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Term Paper Sample
Term Paper Sample
Term Paper Sample
Term Paper: CE671 – Integrated Infrastructure Performance and Risk Analysis Study
Edgar Gellada
Jieling Li
Katherine Waldman
This term paper aims to do an ex post facto evaluation of a critical infrastructure project
from the project financing and execution point of view. Essentially, this study will review the
performance and financial viability of the Goethals Toll Bridge Project. In doing so, the group
members will showcase their understanding of the concepts learned in the course.
The first part of this study discusses the rationale and underlying economic, financial, and
political conditions of the project, including a discussion of the Public-Private Partnership (P3)
and the specific model used. The second part is devoted to a detailed understanding of the project,
beginning with the historical background of Goethals Bridge, leading into the reasoning of its
conclusive review of the financials, the group will determine whether or not the utilization of the
P3 model was effective in this project and whether similar future infrastructure projects will yield
In March 2021, United States’ (U.S.) President, Joe Biden unveiled a US$2 trillion
infrastructure plan, known as the American Jobs Plan. This legislation encourages heavy
investment in rebuilding the nation's crumbling infrastructure and shifting to greener energy. The
4. Home or community-based care for elderly and people with disabilities - $400 billion
The president plans to pay for his proposal by raising corporate taxes and eliminating tax
breaks for the fossil fuel industry, creating additional tax burden on those already in a higher tax
bracket. Previous experience has shown that excessive corporate taxes can also result in capital
flight and ultimately, job loss. The 2018 and 2019 U.S. Census Bureau has shown that New York
for two consecutive years had the highest population decreases compared to other states, showing
that factors of commuting or moving outweighed the cost of living found in the city.
A key finding by Watson and McBride (2021)1 states that “an increase in the federal
corporate tax rate to 28 percent would raise the U.S. federal-state combined tax rate to 32.34
percent, highest in the OECD and among Group of Seven (G7) countries, harming U.S. economic
competitiveness and increasing the cost of investment in America. We estimate that this would
reduce long-run economic output by 0.8 percent, eliminate 159,000 jobs, and reduce wages by 0.7
percent. Workers across the income scale would bear much of the tax increase. For example, the
bottom 20 percent of earners would on average see a 1.45 percent drop in after-tax income in the
long run”.
programs in the country, including the American Jobs Plan. According to a PWC report (2016)(1)
on P3s in the U.S., the estimated total infrastructure investment needed by 2020 was US$3.6
1
on a Tax Foundation Fiscal Fact No. 751
According to Levitt, Scott, and Garvin (2019)(2), more than thirty states in the U.S. have
already passed statutes allowing an option for a P3. Laws designed to attract long-term
investments in public infrastructure projects by creating a stable legal structure. The State of New
Jersey on August 14, 2018 enacted Chapter 90 of Public Law 2018(3), a P3 legislation. This
allowed for flexibility and collaboration for community-focused improvements and job creation.
Previously, N.J. Rev. Stat § 18A:64-85 only authorized state and county colleges to use P3s for the
While the State of New York has yet to enact a P3 law, according to a CBC report (2008)(4)
it has had past experiences in implementing P3 projects. Projects mentioned in the report were:
1) the $1.8 billion AirTran Project from JFK International Airport (JFK) to the Jamaica
3) the New York City’s 20-year partnership with Cemusa, Inc. for the design, construction,
4) many other contracts to design, build, finance and operate waste-to-energy, materials
recovery and composting plants in different counties throughout New York state.
The original Goethals Bridge was built in 1928 and was originally known as the Arthur
Kill Bridge. It was later rebranded as Goethals’ Bridge, after Major General George Washington
Goethal, a tribute to the first consulting engineer of Port Authority. Throughout its 92 years of
The economic boom at the beginning of the twentieth century, the incorporation of Staten
Island into New York City, as well as the expansion of factories and other industrial enterprises
along the Arthur Kill put a strain on the ferry system handling the freight, commuters and
automobiles traveling between Staten Island and New Jersey. To alleviate the traffic congestion
and allow for further economic development in the area, particularly on Staten Island, various
recommendations were put forth to connect Staten Island with New Jersey. From 1918 to 1927,
the Port Authority of New York and New Jersey (PANYNJ) built the old Goethals bridge at the
cost of US$7.2 million. It had 672 feet long central span, a 62 feet width which carried four lanes
cost of US$3.9 million. Other modifications to the bridge included a widening of the approach and
closure of the pedestrian walkways due to condition issues. Another rehabilitation was also
performed in 2006 for the bridge deck which extended its lifespan for another 10 years.
