BUSINESS MODELS FOR ENHANCING FUNDING AND ENABLING FINANCING OF INFRASTRUCTURE IN TRANSPORT

Periodic Reporting for period 2 - BENEFIT (BUSINESS MODELS FOR ENHANCING FUNDING AND ENABLING FINANCING OF INFRASTRUCTURE IN TRANSPORT)

Reporting period: 2015-12-01 to 2016-09-30

The BENEFIT project (Business models for ENhancing funding and Enabling Financing for Infrastructure in Transport) is one of the first H2020 projects. The innovative aspect of BENEFIT is that it builds on business models and introduces an indicator system describing all elements of transport infrastructure delivery and operation (Matching Framework).

By applying the Matching Framework, BENEFIT undertakes:
- An ex-post analysis and assessment of alternative funding and financing schemes (such as public, PPP and other) based on existing experiences in different transport sectors and geographical areas and their assessment with respect to economic development, value for public money, user benefits, life-cycle investment, efficiency, governance and procurement modalities, etc.; and, provides lessons learned, identification of the limitations of the various schemes and the impact of the economic and financial crisis.
- An ex-ante (forward) analysis and assessment of the potential of transport investments and the related funding schemes, including innovative procurement schemes still in a pilot phase, to contribute to economic recovery, growth and employment, in view of future infrastructure needs with a 2050 horizon for modern infrastructure, smart pricing and funding.

BENEFIT was concluded within 22 months (Dec. 2014 – Sept. 2016) and bears the following innovative aspects:
- Transport infrastructure business models and their project rating: Improved value propositions lead to funding schemes with enhanced creditworthiness enabling viable financing, balancing of project financing and funding risks, increasing the value basis of stakeholders and highlighting the potential of transport investments.
- Transferability of findings with respect to lessons learned, limitations and the impact of the economic and financial crisis through the introduction of typologies for particular sets of stakeholders under different scenarios.
- Open-access case study database in a wiki format

In addressing its scope, the BENEFIT project followed three parallel and interconnecting streams of work. The BENEFIT case study collection (80 projects) formed the basis of analysis including projects from 18 countries across all transport infrastructure modes (D2.1).

Stream 1: Ex-post analysis
- Lessons Learnt analyses concerning funding and financing schemes and the identification of the combinations of underlying factors influencing performance. These concerned: (a) Descriptive statistics analysis (D4.1) and (b) Qualitative analysis of 80 projects covering all transport modes (D4.2).
- Limitations of PPP and other funding schemes addressed by the mapping of interrelations of influential factors (D4.3).
- Analysis of the effects of the recent economic and financial crisis (D4.4).

Stream 2: BENEFIT Matching Framework development and its application in ex-post and ex-ante analyses.
- Lessons Learnt and impact of Economic Crisis using Matching Framework to validate and demonstrate its applicability (D4.2 and D4.4).
- Construction and validation of indicators (D2.2 D2.3 and D2.4)
- Model development (D3.1)
- Multi-approach indicator analysis to identify combinations of indicators influencing performance (D4.2 and D4.4)
- Synthesis of findings (Streams 1 & 2) (D3.2)
- Development of rating methodology and system (TIRI) calibration and validation (D3.2)
- Application of TIRI as ex-ante tool (5.1)

Stream 3: Dissemination, Communication & consultation activities
In line with BENEFIT’s Data Management and Dissemination Plan, the following were conducted:
- Policy Guidelines and Recommendations (D5.3)
- E-communication: 6 Newsletters produced and e-circulated (D6.3); Case Study Wiki (D6.5); BENEFIT Portal; 1 "hangout"; (3) Webinars organized on project specific themes (D6.6).
- Special Sessions: TRA 2016, Outreach Session, (April 2016); WCTRS 2016 BENEFIT Special Session ( July 2016)
- Workshops: Final Event (Brussels, Sept. 2016; D6.10); 2 Policy Dialogues (Milan, Sept. 2015 and Frankfurt, April 2016; D5.2); Lunch Conference, DG MOVE (March 2016)
- Invited Presentations: ITF/OECD Working Group on PPPs, Sept. 2016
- Publications: E-Book of (new) Case Studies; 15 papers presented at (12 international conferences / events and fora in 9 countries; 13 journal publication; 3 Journal Special Issues to be published 2017 [European Journal of Transport and Infrastructure Research, Journal of Case Studies in Transport Policy and Research in Transportation Economics Journal); Taylor & Francis book edition entitled “Funding and Financing Transport Infrastructure: Business Models to Enhance and Enable Financing of Infrastructure in Transport”.

Exceeding expectations, the key outcome, of the BENEFIT project was the development of the Transport Infrastructure Resilience Indicator (TIRI) rating to be used to provide over the project life-cycle of a project assessments concerning the likelihood to reach cost and time to construction completion, traffic and revenues targets. The rating may be used:
- In the planning phase to guide project planning and test scenarios of funding and financing schemes under varying economic conditions;
- In tender preparation to support decisions with respect to the minimum contractual requirements;
- At project award to assess project resilience given contractor competence and risk allocation;
- At financial close to provide the indication of the appropriate mix of public and private funds that would support the achievement of desired outcomes.
- During implementation as a project “health monitoring tool” allowing for the assessment of corrective actions;
- During (re) negotiations to provide a measure of the ability of propositions to improve on outcomes and enhance project robustness.

The BENEFIT Matching Framework includes the assessment of wider value propositions and synergies across sectors: the Revenue Support Indicator provides a measure of how inclusive and integrated an infrastructure project might be; the level of opportunity that may still be exploited and the impact on the likelihood of reaching specific outcomes such a configuration under the particular conditions of a project may have.

The study and research conducted within BENEFIT led to the conclusion that appropriate low-cost financing schemes are needed. The Financing Scheme Indicator (FSI) has the possibility to represent any financing scheme, while the same applies for the Remuneration Attractiveness (RAI) and the Revenue Robustness (RRI) Indicators for the remuneration and revenue scheme respectively. This allows project owners and sponsors to assess the contribution of the proposed scheme in achieving project outcomes.

The application of innovation is considered in the BENEFIT Matching Framework. However, its successful application is connected to the competence to implement innovation. Considering innovation sponsors in the financing scheme would also potentially reduce the cost of capital.

The TIRI rating (static and dynamic) apart from assessing the likelihood of reaching specific outcomes, which supports and contributes in assessing more accurately a project’s creditworthiness, also allows for:
- Assessing the managerial flexibility throughout the project lifecycle;
- Guiding improvements;
- The effective use of real options

BENEFIT Conceptual Approach: Key Elements in Transport Infrastructure Provision, Operation and Maint

Periodic Reporting for period 2 - BENEFIT (BUSINESS MODELS FOR ENHANCING FUNDING AND ENABLING FINANCING OF INFRASTRUCTURE IN TRANSPORT)

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