Alternative Project Delivery - Texas Water Development Board

Introduction
These large private firms sell their products based on several features that distinguish
them from other service providers. These features include:
• Multinational Corporate R & D
• Concession Fees
• Stabilized Rate Structure
• Access to Private Capital
• Off-balance Sheet financing
• Higher Competencies
• Performance Guarantees
These features translate into such benefits as:
• Cost Reduction
• Technologies
• Guarantees
• Management Expertise
• Capital
There is constant development of performance enhancement, financial and contractual
products. The privatization contracts are for a myriad of different services and
financial relationships that comprise the privatization product spectrum. The
predominance of these contracts to date have been for Operations and Management
(“O&M”) services not involving private capital. O&M contracts present the lowest
political and legal barriers to enter into privatized services. However, once a utility has
been privatized, the general trend has been to continue operations and expand the
business relationships.
Competition and Its Impacts
There is growing political support for privatization. This can be related to the fact that
privatization has benefits to local government officials that may not be available
through other forms of service delivery. In its 1997 survey, the Urban Water Council
of the U.S. Conference of Mayors, confirmed that the political interest in
Public/Private/Partnerships was expanding. Of 261 cities surveyed, 40 percent
currently had some form of Public/Private/Partnership and 14 percent of the cities
without any Public/Private/Partnerships were considering such an approach to
delivering services.
The table below characterizes the extent services are presently provided through
private sources and what is anticipated in the next decade.
B1381-Sect1 R. W. Beck 1-7