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Transportation Megaproject Procurement: Benefits and Challenges for Ppps and Alternative Delivery Strategies, and the Resulting Implications for Crossrail

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Transportation Megaproject Procurement: Benefits and Challenges for Ppps and Alternative Delivery Strategies, and the Resulting Implications for Crossrail Transportation Megaproject Procurement: Benefits and Challenges for PPPs and Alternative Delivery Strategies, and the Resulting Implications for Crossrail By Michael A. Kay Bachelor of Arts in Politics New York University, 2004 Submitted to the Department of Urban Studies and Planning and Department of Civil and Environmental Engineering in partial fulfillment of the requirements for the degrees of Master in City Planning and Master of Science in Transportation at the Massachusetts Institute of Technology June 2009 © 2009 Massachusetts Institute of Technology. All Rights Reserved Author …………………………………………………………………………………………………………………. Department of Urban Studies and Planning Department of Civil and Environmental Engineering May 21, 2009 Certified by ……………………………………………………………………………………………………………. Frederick P. Salvucci Senior Lecturer, Department of Civil and Environmental Engineering Thesis Supervisor Accepted by …………………………………………………………………………………………………………… Professor Joseph Ferreira Chair, Master in City Planning Committee Department of Urban Studies and Planning Accepted by …………………………………………………………………………………………………………… Professor Danielle Veneziano Chairman, Departmental Committee for Graduate Students Department of Civil and Environmental Engineering 1 of 175 2 of 175 Transportation Megaproject Procurement: Benefits and Challenges for PPPs and Alternative Delivery Strategies, and the Resulting Implications for Crossrail By Michael A. Kay Submitted to the Department of Urban Studies and Planning and the Department of Civil and Environmental Engineering on May 21, 2009, in partial fulfillment of the requirements for the degrees of Master in City Planning and Master of Science in Transportation at the Massachusetts Institute of Technology Abstract This thesis evaluates the applicability of public-private partnerships (PPPs) and alternative delivery strategies to transportation megaprojects. There has been tremendous expansion of innovative procurement and financing mechanisms in this area. However, there are still many hurdles to overcome before these options can penetrate the transportation market with any regularity. The thesis identifies the barriers and their origins, and suggests changes to policy and institutional frameworks that may be incorporated to encourage a broader range of delivery options. There is potentially much to be gained from increased private sector involvement in transportation megaproject delivery, but it requires significant investment of public sector time and money at the outset to be able to identify the most appropriate course of action. The public and private sectors often have diverging short-term versus long-term interests that must be reconciled if PPPs are to provide improved outcomes. The thesis introduces the various stages of megaproject development and the way public and private sector strengths may be packaged together throughout these stages to form alternative delivery strategies. It also provides an assessment of the many issues surrounding the business case, risk, management, and contracts. These issues are later revisited in an evaluation of several projects in the U.S. that have utilized “traditional” and alternative delivery strategies in the past. Included in this assessment are two larger case studies: Boston’s Big Dig and Puerto Rico’s Tren Urbano. Each incurred both successes and failures as a result of the traditional delivery strategy in Boston and the alternative delivery strategy in Puerto Rico, respectively. The research provides guidance to Transport for London (TfL) as TfL proceeds with delivery of Crossrail; a large-scale rail initiative in the greater London region. As part of its preliminary analysis in advance of Crossrail, TfL has sought input from around the world on experiences with unconventional megaproject delivery. To that end, this thesis provides context from North America. Yet the majority of the conclusions and recommendations are intentionally broad so as to have relevance not only for TfL, but for any public sector agency considering experimentation with alternative delivery strategies for transportation megaprojects. Thesis Supervisor: Frederick P. Salvucci Title: Senior Lecturer, Department of Civil and Environmental Engineering Thesis Reader: Ralph Gakenheimer Title: Professor of Urban Planning, Emeritus, Department of Urban Studies and Planning 3 of 175 Acknowledgements There are countless people who have influenced and guided me throughout my time at MIT and my entire life, without whom I would not be where I am today. I would like to take this opportunity to recognize a few of them: • To my family for all of your unconditional love. I could not have done this without you. • To Nigel Wilson, John Attanucci, Mikel Murga, Rabi Mishalani, Ginny Siggia, and everyone in CEE, for accepting me into the MST program and for all of your support along the way. • To all of the DUSP faculty and staff, and especially to the late, great J. Mark Schuster, for encouraging me to look at cities from multiple lenses. • To Julian Ware, Peter Regan, Steve Allen, Shashi Verma, Michael Colella, Lauren Sager Weinstein, and the great folks at Transport for London. It was a pleasure working with you. • To my academic advisor, Chris Zegras, for helping me to craft a dynamic program that has enabled me to maximize my limited time here at MIT. • To my reader, Ralph Gakenheimer, for your time and incredibly valuable input. • To everyone in 1-235 and to my DUSP classmates, former and present, for reminding me to not take myself too seriously and for providing much needed comic relief. • To my colleague and friend, Eric Plosky, for agreeing to discipline and encourage me when I wouldn’t do so myself. • To Kathryn, for always providing a shoulder to lean on. I am excited to begin the next chapter of my life with you by my side. • Finally, I’d like to thank my mentor and research advisor, Fred Salvucci, for taking a chance on me and for reaffirming my belief that public policy does indeed play an essential role in the nexus of urban planning and transportation. 4 of 175 Table of Contents List of Figures.......................................................................................................................... 10 List of Tables........................................................................................................................... 11 List of Acronyms...................................................................................................................... 12 Chapter 1: Introduction .......................................................................................................... 14 1.1 Objective and Methodology...........................................................................................................................................14 1.2 Background .......................................................................................................................................................................14 1.3 Public Sector Inefficiencies ............................................................................................................................................15 1.4 Uniqueness of Transportation.......................................................................................................................................15 1.4.1 Political Turnover ............................................................................................................................................................16 1.4.2 Funding and Contractual Laws......................................................................................................................................16 1.5 The Promise of Alternative Delivery Strategies .........................................................................................................16 1.6 The Risk of Inexistence ..................................................................................................................................................17 1.7 Crossrail Defined .............................................................................................................................................................18 1.7.1 Crossrail Objectives.........................................................................................................................................................18 1.7.2 Crossrail Timeline ............................................................................................................................................................19 1.8 What Makes a Project a Megaproject? .........................................................................................................................19 1.9 Outline of Chapters .........................................................................................................................................................19 1.10 Terminology......................................................................................................................................................................20 Chapter 2: Transportation Megaproject Development.......................................................... 21 2.1 Project Stages....................................................................................................................................................................21 2.1.1 Planning/Feasibility/Appraisal/Conception ..............................................................................................................21
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