TRS: The Use of Life-Cycle Cost Analysis to Evaluate Public-Private Partnerships

Status:  Complete
Report Date:  05/15/2013


MnDOT would like to compare traditional procurement options to the design-build-finance-operate-maintain (DBFOM) approach in public-private partnerships (P3) involving concession agreements so that it can estimate the proper valuation of private sector proposals. To do so, MnDOT needs information about conducting lifecycle cost analyses (LCCAs) of corridor, bridge and multi-modal projects to forecast operations and maintenance (O&M) costs over the long term. This information will help support MnDOT's Alternative Transportation Finance, Sustainability, Asset Management and Bridge Risk Infrastructure Management initiatives. To meet this need, CTC & Associates conducted a literature review and interviews with experts from several departments of transportation (DOTs) about the use of LCCA for comparing traditional procurement options to P3 concessions projects. We found little direct information about the use of LCCA specifically for P3 projects, although there is a significant amount of guidance and research related to value for money (VfM) comparisons of public procurement options to P3 proposals, and to LCCA in general. Interview results suggested that states are using consultants to estimate the long-term O&M costs of projects, however, it is unclear whether consultants have a formal LCCA methodology for estimating such costs.

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