IN 1969 Neil Armstrong landed on the Moon; the Boeing 747 took its maiden flight and the states of Indiana and Kentucky set their sights on building a new crossing over the Ohio river. Planners wanted a better connection between southern Indiana and the city of Louisville in Kentucky. Yet federal and state governments are notoriously slow to make such investments so it is not surprising that it has taken America four decades to reach a point where construction is imminent.
The plan, now known as the Ohio River Bridges project, calls for two new bridges. One crossing will be in downtown Louisville and the other will be slightly out of town. Construction is expected to begin this summer and they should both be open by 2016.
Good reasons abound for building both of the new crossings: they will improve regional mobility, generate jobs, improve access to markets and make transportation more efficient. But one of the unusual aspects of the plans is that the states of Indiana and Kentucky have unwittingly created one of the world’s best natural experiments for testing two methods of procuring infrastructure.
The downtown bridge is being built by Kentucky and the other, known as the East End crossing, is being built by Indiana. Yet while Indiana has legislation that allows for public-private partnerships (PPP), Kentucky does not. So the downtown bridge will be procured the traditional way, and the East End crossing will use a PPP.
Both bridges are being designed and built by the same company: Chicago-based Walsh Construction. The bridges are similar, although not identical. Thus far the estimated costs of the two projects have bundled approaches, tunnels and interchanges for both bridges so it is not yet possible to compare the $763m PPP bridge with the $860m traditional bridge. Nonetheless, as the Indiana bridge began as a traditional procurement, the move to a PPP has generated savings of $225m on the proposed cost of construction and seen the completion date shorten by eight months, according to Indiana’s Department of Transportation.
The most interesting comparison between the bridges is over the longer term. For the PPP bridge, responsibility for the initial capital investment has been bundled in with the 35-year maintenance and operating costs. A special-purpose entity called WVB East End partners will finance and maintain the crossing. Walsh is also a partner in this entity and Greg Ciambrone, vice-president of strategic investments, says that WVB looked at many design alternatives such as the use of LED lighting, more robust pavement and “weathering steel”, that will not need to be repainted, during the bid phase, in an effort to optimise its bid and reduce costs during the 35-year concession term.
This would support the hypothesis that the PPP bridge will be in better shape in 35 years, and may cost less to maintain, than its partner. With luck it will not take this long, though, for Americans to warm to PPP. The Brookings Institution, a think-tank in Washington, DC, calculated in 2011 that the amounts committed through PPP for infrastructure increased fivefold between 1998-2007. Nonetheless, between 1990 and 2006 America financed a mere $10 billion of PPP for transportation infrastructure. Over the same period in Britain—where the economy is a sixth as large—the sum was $50 billion.
