Public Policy Analysis Harvard Case Solution & Analysis

Public Policy Analysis Case Solution

Alternative Approaches to Fund Transportation Projects

Overview

            There are numerous ways to finance public transportation or transportation projects but most common ways include the public funding, private funding and public-private partnerships (PPP). However, the mode of payment and infrastructure may differ from one solution to another.

            In public funding the capital is usually raised from public funding or taxation and in this mode of funding capital recovery is not guaranteed. Moreover, in this mode of funding the loss and profit wholly belongs to the government.

            On the other hand, in private funding, the capital recovery is guaranteed and all the losses and profits are held with the private company or entity. Finally, in public-private partnership, the government makes partnership with private companies to complete a contract on agreed terms and condition pertaining to capital requirement as well as profit and loss sharing. (Gruber, 2011)

Comparing the Alternatives

Public Finance Approach

            As it has been discussed earlier that in this mode of financing the amount is collected by taxation or other state and federal sources and then the respective project given funds to complete it. However, this is the most commonly used method of financing projects after PPPs. Moreover, through this source of financing capital recovery is not sure while the project completion is sure and mostly the projects started through this sources complete on time.(Gruber, 2011)

Public-Private Partnership

            Under this mode of financing, transportation or any project takes funding from a joint venture which is formed through a partnership of a government and private company or group to complete a specific project. Under this method, the capital recovery is ensured and the profits are higher as compared to public finance. However, this is the most commonly used method all over the world to fund public projects as this is the most viable way of funding public projects and government encourages companies to make these partnerships to give benefit to the private sector as well as to fund public project. (Gruber, 2011)

1 Introduction

1.1Elements of the transportation sector of the Economy

            There are many ways of transportation which are being followed in the United States and these methods include land, airways, rail roads and waterways. Majority of the passengers use automobiles to travel for shorter distances and for longer distances they use railroads and airways. However, the water ways are normally used for cargo and other shipping purposes. Moreover, air cargo is also used in this territory for perishable and express shipments.

1.2 Overview of National Transportation Policy      

Furthermore, the transportation policy of America indicates six main points or key elements which have been stated by the secretary of transportation. These elements include maintaining and expanding the nation's transportation system, fostering a sound financial base for transportation, keeping the transportation industry strong and competitive, ensuring that the transportation system supports public safety and national security, protecting the environment and the quality of life, advancing the U.S. transportation technology and expertise for the 21st century. From these key elements, it can be summarized that the government is focusing to make a strong and profitable transportation structure. (America, 2016)

1.3 Private sector side of Transportation       

In addition, the private transportation sector of America consists of sipping corporations, cargo companies and other private transporter which deal with contract carriage and other services. Moreover, this sector consists of high volume of revenue as the manufacturing industry of the USA is large enough to provide sufficient business to these private transporters.

1.4 Transportation Alternative (PPPs vs. Public)

Finally, if the whole introduction is summarized and a comparison between private and public sector is made, it can be said that the PPPs have a higher efficiency to provide benefit to both the parties i.e. government and private companies. Moreover, the public sector is very strong but still this segment cannot benefit two sides of the economy. Therefore, it can be concluded that the most feasible option of funding any project is the PPP......................

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