Zhang’s Research Quantifies PPPs for Real-World Applications
Highway funding shortfalls necessitate alternative and creative ways to finance the highway infrastructure, and one such innovative way is to form public-private partnerships (PPPs). In doing so, the private sector is highly interested in anticipating any risks to its investment, while the public sector is keen to forge a partnership based on a fair concession agreement that considers both investment risks and profit potential. The work of one CTR faculty researcher, Zhanmin Zhang, is helping address both the private sector and public sector questions through the development of analytic tools to quantify risk/profit trade-offs and evaluate the viability of PPP investments. He is one of the few researchers to bring analytic tools to bear on examining alternative scenarios in this emerging practice of PPPs. As CTR Director Dr. Chandra Bhat indicates, “Dr. Zhang is a pioneer in bringing systems engineering methods to bear on the design and management of physical infrastructure systems, as well as in delivery management techniques such as PPPs. We are fortunate to have someone with his unique skills and expertise here at CTR and at UT Austin.”
Dr. Zhang is participating in two current PPP projects. One project is funded by the Federal Highway Administration through an IDIQ (indefinite delivery/indefinite quantity) agreement with Booz Allen Hamilton, a multi-faceted consulting firm. The project’s objective is to develop a framework and educational tool for assessing the benefits and costs of highway PPP projects. Zhang’s primary responsibility under this project was to examine models for quantifying risks associated with PPP projects so that they could be integrated into the cost/benefits analysis process.
The other project is funded by a private industry in China to study the financial viability of PPP investments in urban development. Under this project, Zhang will be developing a methodological framework and mathematical models that can be used by both private and public sectors to assess investment return, quantify investment risks, and perform fair risk allocations specifically for new infrastructure development in existing urban areas. Two graduate students under Zhang’s supervision, one MS and the other PhD, are participating in the research work of the two projects.
Zhang is further making his mark in the PPP arena through his work on the Conference Organizing Committee of the International Conference on Public-Private Partnerships, which will be held in Austin in May 2015. ICPPP2015 is intended to cover a wide range of topics related to PPPs, ranging from policy to engineering, and economics to legal issues. Find out more and register here.