Civil Engineers in Public-Private Partnerships and as Master Planners for Infrastructure Development

A PPP project cycle involves several phases which are common for the majority of these partnerships (Figure 2). These phases can be grouped in three large divisions: feasibility, procurement, and implementing/operating (HDR 2005; European Commission 2003). Each of these phases consists of many stages and two principal parties are involved: the client (public owner) and the service provider (private sector) (El-Haram and Agapiou 2002). The first phase embraces these steps: genesis, feasibility, plan and test. The second phase covers finance, and selecting and contracting a partner. Financing, when required, is a major aspect that is likely to be used in the U.S. market; this is an extremely complex subject that engineers would do well to learn about. The third phase joins the executing activities to deliver a project: design, build, operate, and maintain. The third phase can also include operation, ownership, and transfer (if applicable).

Before the feasibility phase, typically a team from the private sector and a team from the public sector are assembled to study the project (HDR 2005; El-Haram and Agapiou 2002). Zhang (2005) suggested that these two groups will be responsible for the success or failure of a PPP project. Genesis is the preliminary stage of the first phase and answers this fundamental question: What is driving the public or the private sector for PPP projects? Both sectors are driven by specific needs. In the public sector, these needs are linked with population growth, better quality of life, and infrastructure restoration. On the other hand, the private sector looks for an economic benefit and a reasonable risk allocation between the parties. So, during this phase, general needs have to be identified and potential solutions can be defined as well (HDR 2005).

The feasibility stage must determine if the selected PPP is feasible both financially and technically. The overall objectives must be identified in this period as well. Some of the questions that need to be addressed are: How will the project be funded? What are the criteria to evaluate the net benefits of the projects? What constraints might hinder completion of the project? Among the available solutions, which solution is the best? Are there other approaches that might be even better? The final stage of this phase is to plan and test. As master planners, civil engineers should have an active participation in this stage, mainly in the evaluation of the different alternatives and the identification of major risks. Within this stage, a delivery methodology would be implemented as well as a financial plan, including a preliminary budget and schedule. Additionally, political climate, site analysis, stakeholder’s attitude (feedback), environmental regulations, and market demands must be analyzed.

In the procurement phase, the best-value private partner is selected. This phase can also be subdivided in many stages according to the level of detail required by the parties. The procurement phase is time-consuming and has been considered a key to success by practitioners and researchers (Miller et al. 2000; Abdel-Aziz and Russell 2001; Zhang and Kumaraswamy 2001; Cartlidge 2006). For example, Jefferies (2006) addressed the procurement phase as the key success factor for the SuperDome facility in Australia. Also, during this phase, the scope of the PPP or performance requirements must be clearly defined (Zhang 2005) and the sharing of risks and rewards for both sectors have to be established. Abdel-Aziz and Russell (2001) stated that PPP procurements have three dimensions that have to be entirely discussed in order to avoid pitfalls during the implementation phase. These dimensions are: (1) rights (possession, revenues); (2) obligations (operation, financing, reward scheme, specifications); and (3) liabilities (taxes, risk, liabilities). This phase may also include a prequalification stage.

The implementation phase is the more visible stage (HDR 2005) and embraces all the actions associated with the physical completion of the project, from engineering design to the construction of the infrastructure. When the implementation phase is completed, the private partners have to operate the infrastructure according to the performance standards defined by the specifications and contractual documents. The final stage of implementation, transferring, may not be required in all PPPs. In this stage, the private sector transfers the control of all the assets to the local government after finishing the operational period

The stages of a PPP, as a project delivery system, may differ based on the degree of involvement by the government and the degree of involvement by the private sector. Typically finance, design, build, own, operate, and transfer are the principal stages of PPPs (Jefferies 2006; UGAO 1999). Figure 3 shows the different types of PPPs and how these fit according to the owner’s responsibility and the duration of the partnerships. These stages can be grouped in different ways to generate the different types of PPPs.

Build, operate, and transfer, for example, is one of the most common approaches for PPPs (Abdel-Aziz 2007). This is an agreement between the public and private sector in which the private sector builds a facility and operates it for a specific time varying from short-term to very long-term concessions (BCMMA 1999). When the operating period ends, the public sector will assume responsibility for the facility. Generally, the financing for these types of projects is provided by the private sector (Cartlidge 2006). BOT advantages for the public sector include the low cost of private operations, the ownership (the facility always belongs to the government), the smaller amount of money needed to deliver a project, and a shorter delivery time. The main disadvantage is replacing the private partner if it goes out of business (BCMMA 1999). The operate, build, and transfer model is similar to the BOT model except that the transfer to the public owner takes place at the time that construction is completed, rather than at the end of the operating period.

The participation of civil engineers as master planners depends upon the type of PPP. For instance, a BOT scheme shows that the role of civil engineers is not limited to design and build, which implies that civil engineers should have the ability to provide technical advice for the design team, considering the long-term implications of those decisions. In a long-term lease agreement, such as the Chicago Skyway, Indiana toll road, and Pocahontas Parkway, civil engineers should be aware of the technical challenges when forecasting demand or estimating maintenance routines that will occur fifty years from now.

To define the role that civil engineers should play as master planners in the development of PPPs, we compared the current and future (suggested) approaches to the delivery of PPPs. Table 1 summarizes the comparison between traditional PPP infrastructure projects (design, bid, build) and a suggested approach for the development of future infrastructure projects.

The characteristics of PPPs indicate an integrated approach to delivery of infrastructure projects, which is in accordance with ASCE’s 2025 vision (ASCE 2006). Techniques to assess best value or sustainability denote the need for a life cycle analysis. Similarly, this approach suggests the involvement of engineering practitioners in public policy, which in turn requires civil engineers with strong and fluent communication skills to communicate with stakeholders, coworkers, media, politicians, and community leaders in order to establish a productive dialogue and to present the benefits and challenges associated with project development.

