LESSON 1: HIGHWAY AND RAILROAD ENGINEERING

What is Transportation Engineering?

Transportation engineering is a field of civil engineering that

deals with the application of technology and scientific
principles to the planning, functional design, operation, and
management of facilities for any mode of transportation in
order to provide for the safe, rapid, comfortable, convenient,
economical, and environmentally compatible movement of
people and goods.

Modes of Transportation

- Land Transport
o Road Transport
o Rail Transport
- Maritime Transport
- Air Transport

Walking – the oldest means of transport.

ADVANTAGES DISADVANTAGES
ROAD  Time Flexibility:  Uneconomical
TRANSPOR  Most versatile and costlier over
T with the least long distances. Ideal land transportation scheme: Maximize mass
geographical  Functionality transportation.
constraints. based on weather
Highway Engineering (a more strategic approach)
 Capacity to condition
perform door-to-  Can be easily Highway engineering considers all aspects related to the
door freight and affected by design of the roads themselves, as well as how pedestrians
transit. external are managed. Highway engineers study the traffic volumes
 For trades and influences
and patterns to determine the best strategies to minimize
business, it has  Limited carrying
traffic, prevent collisions, and limit damage to the road
lesser conditions capacity
of service; and  Not as structures caused by the passage of vehicles.
 Cost environmentally Railway Engineering
effectiveness, responsible
especially on short compared to the Railway engineering is an interdisciplinary engineering field
distances transit. other modes. dedicated to building better, faster, more efficient rail
systems. The discipline combines several engineering
RAIL  Can  Does not disciplines - civil engineering, electrical engineering,
TRANSPOR accommodate provide door-to- mechanical engineering, industrial engineering, and
T large carrying door service electronics engineering. Railway engineers could be expected
capacity  Limited to be involved in the design, construction, maintenance, and
 Particularly destination reach
operation of trains and rail systems.
cheaper over  Complex design
distances and infrastructure Mech Eng. – train system; ECE – signaling; Architect – design.
 Available and system to
throughout the secure safety and Agencies Involved in Highway and Railway Planning,
Season efficiency. Construction, Regulation and Maintenance
Not influenced by
traffic congestion 1. Department of Public Works and
 Environmentally Highways (DPWH)
responsible; and
The DPWH is responsible for
 Motive power
unit efficient. the planning, design,
construction, and maintenance of
infrastructure, especially the
 national highways, flood control, and water resources
development system, and other public works in
accordance with national development objectives.

2. Department of Transportation (DOTr)

The DOTr is the primary policy,

planning, programming, coordinating,
implementing, regulating, and
administrative entity with regard to
the transportation system in the
Philippines. It is responsible for the
country's land, air, and sea communications
infrastructure to have effective, efficient, fast, safe,
convenient, and reliable transportation services.

ROLE OF LAND TRANSPORTATION SYSTEM IN NATIONAL

DEVELOPMENT

Mass transportation is directly proportional to the growth of

the economy.

