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New bold dream

Viewpoint - Bridging the gap between demand for projects and available funds is never easy

Demand for transport infrastructure in Essex is enormous.

A cade of under investment has given rise to a major deficit in basic infrastructure that is further exacerbated by the planned development of two new international ports at Harwich and Shellhaven; pressure for a major expansion at Stansted; growth in the Thames Gateway and along the M11 corridor; and around 130,000 new houses not to mention the Olympics.

A plethora of studies have identified, and legitimised, more than 40 major named projects that Essex County Council as highway authority would be expected to pursue.

Unfortunately, there is no guarantee of funding or resources to even develop the schemes let alone fund them.

Against this background Essex County Council recognised that traditional means of procurement would fall hopelessly short and that we need to explore new mechanisms for funding and delivery.

We already have a good track record in experimenting with innovative funding mechanisms - the fi rst PFI road, the A130, was delivered in Essex.

From this we have learnt many lessons and understand the strengths and weaknesses of using PFI for road infrastructure.

Given the scale of the task we are facing it seemed clear to us that the bureaucracy and hurdles integral to PFI were something to avoid. What we were searching for was a new public/private sector partnership model that would harness entrepreneurial private sector skills, share risk more equitably and at the same time still maintain robust public accountability without unnecessary bureaucracy.

At present the County Council expects to deliver only 40% of the minimum prioritised programme needed to meet demand over the next 10 years. This leaves a funding gap of £750M. Development costs alone would be expected to exceed £50M.

Through a new public/private sector partnership we hope to package up a significant programme whereby a private sector consortium comprised of contractors, consultants, developers, bankers and financial institutions could help pump prime start-up costs and deliver capital projects in return for a guaranteed revenue stream.

We are well aware of the procurement barriers and the risks we need to make transparent. However, the reward will be high if we can steer a way through the legislation and guidance.

Early investigations have revealed a strong potential for engaging more innovatively with a strategic business partner to make best use of commercial risk, balance costs, access new sources of funding and maintain statutory compliance whilst retaining County Council control. The beauty of this approach is that all the risk is shared by the partnership thus avoiding the need to engage in the protracted processes of providing Major Schemes Business Cases and detailed justifications to government.

We are encouraged and plan to move to the next stage, working through the practicalities and legislation.

Tony Ciaburro is Highways and Transportation director at Essex County Council

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