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I didn't want to go into an extended tirade against PPP, but I stand by my point that even with the other cowt increases, the Dutch PPP projects have been costly messes. That is:

One major dent in the finances wasn't directly due to the PPP structure, but to construction fraud. The Dutch government had tendered the line in four tranches and national construction companies colluded to extract maximum profits for each of these.

There was more to this. From Privatising Railroads: The Problematic Involvement of the Private Sector in Two Dutch Railway Projects (pdf!):

The privatisation strategy was not formed until 1998, after decisionmaking had been concluded and the programme of requirements had become available. Until then, it had been assumed that traditional contracting out would be pursued by means of 21 separate contracts. Because Parliament and the Ministry of Finance had asked for results in the area of public-private partnerships in 1999 after a market consultation, a decision was made to pursue maximum privatisation for the HSL-South. The idea of a single contract was rejected, as such a contract would be difficult to manage and competition would be limited by the fact that few private companies could handle such a large contract. Eight "design and construct" contracts were decided on for the foundation structures of the rail line, including one for the tunnel under the Green Heart. The superstructure (the infrastructure provider) and the transport service delivery would be tendered in the form of concession contracts. The government would be responsible for coordinating the contracts.

...In 1999, the government started the tender procedures for all of the HSLSouth contracts at the same time. Contracting out the tunnel under the Green Heart proved relatively easy. Foreign companies participated, and innovative proposals led to significant cost reductions. Offers for the other contracts, however, created a panic on the part of the government. The total costs based on the offers amounted to 2.54 billion euros, which was 43 percent higher than the allowable budget of 1.78 billion. It was later revealed that private consortia had made a number of illegal agreements, but these agreements were not the main cause of the exorbitant figures. More important factors were the lack of competition due to the simultaneous contracting-out of a number of large government projects and the high-risk insurance that the companies wanted.

Informal, secret consultations with all bidders together in the hope of persuading them to lower their bids turned out to be fruitless, and the government stopped the tender procedure. The Arbitration Council, however, deemed this decision unlawful, as the government had not formally negotiated with the bidders. The government then attempted to lower the bids by agreeing to cutbacks and the transfer of risks back to the government. The contracts, which were valued at 2 billion euros, were eventually signed in July 2000. The final version reflected cutbacks (euphemistically called "optimisations") of approximately 540 million euros from the original private bids. The ultimate bid was 265 million higher than the expected contract value. The 265 million comprised 220 million euros plus an amount of 45 million euros, as parts of the substructure contract had been shifted onto the infrastructure provider contract.

My emphases.

the Betuweroute, which was actually constructed with very little construction cost overruns

Then again, there was no real PPP there. From the same source as above:

By 1998, privatisation had not yet been achieved. Because construction could not wait, the cabinet opted for prior public financing. The construction of the physical foundation for the railroad, the substructure (foundation, tunnels, viaducts), was contracted out in the traditional manner...

The market exploration also showed that the private parties were unwilling to participate as risk takers in the operation, and the tender procedure was postponed. The government would operate the line...

The privatisation objectives of the Betuwe Line have not been achieved. The project has been completely prepared, built and financed in the public realm. Maintenance and operation are also in public hands. The desired private contributions were not secured, nor were the possible advantages of contracts with innovative solutions and efficiency advantages.

*Lunatic*, n.
One whose delusions are out of fashion.
by DoDo on Fri Dec 18th, 2009 at 03:53:03 PM EST
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