Our mass transportation came from loans. If we do not

support it, or we do not meet the expected number of
commuters, we will not be able to achieve the needed
revenue; hence, our debt increases. That is why it is crucial to
fix our country’s traffic problems to promote our mass
transportation and support people to commute rather than
using private vehicles.
CONTRACT TYPES FOR PROJECT FINANCING – from AIRA - Build-and-Transfer (BT)
- Build-Own-and-Operate (BOT)
 Public-Private Partnership (PPP)
- Contract-Add-and-Operate (CAO)
Elements of PPP - Develop-Operate-and-Transfer (DOT)
a. Contractual agreement - Rehabilitate-Operate-and-Transfer (ROT)
b. Value for money - Rehabilitate-Own-and-Operate (ROO)
c. Shared risk
d. Outcome orientation
The discussion below is from the excerpt of the Republic Act
Primary Laws Involved in PPP No. 7718: An act amending certain sections of Republic Act
a. Government Procurement Act (RA 9184) And Its No. 6957, entitled “An act authorizing the financing,
Implementing Rules and Regulation (IRR): construction, operation and maintenance of infrastructure
https://www.gppb.gov.ph/assets/pdfs/Updated projects by the private sector, and for other purposes”
%202016%20IRR_31%20March%202021.pdf
Section 1.3 - Definition of Terms
b. The Philippine Amended Bot Law (R.A. 7718) And Its
Revised Implementing Rules and Regulations (IRR): Contractual Arrangement
An act amending certain sections of Republic Act No. - Refers to any of the following contractual arrangements
6957, entitled “An act authorizing the financing, or schemes, as well as other variation thereof, as may be
construction, operation and maintenance of approved by the President, by which infrastructure
infrastructure projects by the private sector, and for and/or development projects may be undertaken
other purposes” pursuant to the provisions of these Revised IRR:
https://www.gppb.gov.ph/laws/laws/RA_7718.pdf
I. Build-and-transfer (BT) - A contractual arrangement
Build-Operate-and-Transfer (BOT) whereby the Project Proponent undertakes the
BUILD (B) financing and Construction of a given infrastructure
- Approves construction or development facility and after its completion
OPERATE (O) turns it over to the Agency or LGU concerned, which
- Provides franchise shall pay the Project Proponent on an agreed
- Regulates activities schedule its total investment expended on the
TRANSFER (T) project, plus a Reasonable Rate of Return (ROR)
- Pays fees and charges thereon. This arrangement may be employed in the
- Owner COnstruction of any Infrastructure or Development
Projects, including the critical facilities which, for
Build-Lease-and-Transfer (BLT) security or strategic reasons, must be operated
BUILD (B) directly by the Government.
- Approves construction
LEASE (L) II. Build-lease-and-transfer (BLT) - A contractual
- Pays lease arrangement whereby a Project Proponent is
TRANSFER (T) authorized to finance and construct an infrastructure
- Owner or development facility and upon its completion
turns it over to the Agency/LGU concerned on a
Build-Transfer-and-Operate (BTO) lease arrangement for a fixed period, after which
BUILD (B) ownership of the facility is automatically transferred
- Approves construction to the Agency/LGU concerned.
TRANSFER (T)
- Owner III. Build-operate-and-transfer (BOT) - A contractual
OPERATE (O) arrangement whereby the Project Proponent
undertakes the Construction, including financing, of
a given infrastructure facility, and the operation and
maintenance thereof.

- The project proponent operate the facility over a
fixed term during which it is allowed to charge
facility users appropriate tolls, fees, rentals, and
charges not exceeding those proposed in its bid or as
negotiated and incorporated in the contract to
enable the Project Proponent to recover its
investment and operating and maintenance
expenses in the project.
