36 | Public-Private Partnerships in Urban Bus Systems
This analytical framework calls on planners to answer three questions.2 It is strongly recommended to proceed to project preparation only if the answer to all three is yes: • Are the technical solutions under consideration the most efficient ones for achieving project objectives? • Can the public entity afford the project? • Is there an enabling environment, and do institutions have the needed fiscal capacity? If planners give a positive answer to each of these questions, authorities can c onsider structuring a PPP. However, these conditions alone do not ensure that a PPP is the optimal financing and delivery method. This analytical framework aims to help project planners to verify that financing and delivering a project as a PPP will provide value for money over traditional public procurement.
TECHNICAL ELEMENTS Determining the scope and nature of a proposed technical solution is critical when considering whether to use a PPP as a delivery method. Different technical solutions have different investment, financing, and expertise requirements. For instance, delivering a trunk-fed BRT as a technical solution may justify the use of a PPP from the perspective of transferring costs and seeking operational efficiencies among new operators who have proven experience in this specific technology. Reviewing stakeholders’ objectives and limitations (chapter 2) and considering alternative ways—beyond a PPP—to deliver services (chapter 3) are both useful exercises when considering if an identified technical solution will be best supported by a PPP. When assessing a particular technical solution, planners should consider whether or not it meets two critical objectives.
Objective 1: Does the solution benefit public transportation users? The primary objective of any urban bus reform should be to promote the welfare of public transportation users. There are two reasons for proposing this objective. The first reason is that any urban bus reform is expected to improve mobility, which improves the welfare of public transport users. The second is that attracting more users to the system would promote the achievement of any other objective. The key benefit for users is a reduction in their generalized cost of travel. The generalized cost of travel consists of all financial and nonmonetary costs that the user faces when traveling. In the case of city buses, the obvious financial cost is the bus fare—and also the relative costs of other transportation modes, if required to complete the route. Nonmonetary costs are even more important in influencing users’ decisions. The value of time, for one, should be assessed for each stage of a trip, using a slightly different equation for each type of time: (a) access time (from the home to a bus stop, for example); (b) waiting time (at the bus stop until a bus arrives); (c) time on the bus (which will depend on its speed, the traffic around it, and the length of the trip); and (d) transfer time (including additional access and waiting times). The value of time also depends on the level of comfort during all of these stages. Users generally value their
