Faced with political opposition and inconsistent rules from state to state, partnerships that channel private investment into public works have lagged badly in the U.S. compared to Europe and Australia. A new survey report suggests that public officials that have experience in building via public-private partnerships consider the method an important and useful development tool, but that there is a long way to go in gaining broader acceptance.

Photo: Missouri DOT
Can PPPs fund special truck lanes, such as the ones shown in this experiment in Missiouri?

Released at a conference on infrastructure finance in New York City May 7, the report was prepared by McGraw-Hill Construction, the parent of ENR magazine, and Halcrow, the U.K-based designer and program manager. Dow Jones Co. sponsored the conference and the attendance was dominated by staff of financial companies.

According to the survey of government officials, past experience with public-private partnerships, or PPPs, leads to a positive outlook. On the other hand, three out of four officials without PPP experience have not made up their minds about them, the survey showed.

That suggests that education on behalf of PPPs could go a long way toward converting the large number of ambivalent transportation and highway officials, says Harvey M. Bernstein, McGraw-Hill Construction’s vice president of industry analytics, alliances and strategic initiatives. He suggests that a “center of knowledge and expertise on federal or state level” could help smooth the way for more PPPs.

“With the knowledge level required, with the extent of local politics involved, even though the political environment will vary state to state, we think this will drive it a little more quickly in the U.S.,” he says.

The ambivalent officials need all the support they can get because there is a perception in the public and among elected officials that private companies make too much profit in PPPs, the report says. To underscore that point, financial experts at another infrastructure conference called for tougher terms and more transparency on the deal terms and longterm payouts as a way to overcome push-back from the public on PPPs.

From the private developers’ and dealmakers’ perspective, one of the most discouraging problems with PPPs is their tendency to drag out over many years before closing and sometimes not to close at all, several speakers at the Dow Jones conference suggested.

One panelist said the obstacles are especially great now because of the general skepticism with which Wall Street and the process of raising capital is held. But other panelists showed how badly more capital from the private sector is needed.

And an executive of the survey report’s other sponsor returned to the theme of education and suggested the message should be directed to the doubtful public officials rather than at the sources of finance. Michael Della Rocca, president of Halcrow North America, said that next year the same type of session should be held at “the league of municipalities or the National Conference of Mayors” rather than for “the dealmakers.”