovation and cost-effectiveness provide benefits in the operation/maintenance stage. The type of privatization also impacts the flow of benefits. The greatest innovation and cost-efficiency benefits are derived from ownership transfer rather than contracting out operation and maintenance. Civil engineers are in a good position to know which projects are likely to reap the most benefits and how to conduct the bid process to maximize those benefits. The policy maker, however, must consider factors like the public's expectation of the government's responsibility, the environmental impact, and other tradeoffs. Some of those tradeoffs are: investment encouraged by long-term time horizons versus competition among private companies; profit induced benefits versus regulation of monopoly prices; and economies of scale versus conflicts over control among local authorities.
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