- The Project Proponent transfers the facility to the
Agency/LGU concerned at the end of the fixed term
that shall not exceed fifty (50) years: Provided, that
in the case of an Infrastructure or Development
Facility whose operation requires a public utility
franchise, the proponent must be FIlipino or, if a
corporation, must be duly registered with the
Securities and Exchange Commission (SEC) and
owned up to at least sixty percent (60%) by Filipinos.
- This build-operate-and-transfer contractual
arrangement shall include a supply-and-operate
scheme which is a contractual arrangement whereby
the supplier of equipment and machinery for a given
infrastructure facility, if the interest of the
GOvernment so requires, operates the facility
providing in the process technology transfer and
training to Filipino nationals.
IV. Build-own-and-operate (BOO) - A contractual
arrangement whereby a Project Proponent is
authorized to finance, construct, own, operate and
maintain an infrastructure or development facility
form which the Project Proponent is allowed to
recover its total investment, operating and
maintenance costs plus a reasonable return thereof
by collecting tolls, fees, rentals or other charges from
facility users: provided, that all much projects upon
recommendation of the Investment Coordination
Committee (ICC) of the National Economic and
Development Authority (NEDA), shall be approved
by the President of the Philippines. Under this
project, the proponent who owns the assets of the
facility may assign its operation and maintenance to
a Facility operator.
V. Build-transfer-and-operate (BTO) - A contractual
agreement whereby the Agency/LGU contracts out
the Construction of an infrastructure facility to a
private entity such that the Constructor builds the
facility on a turnkey basis, assuming cost overruns,
delays, and specified performance risks. Once the
facility is commissioned satisfactorily, title is
transferred to the implementing Agency/LGU. The
private entity however operates the facility on
behalf of the implementing Agency/LGU under an
agreement.
VI. Contract-add-and-operate (CAO) - A contractual
arrangement whereby the Project Proponent adds to
an existing infrastructure facility which it is renting
from the Government and operates the expanded
project over an agreed Franchise period. There may
or may not be a transfer arrangement with regard to
the added facility provided by the Project
Proponent.
VII. Develop-operate-and-transfer (DOT) - A contractual
agreement whereby favorable conditions external to
a new infrastructure project which is to be built by a
Project Proponent are integrated into the
arrangement by giving that entity the right to
develop adjoining property, and thus, enjoy some of
the benefits the investment creates such as higher
property or rent values.
VIII. Rehabilitate-operate-and-transfer (ROT) - A
contractual arrangement whereby an existing facility
is turned over to the Project Proponent to refurbish,
operate and maintain for a Franchise period, at the
expiry of which the legal title to the facility is turned
over to the Government.
- The term is also used to describe the purchase of an
existing facility from abroad, importing, refurbishing,
erecting and consuming it within the host country.
IX. Rehabilitate-own-and-operate (ROO) - A contractual
arrangement whereby an existing facility is turned
over to the Project Proponent to refurbish and
operate with no time limitation imposed on
ownership. As long as the operator is not in violation
of its Franchise, it can continue to operate the
facility in perpetuity.
 - Hydropower and waste-to-energy are other
examples of the bundling approach.
PUBLIC-PRIVATE PARTNERSHIP (PPP) PPP is like a marriage contract or a credit card scheme where
(VIDEO TRANSCRIPT) – from AIRA the government gets to service today and pays for it later.

