Program Outline

I. Infrastructure Trends & Issues
What are the key political, economic & social issues that guide the delivery & financing of infrastructure projects?

A. Globalization
    1. global financial crisis
    2. competition for commodities
B. Sustainability
    1. ecological
        • climate change
        • scarcity of natural resources
    2. security built environment
        • natural hazards
        • man-made hazards
C. Impact on Investment Needs
    1. potential impact of federal stimulus program

II. Project Delivery Systems
What are the limitations of the conventional design-bid-build approach? What are the advantages of integrated delivery systems and when should they be considered? What are the arguments for and against public-private partnerships?

A. Examples from History
    1. Old London Bridge
    2. Zane’s Post Road
    3. New York City IRT
B. Project Delivery Systems
    1. design-bid-build
    2. design-build
    3. design-build-operate
    4. design-build-finance-operate
C. Public-Private Partnerships (PPP)
    1. general types & features
        • brownfield
        • hybrid
        • greenfield
    2. recent examples
        • Chicago Skyway
        • Indiana Toll Road
    3. arguments against use of PPP
        • infrastructure a “public good”
        • public sector offers lower borrowing costs
        • aversion to foreign ownership
    4. arguments in favor of PPP
        • infrastructure has attributes of private rather than public good
        • state/local governments have debt ceiling
        • private sector promotes efficiencies & innovation

III. Infrastructure Financing
What are the current sources of infrastructure financing? Why is there a perceived funding gap? How and why are capital projects funded through debt? How has the current financial crisis affected financing? What role can private finance play? What role can government play in a public-private partnership?

A. Direct Sources
    1. grants from federal government (such as part of stimulus package)
    2. current revenues
        • gas tax
        • sales tax
        • property tax
B. Bonds
    1. Types
        • general obligation
        • revenue
        • project
    2. Ratings
        • role of rating agencies
        • rating enhancements
            i.) government guarantee
            ii.) letters of credit
            iii.) municipal bond insurance
C. Emerging Sources & Techniques
    1. Project Finance
    2. Tax-Increment Financing
    3. Innovative User Fees (such as congestion pricing)
D. Private Financing
    1. project capital structure
        • debt/equity ratio
        • flow of funds
    2. types of government support
        • direct (equity, debt, currency guarantees)
        • indirect (access improvements)

IV. Project Feasibility
What are the major risks that accompany any large-scale infrastructure project? What is a framework that allows us to better identify, allocate and mitigate these risks?

A. Project Phases & Risks
B. Risk Framework
    1. global risks
        • political
        • currency
        • inflation & interest rates
    2. elemental risks
        • market
        • construction
        • technology
        • operations
C. Risk Mitigation Strategies

V. Project Evaluation & Risk Analysis
How do you determine if a project is viable? How do you choose among project alternatives? How sensitive are the results to changes in project parameters?

A. Overview of Quantitative Decision Making Techniques
B. Basics of Engineering Economics
        • time value of money
        • discounted cash flow analysis
C. Discount Rate Selection
        • controversial
        • dictates choice of technology
D. Evaluations Based on Discounted Cash Flows
    1. net present value
    2. benefit-cost
    3. internal rate of return
E. Risk Analysis
    1. sensitivity analysis
    2. Monte Carlo simulation

VI. Effective Procurement Principles & Strategies
This section will use examples from past projects to illustrate sound procurement practices that seek to preserve the owner’s interests while at the same time attracting private sector participation.

A. Seven Sound Procurement Principles
    1. sound financial analysis
    2. scope defined
    3. head-to-head competition
    4. transparency
    5. fair treatment
    6. safety confirmed
    7. contract elements
B. Project Examples
    1. Dulles Toll Road
        • example of limited financial analysis
    2. SR-91 Toll Road
        • example of proposer-defined scope
C. Innovations through Proper Procurement

VII. Case Studies
The case studies will illustrate and reinforce the key concepts, ideas and principles covered in the seminar.

I. Case Study No. 1 – Far West Side Projects

A. Background & Project Description
    1. Three mega-projects intended to stimulate development of the western mid-town section of Manhattan
    2. Extension of No. 7 train
    3. New Penn Station
    4. Hudson Yards Development
B. Financing
    1. PILOT bonds (No. 7 train)
    2. Private Financing (New Penn Station, Hudson Yards)
C. Project Risk Framework
D. Evaluation

II. Case Study No. 2 – JFK Airtrain

A. Background & Project Description
    1. Project provided a direct rail link to JFK Airport (NYC)
B. Financing
    1. Bonds backed by Passenger Facility Charges (PFC)
C. Approval Process
    1. FAA approval to use PFC funds
    2. Overcome challenges from airlines
    3. ULURP (Uniform Land Use Review Process)/ City Council
D. Project Risk Framework
E. Evaluation

VIII. Federal Stimulus Package

A. Status & Updates
B. Major Beneficiaries
C. Schedule