Civil & Environmental Engineering
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Item STRUCTURED PROJECT FINANCE FOR PUBLIC-PRIVATE PARTNERSHIPS IN THE U.S.: AN ENHANCED APPROACH TO BETTER ACHIEVE FINANCIAL AND POLICY OBJECTIVES(2014) Farajian, Morteza; Cui, Qingbin; Civil Engineering; Digital Repository at the University of Maryland; University of Maryland (College Park, Md.)As existing U.S. infrastructure ages, government entities are looking to the private sector and to alternative financing mechanisms, such as project finance, to help leverage traditional funding sources and pay for the increasing needs. As a result, the use of Public-Private Partnership (P3) delivery method in the U.S. has increased over the last two decades. The question is how the existing cases can be used to potentially enhance the current P3 model both in terms of bankability and overall procurement process maturity. This study is organized into three main parts. In the first section, project finance in general and the role of different credit enhancements in structured project finance in particular have been. In the second section, a QCA analysis has been perfumed to study and compare 18 P3 projects that have been procured in the U.S. over the last two decades. The goal is to identify logical patterns between project characteristics (i.e. capital value, term of contract, construction risk, traffic and revenue risk, and procurement competition level) and financial characteristics (i.e. equity IRR, interest rate on debt and leverage). The results are further analyzed to refine conclusions that to can provide a better understanding of how financing package of P3 projects may change based on project characteristics and policy objectives. In the third section, an enhanced P3 model has been proposed by using crowdfunding. A SWOT analysis has been conducted to explain how the proposed approach can improve current P3 model. The findings of this study can help P3 practitioners to better utilize available tools and also provides them with new tools to further enhance procurement of P3 projects. The case library provides a significant resource to practitioners as well as researchers and the proposed corwdfunding approach is a novel step toward taking P3 projects to a new maturity level.Item PROJECT PERFORMANCE BASED OPTIMAL CAPITAL STRUCTURE FOR PRIVATELY FINANCED INFRASTRUCTURE PROJECTS(2004-11-18) Sundararajan, Satheesh Kumar; Tseng, Chung-Li; Civil Engineering; Digital Repository at the University of Maryland; University of Maryland (College Park, Md.)Privately Financed Infrastructure (PFI) projects are characterized by huge and irreversible investments and are faced with various risks. Project performance risks, such as project completion time and costs, affect the project value significantly, particularly in project development phase. This is because a major part of the project investments are made during this phase. Due to high uncertainties in managing the project performance risks, the selection of optimal financial structure is a challenge to Project Company sponsors and Lenders. Conventional project performance measurement and valuation methods cannot capture the dynamics of risk variables and their impact on the project value. Without such dynamic performance information, the decision of capital structure may not only be suboptimal, but lead to erroneous results. This research proposes an uncertainty evolution model, with which the dynamics of the project performance risk variables can be predicted at any desired time over the project development phase. A dynamic capital structure model is proposed, that explicitly considers the performance risks and adjusts the capital structure dynamically to counter the impact of performance risks. Numerical results show that such a model can add a significant value to a PFI project. Two risk-sharing mechanisms are also incorporated in the capital structure for a PFI project: active project management (self-support) and government support. An active project management method called {\it dynamic crashing} is proposed. By dynamically controlling the project performance through dynamic crashing, we show that the project value can be improved and the chances of potential bankruptcies can be reduced. In addition, the significance of government support as a risk-sharing mechanism is also modeled, which may be viewed as another means to protect the Project Company against the potential bankruptcies and improves the project value. Numerical results are implemented to validate the models. Overall, this research contributes an integrated framework to capital structure decisions for projects with performance uncertainties.