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Policy Study No. 272

Table of Contents

INTRODUCTION................................................................................................................. 1

TRENDS................................................................................................................................ 5

  • A.

    State Governments .................................................................................................................................... 5

  • B.

    Local Governments.................................................................................................................................... 7

    • 1.

      Water and Wastewater............................................................................................................................. 7

    • 2.

      Jails and Prisons........................................................................................................................................ 8

    • 3.

      Solid Waste.............................................................................................................................................. 9

    • 4.

      Highway and Street Maintenance ............................................................................................................. 9

  • C.

    Legislation ............................................................................................................................................... 10

  • D.

    Project Delivery Methods ....................................................................................................................... 10

POLICY ISSUES OF INFRASTRUCTURE OUTSOURCING................................................. 11

  • A.

    Outsourcing to Achieve Improved Quality.............................................................................................. 13

  • B.

    Outsourcing to Accommodate Peak Demand ......................................................................................... 14

  • C.

    Outsourcing to Speed Project Delivery and Meet Deadlines .................................................................. 16

  • D.

    Outsourcing to Gain Access to Expertise ................................................................................................ 17

  • E.

    Outsourcing to Improve Efficiency .......................................................................................................... 18

  • F.

    Outsourcing to Spur Innovation .............................................................................................................. 19

  • G.

    Outsourcing to Better Manage Risks ...................................................................................................... 20

  • H.

    Outsourcing to Cut Costs ....................................................................................................................... 21

    • 1.

      The Evidence on Cost Savings from Outsourcing Infrastructure Projects ................................................... 22

    • 2.

      Issues with Cost Comparison Literature and Practices .............................................................................. 27

CONCLUSIONS AND RECOMMENDATIONS .................................................................. 31

APPENDIX: ALTERNATIVE PROJECT DELIVERY METHODS ............................................. 33

  • A.

    Design-Bid-Build (DBB)........................................................................................................................... 33

  • B.

    Construction Manager at Risk (CMR)...................................................................................................... 34

  • C.

    Design-Build (DB) ................................................................................................................................... 36

  • D.

    Design-Build-Operate-Maintain (DBOM)............................................................................................... 37

  • E.

    Design-Build-Finance-Operate-Maintain (DBFOM) ................................................................................ 37

ABOUT THE AUTHORS..................................................................................................... 39

RELATED RPPI STUDIES .................................................................................................... 39

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