Between 1997 and 2006, the PANYNJ held discussions and consultations about the
possible replacement, expansion or rehabilitation of the old Goethals Bridge which connects Staten
Island, New York to Elizabeth, New Jersey. Two alternatives being considered then were:
1. A twin three-lane replacement bridges north and south of the original alignment
of the old bridge to make way for the construction of the north lane bridge. There were various
issues with the twin bridge alternative such as ice falling onto the roadway during winter months.
However, the twin bridge alternative was totally eliminated due to height restriction set up by the
Federal Aviation Administration (FAA) to prevent interference with flights at Newark Liberty
International Airport. The towers were not to exceed 272 feet in height and required to slant
With the remaining option and after completion of a lengthy environmental review(7), the
PANYNJ took a huge step to move the project forward in 2010 by seeking private partners – its
first P3 initiative. The process began with the issuance of a Request for Information (RFI) which
is a preliminary to a Request for Proposals. The private consortium that won the bid was the NYNJ
Link Partnership, formed by Macquarie Infrastructure and Real Assets (MIRA) with a 90 percent
interest and Kiewit Development Company (KDC) with a 10 percent interest. They were chosen
The project was officially approved on April 24, 2013 for a total cost of US$1.521 billion
and to be delivered using the design-build-finance-maintain (DBFM) model with the private
partner covering just over US$1 billion of the total project cost.(8)
Scope of Work
The finalized scope of work (SOW) was listed in the Cost Estimate Review (CER) (8) and
decided by teams from the Federal Highway Administration (FHWA), PANYNJ and private
1. A new six-lane cable stay bridge over the Arthur Kill Channel (the Main Bridge)
including the design and construction of standoff fendering along the New Jersey
bulkhead line as well as the design and construction of fendering for the New York
2. New approach structures in New Jersey and New York to link the main cable stay
3. Work to tie in the New Jersey and New York approach roads to the geometry of the
approach spans;
inspection/maintenance facilities;
5. Permanent fencing generally following the Project Right of Way at ground level along
both sides of the Replacement Bridge, except through open waters and public roads;
6. A permanent access road, including a trestle bridge over Old Place Creek located
generally below the New York portion of the Replacement Bridge for purposes of
The final bridge crossing replacement design adopted for the project was a dual span, state-
of-the-art cable-stayed structure connecting the Arthur Kill with a 900 ft main span, a significant
navigational improvement over the previous 672 feet horizontal clearance for marine traffic of the
old bridge (See Figure 3). Each cable-stayed span boasts a total of 1,635 ft of suspended deck,
including side spans. The project in total has over 7,300 feet of elevated mainline structure
(including the cable-stayed bridge) in each direction, a new railroad bridge west of the New York
toll plaza, a maintenance and control facility, and an access road through the swamp land on the
In vast improvement compared to the old bridge, the new bridge has both the eastbound
and westbound structures designed to carry three 12-foot-wide lanes with full shoulders.
Main Towers. The main towers of the new bridge are configured as a double “V” in
elevation, with each “V” supporting independent structures to comply with a project requirement
of prohibiting vertical tower legs. The open V shaped towers and the outward lean allowed for the
elimination of all cable and structure above the roadway and at the same time the hazard of ice
falling from these components into passing cars has been minimized during wintertime.
Deck System. The deck for the cable-stayed spans consisted of full depth, lightweight
precast concrete panels, made continuous by way of concrete closure pours over the floor beams,
edge girders, and between panels which were then provided with a polyester polymer concrete
overlay. The decks were also post-tensioned longitudinally to preclude tension in the top fiber of
concrete. The decks were also provided with an overlay of impermeable polyester polymer
Truss Redundancy. For the Goethals Bridge Replacement, the design team devised an
innovative use of materials to eliminate the fracture critical scenario and introduce redundancy by
connecting 1) the maintenance travelers supported by rails and 2) deck panel support beams used
as forms below the closure pours between panels to form a longitudinal truss thereby creating a
redundant load path. The provision of an alternate load path likewise allowed the re-classification
of the floor beams which need not be classified as fracture critical members (FCM) which allowed
for fabrication conforming to customary structural steel fabrication requirements and not invoking
the additional stringent material and fabrication provisions of fracture critical steel elements.
Extended Service Life. To ensure the new structure provides exemplary service for future
generations, PANYNJ specified major components to provide an extended service life (Figure 5).
