US Department of Transportation

FHWA PlanWorks: Better Planning, Better Projects

US Department of Transportation

FHWA Planworks: Better Planning, Better Projects

Public Private Partnerships


P3 and the Decision Guide

The use of Public-Private Partnerships (P3s) marks a shift away from traditional ways of procuring and financing highway projects. Under the P3 model, a private partner may participate in some combination of design, construction, financing, operations and maintenance, including collection of toll revenues. This approach provides promising tools for developing or expanding transportation infrastructure and for solving complex problems creatively and efficiently. Many states allow P3 in transportation planning and project development, either through blanket policies or on a project-by-project basis. Lessons learned from pioneering projects indicate that early consideration of P3 increases the likelihood of success for both the public and private entities involved. See FHWA's Center for Innovative Finance Support Website (Reference Links) for more information.

Three areas of information support this application:

  1. P3 and the Decision Guide (below). Each of the four planning phases provides opportunities to educate decision makers and stakeholders about P3s.The Decision Guide describes when and how to include P3 considerations, including questions to consider, data, relationships to other topics, and examples from current practice.
  2. Revenue Generation. Mechanisms such as value capture and tolling or congestion pricing can provide additional sources of funding for traditionally-delivered as well as P3 transportation projects.
  3. Innovative Financing. Innovative sources of financing can leverage revenues that are expected in the future (such as revenue from tolls) to allow investment in traditionally-delivered as well as P3 projects. Financial resources made available by P3 may free up traditional funding to be applied to other projects.

LRP-1

Approve Scope of LRTP Process

https://fhwaapps.fhwa.dot.gov/planworks/DecisionGuide/Step/LRP-1

Explore whether revenue generation strategies such as tolling or value capture taxation are potential revenue sources for the LRTP. Identify internal or external financial experts to provide input. If there is no interest or ability to support these strategies at this point, you may wish to reconsider during environmental review.
LRP-2

Approve Vision and Goals

https://fhwaapps.fhwa.dot.gov/planworks/DecisionGuide/Step/LRP-2

Evaluate whether regional goals are related to the use of innovative sources of financing and revenue as well as innovative procurement models.
LRP-3

Approve Evaluation Criteria, Methods and Measures

https://fhwaapps.fhwa.dot.gov/planworks/DecisionGuide/Step/LRP-3

Define evaluation criteria related to revenue generation, access to alternative funding, and technical innovation; the specific measures that will be assessed; and analytical methods to apply in scenario analysis.
LRP-4

Approve Transportation Deficiencies

This Key Decision is not associated with application.
LRP-5

Approve Financial Assumptions

https://fhwaapps.fhwa.dot.gov/planworks/DecisionGuide/Step/LRP-5

Reach consensus on the ability to include innovative financing options in fiscal constraint.
LRP-6

Approve Strategies

https://fhwaapps.fhwa.dot.gov/planworks/DecisionGuide/Step/LRP-6

Based on agreements to consider P3, incorporate strategies related to tolling and the use of alternative revenue and financing sources.
LRP-7

Approve Plan Scenarios

https://fhwaapps.fhwa.dot.gov/planworks/DecisionGuide/Step/LRP-7

Incorporate P3 into scenarios for evaluation and comparison with other regional priorities.
LRP-8

Adopt Preferred Plan Scenario

https://fhwaapps.fhwa.dot.gov/planworks/DecisionGuide/Step/LRP-8

Consider the role of P3 financing and associated revenue generation in achieving the plan goals to inform the selection of a preferred scenario.
LRP-9

Make Conformity Determination by MPO

This Key Decision is not associated with application.
LRP-10

Adopt LRTP by MPO

This Key Decision is not associated with application.
LRP-11

Make Conformity Determination

This Key Decision is not associated with application.

