4. Implementation Strategies
Increasing demands in the United States for quality transportation services and infrastructure, coupled with increases in the costs of providing these services without significant increases in historical revenue streams, have resulted in many transportation agencies undertaking nontraditional, innovatively financed infrastructure projects. A concern among State and Federal managers is the effectiveness of the audit stewardship and oversight for these projects.
Infrastructure projects can include traditional design and construction, DB, PPP, and concession elements. Many projects are now being awarded to multinational firms with the experience and resources to acquire large government transportation projects. The trend is increasing toward transportation contracts that are larger both in size and dollar amount. In addition, more States are using innovative financing techniques (primarily credit programs) to advance these projects.
European nations also have employed innovative financing methods to meet increasing infrastructure needs, and they have considerable experience in auditing large, innovative transportation projects with DB, PPP, and concession elements. To examine and document the best programs and practices employed by the European nations in the stewardship and oversight of large and innovatively funded projects, a diverse team of financial management specialists with representation from Federal and State transportation agencies, academia, and the private sector traveled to Europe in May 2006.
The scan team identified several strategies for disseminating and fostering the findings and recommendations of this scan. The implementation strategies are summarized below as short term (within 1 year after completion of this report) and long term (within 3 years after the completion of this report):
4.1. Short-Term Implementation Strategies
- The scan report will be disseminated as widely as possible throughout the transportation community. Presentations should be scheduled for the annual meetings of Transportation Research Board (TRB), AASHTO, American Road and Transportation Builders Association (ARTBA), American Council of Engineering Companies (ACEC), and applicable AASHTO committee and subcommittee meetings in 2006 and 2007, with special effort to target the CEOs, CFOs, auditors, and other senior managers in State DOTs. In addition, information should be shared with other relevant constituents, such as legislators, governors' associations, the U.S. Conference of Mayors, the National League of Cities, and other public sector professional organizations.
- Scan team members are encouraged to write articles for publication in professional transportation trade journals and professional accounting and auditing publications.
- Scan team members are encouraged to volunteer for speaking engagements at professional meetings and conferences to share the recommendations of this report.
- A best practices Web site that would incorporate the scan results should be developed by AASHTO and FHWA through the AASHTO Standing Committee on Finance and Administration and the Subcommittee on Internal/External Audit. Availability of the Web site should be promoted throughout the governmental auditing, finance, and transportation community. Links to other Web sites with applicable information should be included, such as the following:
- Scan team members should participate in national and international PPP forums to obtain additional information and training and to document best practices on PPPs in the United States and abroad. The information learned from forum participation should be disseminated via FHWA, AASHTO, TRB, ARTBA, and ACEC.
- A monograph explaining public-private partnerships from the specific viewpoint of transportation should be written and made available to the transportation community.
4.2. Long-Term Implementation Strategies
AASHTO and FHWA should partner in providing consultation and training of auditors and other financial managers involved in PPPs and other innovative transportation procurement contracts. This consultation and training should include development of the following:
- A financial project planning and business model that agencies could use to analyze the robustness of the financial portion of PPPs and other large, innovative scheme proposals. Value for money concepts should be included in the development of the model.
- A model to establish public comparables for all projects being considered. This model should enable the user to interact with the business financial model discussed above, including the analysis of value for money.
- A model contract for concessions and PPPs, including a library of contract practices, guidelines, and clauses.
- A dictionary of commonly used terms within the audit environment on transportation financing structures.
- A database of best practice audit processes and procedures for traditional and nontraditional capital improvement highway transportation projects. The database could include concession contracts, private sector rate of return on concession contracts, national tolling charge (revenue) per mile, profit-sharing arrangements for debt refinancing, and audit techniques for PPPs.
- A series of training courses on special topics unique to audit and finance transportation personnel dealing with traditional and nontraditional projects. The training should include topics such as value for money, risk analysis, business modeling, financial analysis, capital budgeting, and negotiating.
- An audit guide for PPPs.
- A repository of specific statutory and regulatory requirements found in each country scanned and make them available to the transportation community on the Web site.