K govt design contract agreements shareholders

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Unformatted text preview: ondition Very Good Good Fair Poor Very Poor Small Auto 2-Axle Vehicle 5-Axle Vehicle 0.0% 0.0% 0.0% 2.0 1.1 2.5 11.0 6.1 10.9 29.0 15.3 26.6 38.0 22.2 39.8 Estimated percentage increase in auto operating costs as a function of pavement condition. Highway Mileage in the United States by Administrative Responsibility Administrative No. of Agencies Miles Federal Agency 5 262,403 State Agency 50 934,696 County Agency 2,500 1,577,420 City, Town and Township 10,000 486,575 Other Local (only Residential streets) 25,000 605,153 35 4,773 38,000 3,871,020 Administrator Toll Highway Authority Total The Policy Challenge: The ? How to Avoid Tolls too High Quality too Low While Still Obtaining: Production ?...... Efficiency Arguments for Government Provision Arguments 1. Non – Economic Military, Political Military, 2. Economic Non-Excludable Non Imperfect Competition Imperfect Shadow Tolls Oligopoly high prices can be exacted Externalities Externalities Air pollution, health, vehicle wear & tear, congestion Air Traditional Highway Solution: Traditional Government Ownership Market Failure & Laissez-Faire Tolls Too High Quality Too Low Everything else society must produce and/or want Possible Effect of Government Ownership Possible M PPF H H= highway (quality & quantity) P.P.F = Production Possibility Frontier Argument for Privatization: Improve Argument Production Efficiency Production M PPF H Economic Argument for Privatization of Highway Ownership Highway Economic Efficiency Rationale* Feasibility of Implementation wrt Economic Efficiency ** *Auction highway at bids that are above the production of government, thus their buyers believe that they could reduce the cost of production this is an Important economic efficiency arrangement. **How can we have our cake and eat it to? Different kind of government interaction And regulation is necessary. W0 W1 W2 M The policy challenge: How to obtain a c Instead of a b?....... W equal welfare contour b C a W2 W1 W0 H Problem with Fair ROR Regulation Problem Under Laissez – faire: Profit Max. Cost Min. Under Fair ROR Reg: Profit Max. Cost Min. Efficient Production Excess Toll Problem: Two NonExcess Traditional Solutions 1. Unlimited Access Non-Toll Private Road 2. Non-ROR Based Toll Regulation Sub-Optimal Quality Problem Sub Two Solutions (Complementary): 1. Legalistic: Covenants, Performance Bonds 2. Market-Like: Pigouvian Subsidy, Incentive Fee S = F + P/E F=Fuel Tax per VMT P=Total User Cost per VMT E-Price Elasticity of Demand for usage of the highway MIT OpenCourseWare 1.040 Project Management Spring 2009 For information about citing these materials or our Terms of Use, visit: WORKING THE GLOBE: Improving the Built Environment Moavenzadeh Institute of Technology 20 February 2009 The Louis Berger Group THREE STORIES: † Cutting Edge Urban Planning: Abu Dhabi † Multicultural Joint Venturing: Qatar † Post-conflict Reconstruction: Afghanistan BUT FIRST † Context, and † Why I think THE GRASS IS GREENER… Global Construction Market An estimated $1 trillion in 1975 An estimated $4 trillion in 2000 USA’s Market Share The US Construction Market as a Percentage of the World Market 50 40 ? 30 20 10 0 1975 2000 2025 And what will we do with the money at home? † Changing windows and adding insulation to homes † Action on long deferred maintenance of vital infrastructure † A few wind farms, PV fields and ethanol † Slow movement towards mass transit and still no high speed rail While the world speeds forward: † Maglev „ 572 kph JR test track „ Shanghai already in revenue service † Cutting edge cities like Masdar: „ Carbon neutral, zero waste „ An MIT project BERGER’S ROLE † Design Competitions „ Overall „ MIST „ HQ † Program Manager for HQ Building „ BIM „ Being there QATAR PROGRAM MANAGEMENT † † † † † Barwa’s Problem Scope of Services Organic Growth too slow JV structuring Conflict of Interest Assisting with Post-conflict Reconstruction † 25 countries emerging from extended periods of civil strife in addition to Afghanistan and Iraq, including Angola, Bosnia, Cambodia, Croatia, El Salvador, Eritrea, Ethiopia, Ghana, Honduras, Iraq, Kosovo, Macedonia, Mozambique, Nicaragua, Nigeria, Philippines, Romania, Rwanda, Sierra Leone, Timor, Uganda and the Democratic Republic of Congo. Many Masters >conflicting priorities † Government † Funding Agencies † The People † Schedule † Cost † Capacity Building Old Rules --- New Realities † † † † Communications Security Financing Operating Costs Violence Case Study † Afghanistan and the REFS project THE TREE: PROJECT OBJECTIVES The purpose of REFS is to promote economic recovery and political stability by: † † † † † † † † Repairing selected infrastructure needed to lower transportation costs Roadway & Bridge Reconstruction (389 KM) Improving the provision of water and sanitation services Increasing access to education, health, and local governmental facilities Restoring electrical transmission and distribution systems Repairing/re-constructing irrigation systems, dams/diversions and canals critical to the reactivation of the agricultural sector Providing employment opportunities to thousands of Afghans through project designs that maximize the use of manual labor to the extent possible Mentoring Afghan professional staff and nascent Afghan private sector companies to the greatest extent possible Ti...
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