PRO-1

Approve Revenue Sources

https://fhwaapps.fhwa.dot.gov/planworks/DecisionGuide/Step/PRO-1

Identify new financial developments and funding sources, including the use of P3 financing.
PRO-2

Approve Project Cost and Revenue Allocation Approach

https://fhwaapps.fhwa.dot.gov/planworks/DecisionGuide/Step/PRO-2

Ensure that the methodology for allocating revenue and identifying costs is inclusive enough to cover P3.
PRO-3

Approve Project List from Adopted Plan

This Key Decision is not associated with application.
PRO-4

Approve Project Prioritization

https://fhwaapps.fhwa.dot.gov/planworks/DecisionGuide/Step/PRO-4

Identify how P3 financing may impact the full list of projects for prioritization in the TIP and STIP.
PRO-5

Reach Consensus on Draft TIP

This Key Decision is not associated with application.
PRO-6

Adopt TIP by MPO

This Key Decision is not associated with application.
PRO-7

Approve TIP by Governor and Incorporate into Draft STIP

This Key Decision is not associated with application.
PRO-8

Reach Consensus on Draft STIP

This Key Decision is not associated with application.
PRO-9

Approve STIP with respect to Fiscal Constraint

This Key Decision is not associated with application.

COR-1

Approve Scope of Corridor Planning Process

https://fhwaapps.fhwa.dot.gov/planworks/DecisionGuide/Step/COR-1

Decide whether P3 may be considered as a potential project delivery mechanism. Identify resource and information needs and identify relevant partners and stakeholders.
COR-2

Approve Problem Statements and Opportunities

https://fhwaapps.fhwa.dot.gov/planworks/DecisionGuide/Step/COR-2

Identify challenges and opportunities for P3 development. Consider the financing and revenue potential of the corridor if developed through P3. Conduct industry and stakeholder outreach to refine project scope.
COR-3

Approve Goals for the Corridor

https://fhwaapps.fhwa.dot.gov/planworks/DecisionGuide/Step/COR-3

Determine the relationship between corridor goals and the use of innovative sources of financing, revenue, and procurement.
COR-4

Reach Consensus on Scope of Environmental Analysis

https://fhwaapps.fhwa.dot.gov/planworks/DecisionGuide/Step/COR-4

Identify how potential impacts associated with P3 and innovative financing strategies should be considered during environmental review.
COR-5

Approve Evaluation Criteria, Methods and Measures

https://fhwaapps.fhwa.dot.gov/planworks/DecisionGuide/Step/COR-5

Identify evaluation criteria, performance measures, and analytical methods related to the use of innovative sources of financing, revenue, and procurement that can be used to assess the feasibility of P3 solutions in the corridor.
COR-6

Approve Range of Solution Sets

https://fhwaapps.fhwa.dot.gov/planworks/DecisionGuide/Step/COR-6

Evaluate and compare the proposed solution sets based on the use of P3 options to deliver one or more projects within the corridor. The use of P3 could influence the number of projects to be built in a corridor and the timing of the delivery of those facilities.
COR-7

Adopt Preferred Solution Set

https://fhwaapps.fhwa.dot.gov/planworks/DecisionGuide/Step/COR-7

Identify specific solutions that best suit P3 development.
COR-8

Approve Implementation Criteria for Prioritizing Projects

https://fhwaapps.fhwa.dot.gov/planworks/DecisionGuide/Step/COR-8

Gather private sector stakeholder input on criteria for prioritization.
COR-9

Adopt Priorities for Implementation

https://fhwaapps.fhwa.dot.gov/planworks/DecisionGuide/Step/COR-9

Consider impact to overall project prioritization based on P3 participation.

ENV-1

Reach Consensus on Scope of Environmental Review

https://fhwaapps.fhwa.dot.gov/planworks/DecisionGuide/Step/ENV-1

Reach agreement that the project has the potential to include P3-supportive revenue generation strategies or user fees designed to manage congestion (e.g., tolling). Identify data, resources, and stakeholders related to the revenue generation strategy to include in the ENV process.
ENV-2

Approve Notice of Intent

https://fhwaapps.fhwa.dot.gov/planworks/DecisionGuide/Step/ENV-2

Validate that the brief description of the action and possible alternatives included in the NOI are broad enough to include a potential P3.
ENV-3

Approve Purpose and Need/Reach Consensus on Project Purpose

https://fhwaapps.fhwa.dot.gov/planworks/DecisionGuide/Step/ENV-3

Use information from planning or other previous studies about financial feasibility and/or tolling in the development of the purpose and need.
ENV-4

Reach Consensus on Study Area

https://fhwaapps.fhwa.dot.gov/planworks/DecisionGuide/Step/ENV-4

Consider input from private sector stakeholders when defining the study area to facilitate flexibility in the subsequent design of the project.
ENV-5