Complex methods were used to validate the required service life, inclusive of chloride
sealers/membranes, careful selection of paint systems, and a detailed maintenance and operations
captured in a project-specific
Future Transit. The project requirements mandated that the project include provisions for
expansion in the form of a mass transit corridor which must meet the needs of either a dual light
rail transit (LRT) system or a transit roadway without the need to strengthen the towers, tower
foundations, or superstructure. Cable anchors also needed to accommodate the future transit load,
though not all cable strands needed to be installed at the time of initial build. The concept
considered the construction of new steel framing to connect the two interior edge girders of the
dual-span cable stayed bridge, add new floor beams, stringers, and a deck system to support the
placed the towers well back from the navigable channel and included a fender wall on the New
Jersey side that barricaded the narrow waterway slip where the NJ tower is located. On the New
York side of the channel the tower is set back far from the channel but could potentially be
impacted in an extraordinary occurrence. Three specific risk vessels were considered: 1) 100,000
1. The Port Authority of New York and New Jersey (PANYNJ) – The owner and lead
agency of the project and bridge infrastructure, providing functionality, design, and
2. NYNJ Link Partnership – The private partner tasked to design, build, finance and
maintain the infrastructure project. The stakeholder responsible for delivering and
maintaining the physical asset for the next 40 years. The agency responsible for
contributing 10% equity and solving issues related to design, logistics, means and
responsible for supplying the remaining funds. The majority stakeholder in the
in the NYNJ Link Partnership consortium. This group is also responsible for
the Federal-aid Highway Program and the Federal Lands Highway Program. The
FHWA was involved in the unbiased risk-based review of the cost estimate to verify
its accuracy and reasonableness as mandated by The Moving Ahead for Progress in
responsible for listing the Environmental Impact Statement (EIS) draft and final
document to the Federal Register. The agency responsible under Section 309 of the
Clean Air Act to review the environmental impact statements (EIS) and to comment
on the adequacy and the acceptability of the environmental impacts of the proposed
action.
7. New Jersey Economic Development Authority – The issuer of $457 million tax-
that was responsible for providing professional and technical advisory services.
services.
13. Prologis Development Services Incorporated – The operator of Port Reading Bank
where PANYNJ bought 1,017 wetland mitigation credits due to the construction
14. USDOT/Credit Council – The group primarily responsible for the Department’s
credit policies and overseeing the credit programs, such as the Transportation
15. U.S. Coast Guard – The federal sponsor of the project responsible to make sure that
16. Local Authorities – Including the States of New York and New Jersey, the cities of
The FHWA mandates that for major highway transportation projects of US$500 million or
higher requires review and approval from FHWA HQ while for projects US$100 million to
The Goethals Toll Bridge Project being a P3 project was required to be assessed for
method. An assessment on whether the project was more suitable to traditional delivery methods
In terms of planning, Figure 7 shows the processes that the project went through to comply
Historical data of traffic volumes and E-ZPass for tunnels and bridges was extracted from
the official PANYNJ website (Appendix C). The data (January 2011-February 2021) is broken
down in terms of automobiles, trucks, and buses. The Average Annual Daily Traffic (AADT) is
calculated using a 365-day year (Figure 8) using linear regression on a 40-year forecast.
According to the Minnesota DOT Guidance(12), benefit-related data such as Vehicle Miles
Traveled (VMT) and Vehicles Hours Traveled (VHT), as well as cost-related data should be
included in the engineering analysis of the project. However, VHT is often generated using travel
demand models or traffic operations models which are beyond the scope of this study. A very
simplistic approach in obtaining the VHT suggested in the Minnesota DOT Guidance is by
multiplying the AADT by the estimated time needed to travel the corridor. The PANYNJ website
does not list any historical data on travel time for both the old and new bridge. The website only
VMT should also be forecasted using the usual range of engineering tools and methods,
often similar to those used to estimate travel time savings. AADT can also be converted to VMT
by multiplying the AADT by the estimated distance traveled in the corridor which in this case, and
for simplicity, shall be assumed to be not much different considering the new bridge was built
parallel to the new bridge. While the new bridge is longer than the old bridge, the road alignment
In terms of the Car Crash Incidents, according to the PANYNJ press release(13) in February
2020, crashes at the bridge overall have declined by 57 percent due to the wider lanes and shoulders
of the new bridge as well as due to the new cashless tolling system.
PANYNJ
Prior to the project implementation, the PANYNJ was collecting US$131.8 million/year in
tolls on the 4-lane bridge. The yearly operating costs were determined to be around US$24.7
million.
