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Home » About Bechtel » News & Info » Company Magazine Archives » November 2004 » Features » Ticket to Success » Understanding the PPP
Understanding the PPP
A public-private partnership (PPP) brings together corporations and government organizations to undertake projects neither sector could pull off alone. In the case of the London Underground modernization, the approach has been a ticket for success.
“The PPP blends the best of both worlds,” says Bechtel Senior Vice President Robert Dove, who sits on the board of Tube Lines—the private part of the PPP. “We bring the financial capability and managerial and technical expertise, and the Underground [the public part] adds its knowledge of the system. It’s a complex model to manage, but it can produce extraordinary results when there is a real partnership between public and private sectors.”
Under the PPP, Tube Lines—composed of Bechtel Enterprises and European firms Jarvis and Amey—is upgrading nearly every aspect of the Jubilee, Northern, and Piccadilly lines. For its part, the government transit authority retains control of day-to-day operations as well as the “social” aspects, including selling tickets and setting fares and schedules.
Funding for the project was facilitated by Bechtel Enterprises, the company’s financing and development arm, which helped Tube Lines arrange a financial package that involved 29 banks, then also helped with a restructuring that converted the package to a successful bond issue.
It was a complicated deal four years in the making, says Dove. But it was worth the effort. “We were able to bring in private-sector funding instead of the government seeking approval for billions of pounds in new taxes.”
“The PPP blends the best of both worlds,” says Bechtel Senior Vice President Robert Dove, who sits on the board of Tube Lines—the private part of the PPP. “We bring the financial capability and managerial and technical expertise, and the Underground [the public part] adds its knowledge of the system. It’s a complex model to manage, but it can produce extraordinary results when there is a real partnership between public and private sectors.”
Under the PPP, Tube Lines—composed of Bechtel Enterprises and European firms Jarvis and Amey—is upgrading nearly every aspect of the Jubilee, Northern, and Piccadilly lines. For its part, the government transit authority retains control of day-to-day operations as well as the “social” aspects, including selling tickets and setting fares and schedules.
Funding for the project was facilitated by Bechtel Enterprises, the company’s financing and development arm, which helped Tube Lines arrange a financial package that involved 29 banks, then also helped with a restructuring that converted the package to a successful bond issue.
It was a complicated deal four years in the making, says Dove. But it was worth the effort. “We were able to bring in private-sector funding instead of the government seeking approval for billions of pounds in new taxes.”