7 things every good transportation strategy needs
By Michael Sutherland | December 16, 2016
For a strategy like that to have legs, you need to factor the right things into the development process. Here are seven tips that, properly and carefully considered, will go far to ensuring your transportation project is on track, giving your community the mobility it needs.
Prioritize investment. Start by identifying and monetizing the value—social, service, and economic—that any investment in transportation infrastructure will have. Reject outright any methodologies that apply multipliers to your capital spending estimates to justify the indirect or “here’s hoping” benefits. The same with any productivity improvements based on faster transit times. Include only numbers that reflect truly new usage, not just a shift to another time or mode of transportation. Look for solid benchmarking data to help you understand adoption rates and the level of increased ridership that’s reasonable to expect.
Use land-value-capture methods to subsidize transit. Start to amass land in the vicinity of transit projects early in the planning phases. Property values are known to increase where there’s transit, so governments may be able to finance some of the project costs by selling off desirable real estate. If there are no land holdings to help offset costs, governments should consider special taxation for development around new transit to subsidize their investment. Canvass the marketplace and sound-out potential investors for suggestions as to how the land could best be used or developed. The information is a valuable guide for city planning around transit, and can help make the area more attractive by encouraging community-focused, mixed-use developments, businesses, or recreation opportunities.
Consider a Master Services Agreement (MSA).It’s an overarching contract that appoints one advisor to guide the evolution of the entire transit network, including roads, motorways, and light rail. An MSA acts a guideline to enact a shared vision for the transit program while establishing continuity and benchmarks for service, quality, and delivery into the plan. This allows governments to avoid issuing separate contracts for every project within the program, as well as for different types of advice—technical, financial, or planning—on a per-project basis. A well-positioned MSA contractor has experience helping governments evaluate the technical feasibility of projects. They can also estimate revenue potential, negotiate project agreements, and execute competitive procurement processes.
Provide high-quality project specifications. You can’t proceed without a clear, definitive cost estimate. If the scope and parameters are not defined properly, bidders who have experience operating comparable projects in a similar region or for the same government will have a distinct advantage. They may be better able to predict shortfalls and compensate for them in other parts of the plan, compromising the competitiveness of the process. Or bid enticingly low, expecting to make up the difference on change orders. Of course, project specifications and functionality must be scoped out properly to encourage competitive bids. But governments must allow for private sector innovation in the design and delivery process, too. It’s one more way to maximize the value PPPs can generate.
Determine the right PPP model. In public-private partnerships, governments must be able to manage the supplier effectively, and for the life of the contract. Standards can’t be allowed to lapse and erode the quality of the asset. Sometimes, maintenance and operating components may be added to design-build-finance-manage or design-build-finance-operate-manage procurement contracts if there’s value to doing so. The contractor should be providing a breakthrough service that a government simply can’t match, or offering an additional feature or benefit less expensively than the government could do itself. In order for these additional services to add value, governments must have the structure and mechanisms to enforce the way in which they’re provided.
Encourage the widest possible interest from the private sector. Financers expect to write large equity cheques to invest in infrastructure. They need to know their cash flow won’t be at-risk due to regulatory changes or new governments coming to power. They’ll want government to do its part to protect their investments with backstops for ridership and revenue. Consider offering a level of predictability or commitment for service continuity and fare revenue that’s consistent with market expectations. Or, if that’s not practical, provide some flexibility to operator partners regarding service quality and usage.
Make the bidding and evaluation processes transparent. Get the community involved. Their feedback on the design, function, and schedule will help solidify bidder interest and validate the project’s viability. Government representatives should interact with prospective bidders in the early stages when technical specs and contractual terms are being decided. This will help inform “market level” agreements on which multiple parties can bid. Publish evaluation criteria well in advance of the bid submission deadline. Host open house sessions for bidders. Have a rigorous request-for-information process that responds to questions quickly and definitively. And conduct commercially confidential meetings with the proponents once project agreements have been reached.
Consider compensating bidders with honorariums or bid fees to encourage participation and validate the process. Winners can agree to pay a prenegotiated amount to the other bidders for the work done to complete the bid. Or, government can pay each bidder an upfront amount to compensate them for expenses.
A smart, honest, transportation strategy is the first, essential step to a solid, well-used transit project that delivers what it’s supposed to. Do your homework. Allot the proper consideration and attention to getting this first principle just right. You’ll garner goodwill and public support, save valuable time, and avoid what may be costly errors further down the road.