Let’s face it, public transportation projects are expensive. Even updating old tracks can cost transit agencies billions of dollars. With many operators facing shrinking budgets, it is becoming harder for them to fund projects that are needed to keep their systems running safely and efficiently.
Public-private partnerships (P3s) can make it possible for transit agencies to make these necessary changes without hiking up fares and losing ridership. In a P3 agreement, projects are privately financed, while the transit agency can still maintain control of all or parts of the project depending on the structure and terms. The private partner, or concessionaire, assumes part, if not all, of the financial risk in exchange for a potential share of the profits.
Cubic has more than 20 years of P3 experience and has worked with leading financial advisors and banks to construct, deliver and service some of the largest projects in the automated fare collection industry.
The latest P3 agreement Cubic has entered into is with the Chicago Transit Authority (CTA) for a $454 million contract to design, build, operate and maintain their new open payment fare collection system called Ventra™. In a recent Chicago Tribune article, CTA president Forrest Claypool was interviewed about two mega-projects along the Red and Purple lines that the transit agency could not afford to undertake on its own for many years unless they consider a P3 agreement. Claypool referred to the contract that the CTA signed last year with Cubic “as a solid model for future CTA public-private partnerships.” Thomas Lanctot, a partner at William Blair & Co., recently told an audience at the William O. Lipinski Symposium on Transportation Policy & Strategy that the P3 agreement between the CTA and Cubic “will be a poster child for the way to structure P3s.”
Previously, Cubic was a major stakeholder in the consortium that won one of the world’s largest P3 contracts with Transport for London for the Oyster® Card system. The P3 contract has since been completed and the Oyster system is now being operated and maintained by Cubic under a separate contract awarded in 2008.
For more information on public-private partnerships see our Q&A blog posts:
What are P3s and Where Do They Belong in the Transit Fare Collection Sector?
What are the Pros and Cons of a P3?
Best Practices and Key Performance Indicators for P3s
Read more about the CTA and their P3 projects: CTA: Companies 'enthusiastic' about partnership for Red, Purple Line projects.