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Applying public private partnerships to the provision of intelligent transport systems

Yao, W.; (2012) Applying public private partnerships to the provision of intelligent transport systems. Doctoral thesis, UCL (University College London).

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Abstract

As an integrated transport solution, ITS (Intelligent Transport Systems) produce direct benefits for the traveller and operator and bring indirect benefits for society as a whole. Nevertheless, insufficient ITS funding holds back ITS development. PPP (Public Private Partnerships) offers an alternative financing channel, which can be advantageous for both public and private parties. Due to the characteristics of ITS, it can be difficult to attract the private sector to invest in some ITS projects where there is a fluctuating profit stream or where the profits cannot cover the investment. In addition, due to the existence of asymmetric information, it is possible for the private company to abuse his/her advantage in information over the public authority to seek excessive private gains. The aim of this research is to develop an incentive mechanism for a PPP contract for the provision of ITS, not only to motivate the private company to enter ITS markets but also to reduce the impact of asymmetric information between the two parties. The benefits and risks to both parties of entering into a contract for ITS provision are revealed in the World Bank and USDOT (United States Department of Transport) databases. ITS costs, potential funding sources, and the economic aspects of ITS are examined. The variety and interdependency of ITS cost components imply that it is possible for the private company to reduce costs under an appropriate incentive mechanism. Additional profit streams can diversify ITS funding sources and make it possible for otherwise low profit or non profit ITS systems to be provided without using government subsidy or an increase road user tolls. In this thesis, an investigation is conducted of ITS provision through PPPs in China, to investigate how they are used in the Chinese road sector and the bottlenecks in ITS development. There are two case studies to show how government regulation is used to encourage ITS provision through user payment and through subsidy. These findings provide a useful reference point for other areas of the world and are especially relevant to developing countries. A comprehensive evaluation framework is developed in this thesis to assess the ITS benefits to the travellers and the wider benefits to the community. Two case studies are presented to demonstrate these methods. In case study One, an SP survey of 1,357 motorway users was conducted in 2007, which examines travellers’willingness to pay for three distinct ITS systems on the Shanghai motorway network. In case study Two, using both AHP and REGIME models, an evaluation of the degree of traffic impact of these three ITS systems is presented. Their relative importance in Shanghai ITS motorway management is then established. This research leads to the development of a theoretical model which incorporates suitable incentive mechanisms for ITS provision through PPPs, on the basis that both parties expect value for money. Complexity has been increased in this model by introducing a subsidy and a shadow cost of subsidy variable, which has not been used in the previous literature. The relationship between subsidy and the efficiency level of the private sector is discussed under conditions of information asymmetry and symmetry. The model shows that it is possible for the private company to maximize the benefits of both the public authority and private company under two constraints, namely Individual Rationality (IR) and Incentive Compatibility (IC). Two working examples sourced from the case studies of two different ITS systems are used to calculate the potential profit and risk costs, first under a flexible payment scheme and then how this simplified by the use of an ITS incentive model. These examples strengthen the argument for the use of incentive models and contribute to ITS project profit control, which is the key for a successful ITS project through PPP.

Type:Thesis (Doctoral)
Title:Applying public private partnerships to the provision of intelligent transport systems
Language:English
Additional information:Permission for digitisation not received
UCL classification:UCL > School of BEAMS > Faculty of Engineering Science > Civil, Environmental and Geomatic Engineering

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