Professional Documents
Culture Documents
PLANNING
The need for public infrastructure is often identified by the public sector local, regional or
provincial governments
Initial planning is typically made by the government:
o Preliminary alignment locations (for highway projects)
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Preliminary design:
o Further the alternatives identified in the planning phase
o Identify best alternative
Final design:
o Construction plans
The public sector engages private consulting firms to conduct preliminary and final design for
two reasons:
o Labor intensive tasks
o Requires extensive technical expertise
CONSTRUCTION
Until recently, nearly all public infrastructure was operated and maintained by the public sector
If the private firm that designs or builds the infrastructure is also required to operate the
infrastructure provides a strong motivation to produce high-quality, low-maintenance facilities
FINANCE
If the public sector finances a project, the capital may be raised in 2 ways:
1. Through traditional taxation
a. Lowest cost alternative for the public sector
b. But may be politically difficult
2. Through the issuance of bonds
a. Higher cost alternative - public sector agency repay the debt with some interest
If a private sector firm finances the project, the firm may raise capital in 2 ways:
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Typically must repay the loans with interest, imposing an additional cost on the construction of
the project
financing body maintains ownership of the infrastructure project by default
private sector firm will only be willing to finance an infrastructure facility if the future revenues
can offset the firms investment costs and future operating costs
DBOM Design, Build Operate and Maintain (a common public private model)
SPECIAL DISTRICTS
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