DBFM Model
The PANYNJ decided to pursue a P3 delivery method because their borrowing capacity
had been exhausted. A private partner that could finance or raise financing and be paid through an
payment for performance made irrespective of demand”. This is ideal when a public agency
wishes to retain full control of setting rates for the use of the infrastructure, when service quality
is an important goal, or when the public agency wants to cap its obligations and windfalls. This
plan has a ‘demand risk’ to the public agency but reduces the ‘risk premium’ in the private cost-
of-capital. The public agency will make payments to the private partner over a long period of time,
on the condition that the terms of the contract are met. This conditionality of payment also creates
an incentive for the private partner to provide efficiency gains in the design, construction, and
A tabulation of the results of the financial analysis from the point of view of the private
partner is shown below (Figure 9). For the P3 model to be sustainable for the Goethals Toll Bridge
Project, and for any other P3 project for that matter, the numbers should also make sense from the
point of view of the private partner. In reconstructing the financial model for this project, the
primary source of data was the PANYNJ Project Authorization. In the absence of certain actual
data, statistical and/or historical data were used such as the average tax-exempt Private Activity
Bond interest rate with redemption terms of 10 years. With regards to the TIFIA loan period, a 35-
year term was assumed. The private partner is also allowed to charge interests of around 5.18%
were determined and calculated. The present values of the yearly net revenue were then computed
(Appendix A).
IRR 20%
To complete the financial picture of the Goethals Toll Bridge P3 project, a financial model
from the point of view of the PANYNJ was likewise developed. Using the AADT values in Figure
8, monetary values for the corresponding traffic volume were calculated. To simplify the
calculation, and due to the cashless tolling system implemented recently, a uniform toll amount of
$16 was used and assumed to remain constant throughout the 40-year period.
The Payback Period, NPV and IRR for the Goethals Toll Bridge Project from the
perspective of the public agency is tabulated below (Figure 10). The complete calculation is
attached in Appendix B.
PANYNJ Amount
IRR 35%
Pauline Hovy (2015) writing for the International Institute of Sustainable Development
(IISD) entitled Risk Allocation in Public-Private Partnerships: Maximizing value for Money, risks
in relation to P3(10) discusses 7 important points underlying the P3 model in infrastructure projects
as follows:
1. Risk allocation is a key feature of P3 such that the public agencies can transfer risks to
the private partner in an optimal manner which produces higher value for money
2. Risks should be allocated to the party best able to manage them at the lowest cost such
that the party that manages the risk also bears its financial cost, as well as its gains
3. Risk allocation should be about managing not only occurrence, but also impact. This
means asking the questions (1) which party is better able to control the occurrence of
the risk and (2) which party is better positioned to manage the outcome of the risk, or
4. Partial risk allocation may create greater incentives for the private party. Comparable
to health insurance companies which typically require users to bear a small portion of
the risk (the deductible), while insuring them against the large financial losses
5. Risk allocation should minimize transaction costs by making parties strive to find risk
costs. The simpler the mechanism, the less costly it will be to manage the system and
7. Flexibility and “rules of the game” will help deal with changes in risks by devising
The FHWA and PANYNJ CER teams used the Uncertainty Quadrant shown in Figure 8 to
categorize risks. Followed by an identification of whether such risks are threats or opportunities
risk sensitivity analysis was done using the Monte-Carlo Simulation (beyond the scope of this
study).
4 – Conclusion
In conclusion, the P3 model is a contract and not full privatization, which creates a safe
environment for a public to private risk transfer. A unique alternative infrastructure financing
model, that attracts investors with credit enhancements, while the subsidiary company protects the
private party’s risk. As discussed, if the subsidiary company fails, then another entity can step in
and assume the debt and operation responsibilities. This creates a safety net for the public entity,
while also encouraging the subsidiary and private companies to be encouraged to provide the best
implementation of the Goethals Toll Bridge Project illustrated the advantage of involving the
contractor at the early stages of design and planning of the project. The adversarial relationship
collaboration between designers and contractors where all parties gain in the mitigation of all risks
involved.
After reviewing the historical, economic, financial, and political aspects of this project, the
group has determined that for Goethals’ Bridge the P3 model has been effective in this project.
The financials for both the NYNJ Link Partnership and the Port Authority of New York and New
Jersey shows positive numbers. The group believes that many other infrastructure projects can
1. PWC, Public-private partnerships in the US: The state of the market and the road ahead,
2016.
2. Levitt, et. al., Public–Private Partnerships for Infrastructure Development, April 26, 2019.
4. Citizens Budget Commission, How Public-Private Partnerships Can Help New York
Address Its Infrastructure Needs, 2008.
6. Bipartisan Policy Center, Infrastructure Case Study: Goethals Bridge Replacement, 2018.
7. ENR New York, ENR New York’s 2018 Best Projects, www.enr.com, September 27, 2018.
10. Hovy, Pauline, Risk Allocation in Public-Private Partnerships: Maximizing value for
Money, risks in relation to P3, IISD 2015.
11. Dochia, Sylvia, et. al., Introduction to Public-Private Partnerships with Availability
Payments, 2009.
12. Minnesota DOT, Mn/DOT Benefit Cost Analysis Guidance, June 2005.