Once the differences between the current and expected delivery approaches have been assessed, it is possible to identify the skills and knowledge required by civil engineers in their role of master planners for infrastructure development. The analysis was conducted based on recent publications by the ASCE (i.e., Vision for Civil Engineers in 2025 and the Civil Engineering Body of Knowledge for the 21st Century); the future of construction engineering and management research (Levitt 2007); the skills for PFI managers of the Royal Institution of Chartered Surveyors (RISC 2003); and interviews with industry practitioners. These practitioners belong to construction companies, investment banking institutions, law firms, government, and consulting companies. A major challenge in this process is the difficulty to separate and differentiate skills and knowledge. For example, communication can be seen as a skill (effective communication), but there is also knowledge associated with this area that civil engineers must learn. Based on the interviews with PPP practitioners, the suggested skills and knowledge are grouped in three main categories: (1) technical, (2) general management, and (3) specific to PPPs.

The first category is related to the basic knowledge and skill that civil engineers as practitioners of PPPs must have, regardless of their area of expertise. Basic concepts such as risk, procurement, and delivery methods are required. The second group, general management, covers skills related to leadership, ethical behavior, and management. These skills are not only applicable to PPPs, civil engineers working in the public sector should also be familiar with these topics, especially with the alternatives for delivery systems. The last category is focused on particular skills and knowledge required for civil engineers who want to successfully work with PPPs for infrastructure development. These skills and knowledge areas include public policy, risk analysis, project financing, and novel procurement methods.

The suggested technical skills and knowledge areas are shown in Table 2. Knowledge in areas of risk, sustainability, and public policy are required in order to develop basic skills in these domains. For instance, topics such as sustainability can be incorporated within the feasibility analysis of PPPs at early stages. Similarly, engineering history is a field that must be studied by civil engineers in order to recommend solutions based on the impact to society and development of similar projects in the past.

Table 3 describes general management skills and knowledge. Some of these areas are currently covered in the traditional project or construction management courses. However, it is important to mention that PPPs require a more comprehensive understanding of these subjects due to the complexity of the projects and the diversity of the stakeholders involved.

The last category refers to specific skills and knowledge for civil engineers involved as PPP practitioners (Table 4). PPPs require specific abilities that may not be present in other types of procurement methods. A more systemic approach is required because of the complex interrelationships between the decisions that need to be made by both the public and private sector during the procurement process. As an example, Table 4 shows that negotiation and procurement knowledge (Miller et al. 2000; Abdel-Aziz and Russell 2001; Zhang 2001; Cartlidge 2006; Jefferies 2006) is essential in order to define the best alternatives to resolve disputes when they arise during the contract execution. However, the dispute resolution techniques need to account for the possibility that foreign investors are stakeholders in the special purpose vehicle company that is usually created to manage PPPs. Hence, having international participants may require a more comprehensive set of alternatives and locations to solve claims between the public and private sector. This also implies that the traditional dispute resolution techniques might need to be expanded to account for the expectations of foreign investors, who would like to resolve those disputes in a neutral environment. Similarly, an understanding of uncertainty is an important skill for civil engineers involved with PPPs. Practitioners should have a deeper knowledge regarding uncertainty and risk assessment in order to evaluate a multistage project with significant uncertainty in terms of revenues, long-term costs, maintenance routines, demand behavior, macroeconomic conditions, etc. Finally, when public-private relationships are considered, the private sector should have a clear understanding of the client expectations. These expectations usually go beyond the traditional customer satisfaction due to the participation of additional stakeholders such as users, the public, politicians, media, and regulatory agencies.

The current deterioration of America’s infrastructure and the scarce resources available to sustain the country’s economic growth require the consideration of novel project delivery schemes. Public-private partnerships are a delivery methodology that brings technical and financial resources from the private sector to the public sector in order to maintain, renovate, and build critical infrastructure systems. Hence, civil engineers must have a more prominent role in the conception, development, and implementation of these infrastructure projects. To accomplish this objective, new skills and knowledge need to be acquired by civil engineers so they can become the master planners of infrastructure development. Also, civil engineers have a role in independent monitoring of performance-based PPPs. According to the interviews conducted with industry practitioners involved in PPPs, civil engineers can add value to these transactions but it is necessary for them to get involved not only with the technical decisions, but managerial and financial decisions as well. However, current civil engineering curricula do not provide the required skills and knowledge base to civil engineers who would be the master planners and implementers of infrastructure projects. Our research has proposed an extended set of skills and knowledge areas to civil engineers involved in PPP projects, with the goal of supplying essential tools for PPP practitioners from three different perspectives: technical, managerial, and delivery systems.

Finally, based on the ASCE’s vision for civil engineering for the next $20\text{years}$ , we argue for the need for reviewing and modifying the current civil engineering curriculum. Furthermore, the current status of PPPs and the necessity of infrastructure projects are demanding the development of new graduate programs that address delivery methods for infrastructure projects, particularly public-private partnerships. This new graduate program would be a sustainable way to provide skills and knowledge for civil engineers who will become the master planners for infrastructure development.

The authors thank Ernesto Carrasco (investment director, Odinsa), John DiCiurcio (executive vice-president, Turner Construction Company), Joe Seliga (Mayer-Brown LLP), George Papas (URS Corporation), John B. Miller (Patton Boggs LLP), Kathleen K. Mayo (Bay Area Rapid Transit), David Horner (U.S. Department of Transportation), and Matt Bidwell (Merrill Lynch Global Infrastructure Fund) for their input and for their valuable and helpful comments.