PPP in the Philippines is a priority program and is a key A PPP can also be compared to a boat ride where the
development strategy. government stirs or regulates, while the PSP rows.

PPP may be undertaken by implementing agencies at 3 levels PPP also shows the Filipino tradition Bayanihan or community
of the government bureaucracy: spirit or forces of stakeholders help carry a ___ from one
place to another. They must trust each other, and work
 National Government Agencies together towards one direction.
 Government Corporations and Instrumentalities
The government believes that the PSP can help to serve the
 Local Government Units
people, encourage innovation, accelerate delivery of services,
These implementing agencies collaborate with the Private provide better value-for-money, and spread risks. The
Sector Proponent or PSP for a particular project. government can also pursue the PPP because it lacks the
resources.
 Exchange Resources
 Share obligations PPP in the Philippines can have several meanings because
there is no single governing law.
 Apportion Risks
 Reap the benefits  There are at least 8 PPP Laws and Regulations
corresponding to 24 PPP modalities.
The project may be a hard/infrastructure project or a soft/
 9 modalities are stated under Republic Act No. 6957 as
social service project
amended by RA 7718 or more popularly known as the
BOT Law.
HARD PROJECTS:
- Under this law the PSP assumes the financing,
 Reclamation designing, constructing, and operating functions.
 Airports - The government does not participate in the
 Seaports operations. It may be regulated, set policies, and on
 Roads certain occasions contribute resources.
 Bridges - 9 Modalities under the BOT Law are:
 Monorail
 Water Supply 1. Build-Transfer
 Power 2. Build-Lease-Transfer
 Market Redevelopment 3. Build-Operate-Transfer
SOFT PROJECTS: 4. Build-Own-Operate
5. Build-Transfer-Operate:
 Hospitals
 Classrooms The government owns the asset after turn
 Agriculture Development over, immediately after construction. The PSP
 Rehabilitation Center operates the asset, in this case, not as owner.
 Evacuation Center The PSP designs, finances, builds, owns,
operates the road, and at the end of the long-
term period, transfers the asset to the
Related projects may be synergized together under one government.
contract. This will ensure the viability and provision for more
services. 6. Contract-Add-Operate
7. Develop-Operate-Transfer
Bundling Approach
8. Rehabilitate-Operate-Transfer
- While an evacuation center may not be viable on its 9. Rehabilitate-Own-Operate
own, other components may be added. On a piece of
The President may add 3 modalities in the list of 9
land owned by a city, an evacuation center may be
where the PSP rehabilitates, finances, and operates
built with an intermodal transport terminal, a gas an existing facility.
station, and a mall.
10. Rehabilitate-Lease-Transfer
11. Rehabilitate-Transfer
12. Rehabilitate-Transfer-Operate
Special laws whether national or local must be
followed. For example, for power and transmission
projects, the Electric Power Industry Reform Act
2001, not the BOT Law, is the applicable law.
13. Concessions
JVs by government corporation and local
governments, the guidelines issued by the National
Economic Development Authority (NEDA)
incorporate ordinance issued by the Department of
Interior and Local Government (DILG) respectively
would be the governing laws.
14. Joint Ventures:
In the JV, both the government and the PSP
pull their resources, co-contribute, co-
implement a project, and co-share in the profits,
revenues, and even in the losses and risks in
proportion to their contributions.
On the part of the government, the
contribution may be cash or non-cash. Non-cash
participation may come in the form of allowing
its property to be used, giving a tax incentive or
awarding a concession.
15. Lease:
The government may also lease properties
for a fee. The PSP can also manage a business
enterprise of/or provide a service for the
government.
The government may either pay the PSP or draw
revenues from the PSP business. The first scenario is
governed by the government performative reform
act under a management or a service contract.
16. Management Contract
17. Management Contract not using public funds
18. Service Contract
19. Service Contract not using public funds
20. Divestment
Government may also sell its assets, this is
the reverse of procurement. A Commision on
Audit circular must be followed. Public auction
is the procedure for divestment.
21. Corporatization
The government may also form a subsidiary
to incorporate the same for the security
exchange commission and attach an asset to
that new corporation. Later on, it may sell the
corporation together with the asset in the initial
public offering or stock exchange.
Government may also set up a new company and
allow a PSP to have a minority equity. This is a
government subsidiary with private equity.
22. Subsidiary with private equity
PSPs can also donate to the government. If there is
no condition or burden attached, this is a gratuitous
donation
23. Gratuitous Donation
If material obligations are required to be performed
by the government, it becomes an onerous
donation.
24. Onerous Donation
HOW IS THE PSP PARTNER CHOSEN?
Any selection procedure must follow four parameters: PACT
1. Public Advantage
2. Accountability
3. Competition
4. Transparency
The PSP must be legally, technically, financially capable. It
must follow the nationality requirements, show a track
record, and have the resources to finance the project.
3 WAYS OF GUARANTEEING PACT
I. Competitive Selection/ Open Bidding
a. Prepare the tender documents
b. Publishes the invitation for eligibility and submit
proposals, and
c. Qualification of PSPs (Prequalifies the bidders)
d. Pre-selection Conference
e. Submit/Receipt of Proposals
f. Evaluation of 2 Proposals (Technical and Financial)
g. Award and Approval of Contract
 h. Execution of PPP Agreement  Procedures
 Performance-Based
 Period
The winner should meet the 7 parameters:

1. Highest Payment to Government

a. What is in it for the government?
2. Lowest Government Subsidy
a. What is the cost to the government?
3. Lowest Tariff by End-User
a. How much will the users pay?
4. Highest Share in Revenues
a. How much is the government’s share?
5. Highest Purchased Price
a. How much is the government willing to sell?
6. Highest Rated Bid
a. Who can provide the best service?
7. Lowest Calculated Price
a. What is the cheapest price?

II. COMPETITIVE CHALLENGE/ UNSOLICITED PROPOSAL

- Becoming more popular
- Rather than originating from government, the study
comes from and is funded by the PSP
a. Stage I:
i. Study by proponent
ii. Proposal by proponent
iii. Acceptance by government
b. Stage II:
i. Negotiation between parties
c. Stage III:
i. Invitation to challengers
ii. Counter-offer by challengers
iii. Right to match by proponent
iv. Award by government

- Under the current NEDA guidelines, there is no right

to match. The 2nd financial offer of the OP (Original
Proponent?) is opened at the same time the
envelopes of the challengers are opened. Whoever
offers the highest revenue percentage, gets the PPP
contract for a particular project.

10Ps of PPPs
 Partnership
 People
 Payors
 Parties
 Pact
 Projects
 Peril Allocation