Approve Evaluation Criteria, Methods and Measures

https://fhwaapps.fhwa.dot.gov/planworks/DecisionGuide/Step/ENV-5

Identify evaluation criteria related to project operations, financing, revenue generation, and project delivery, as well as criteria and methods to evaluate potential impacts and benefits of a P3.
ENV-6

Approve Full Range of Alternatives

https://fhwaapps.fhwa.dot.gov/planworks/DecisionGuide/Step/ENV-6

Identify alternatives that will support the use of innovative sources of financing, revenue, and innovative procurement models consistent with the adopted purpose and need.
ENV-7

Approve Alternatives to be Carried Forward

https://fhwaapps.fhwa.dot.gov/planworks/DecisionGuide/Step/ENV-7

Consider if there are P3 supported alternatives that are fatally flawed and must be eliminated. Validate or revise previous funding/prioritization assumptions as required.
ENV-8

Approve Draft EIS with Conceptual Mitigation

https://fhwaapps.fhwa.dot.gov/planworks/DecisionGuide/Step/ENV-8

Compare all the impacts of alternatives developed through P3 with respect to financing, revenue, and technical analysis.
ENV-9

Approve Resource Agency Public Notice

This Key Decision is not associated with application.
ENV-10

Approve Preferred Alternative / LEDPA

https://fhwaapps.fhwa.dot.gov/planworks/DecisionGuide/Step/ENV-10

Ensure the preferred alternative is consistent with P3 assumptions incorporated in the long-range plan and purpose and need.
ENV-11

Approve Final Jurisdictional Determination

This Key Decision is not associated with application.
ENV-12

Reach Consensus on Avoidance and Minimization for the LEDPA

https://fhwaapps.fhwa.dot.gov/planworks/DecisionGuide/Step/ENV-12

Reach agreement on any mitigation actions required to avoid potential negative impacts. Consider implications of the private sector stakeholder role in the permitting process including providing support for approval of the permit.
ENV-13

Approve Final EIS and Record of Decision

This Key Decision is not associated with application.
ENV-14

Render Permit Decision and Approve Avoidance and Minimization

https://fhwaapps.fhwa.dot.gov/planworks/DecisionGuide/Step/ENV-14

Consider implications of the private sector stakeholder role related to any advance mitigation.

Revenue Generation

Revenue is different than "Innovative Finance" and encompasses tolling, pricing, taxes, loans, and the relatively new topic of value capture. Below are some brief descriptions with examples to help navigate the options for revenue generation.

Tolling has become a familiar approach to revenue generation in recent years where the private sector assumes both the risks and potential benefits of highway expansion. Direct user fees generate revenues and may result in economic benefit. Few facilities can be fully financed using toll revenues alone; most projects will require a combination of revenue sources to work.

Example: E-470 Tollway

Pricing is a broad strategy that generally imposes user fees that vary based on the travel demand on a highway. Fees may vary based on different travel conditions such as peak-period, congestion, market-based pricing, and other factors.

Example: 35Express

State taxes are the traditional revenue sources for transportation. Taxes may be placed on motor fuel, vehicle registration, and other taxes such as general fund revenues. For more detail see State Revenue Sources.

Sales taxes are more common at the local level where taxes and fees are authorized at the state level or approved by voters. For additional information see Local Revenue Sources.

Federal-aid highway funds are available through a variety of mechanisms including bonds, loans, and matching funds. For the wide-range of options in this category see Federal-aid Fund Management Tools.

Value capture is another approach to revenue generation that has not generally been used with highway P3 projects in the past. However, MAP-21 authorized new ways to expedite multiple loan request under a single loan agreement with the Federal government.

Example: I-405 Improvement Project

For additional information, visit the FHWA Center for Innovative Finance Support where you can reach out to experts in many aspects of revenue generation who are available to provide information and assistance.

Innovative Financing

Traditionally, agencies have used public funding and bonds for transportation projects.With P3s there are more financing options available.In addition to private banks and bonds that the private sector has access to,there are a range of finance tools for P3 projects - including innovative programs offered by USDOT.Private sector partners can bring expertise in arranging complex project financing packages, and help assume financial risk.