A rating system to test private investment decisions in public infrastructure projects

Abstract

This thesis will develop a basic method to evaluate the overall quality of proposed infrastructure projects for private sector financial investment. INFRATEST is meant to aid both potential private infrastructure developers and public entities, which desire to privatize certain infrastructure projects, in selection of the most appropriate infrastructure projects to benefit from the advantages of free enterprise. INFRATEST is premised on 15 equally-weighted factors which represent the major components that affect overall infrastructure project economic, financial, and technical viability. Associated with each of the 15 factors are indicators which measure the important aspects of their respective factors. There are 31 indicators in all and they are evaluated on a numerical scale of one to ten. Factor scores are determined from indicator value averages. INFRATEST can serve the private developer and the public entity by providing an information base for deciding which privately funded infrastructure development proposals deserve consideration in the capital markets and for deciding which proposed infrastructure projects are to be developed with public or private funds. Application of INFRATEST to two real-world project proposals, the SAVE project and the Northumberland Bridge project, demonstrated the method's ease and universality of application as well as the method's simple and clear conclusions.