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A survey of the payment mechanisms for transportation DBFO projects in British Columbia

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  • Ahmed M. Abdel Aziz

Abstract

In traditional project delivery systems, payment mechanisms provide compensation for the work performed using construction capital payments. In the alternative public-private partnership (PPP) systems, payment mechanisms follow the selected PPP system. For example, the build-operate-transfer system provides compensation based on project demand using real-tolls usage payments; the design-build-finance-operate (DBFO) system provides shadow-tolls usage payments; and the performance-based DBFO system provides compensation based on contractor's performance using service availability payments. Designing the payment structure is an important task where several factors have to be considered. This paper analyses the implementation of payment mechanisms in a number of DBFO transportation projects in BC, Canada, in terms of payment structure, payment types and characteristics, determination and funding. The analysis provides insights for the design of payment mechanisms. The analysis shows that more payment types are being used and that the mechanisms are designed to achieve specific government objectives. The analysis refers to a new 'hybrid' payment mechanism with elements derived from the traditional and the PPP systems. The hybrid system may have potential to minimize the overall project cost; however, agencies have to be flexible in the delivery concepts as combinations of payments for inputs, usage and services might have to be used.

Suggested Citation

  • Ahmed M. Abdel Aziz, 2007. "A survey of the payment mechanisms for transportation DBFO projects in British Columbia," Construction Management and Economics, Taylor & Francis Journals, vol. 25(5), pages 529-543.
    • Handle: RePEc:taf:conmgt:v:25:y:2007:i:5:p:529-543
    DOI: 10.1080/01446190601161465
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    Citations

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    Cited by:

    1. Juli�n Sierra Tamayo & Jose Manuel Vassallo & María de los Ángeles Baeza, 2014. "Unbundling tolls from contracts: a new road PPP model," Public Money & Management, Taylor & Francis Journals, vol. 34(6), pages 447-451, November.
    2. Rangel, Thais & Manuel Vassallo, José, 2015. "Modeling the effect of contractual incentives on road safety performance," Transport Policy, Elsevier, vol. 40(C), pages 17-23.
    3. Iseki, Hiroyuki & Houtman, Rebecca, 2012. "Evaluation of progress in contractual terms: Two case studies of recent DBFO PPP projects in North America," Research in Transportation Economics, Elsevier, vol. 36(1), pages 73-84.
    4. Roger Vickerman & Emil Evenhuis, 2010. "Transport Pricing and Public-Private Partnerships," Studies in Economics 1004, School of Economics, University of Kent.
    5. Wang, Nannan & Gong, Zheng & Liu, Yunfei & Thomson, Craig, 2020. "The influence of governance on the implementation of Public-Private Partnerships in the United Kingdom and China: A systematic comparison," Utilities Policy, Elsevier, vol. 64(C).
    6. Evenhuis, Emil & Vickerman, Roger, 2010. "Transport pricing and Public-Private Partnerships in theory: Issues and Suggestions," Research in Transportation Economics, Elsevier, vol. 30(1), pages 6-14.
    7. Mahavadi Dhanshyam & Samir K. Srivastava, 2021. "Governance structures for public infrastructure projects: Public–private management regimes, contractual forms and innovation," Construction Management and Economics, Taylor & Francis Journals, vol. 39(8), pages 652-668, August.
    8. Beria, Paolo & Ramella, Francesco & Laurino, Antonio, 2015. "Motorways economic regulation: A worldwide survey," Transport Policy, Elsevier, vol. 41(C), pages 23-32.

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