ROAD CONSTRUCTION: Nevada DOT looks at different P3 option for Project Neon

Availability payment method will have contractor financing three phases of mammoth project

July 16, 2013

The Nevada DOT is checking the availability.

In order to jump-start Project Neon, a $1 billion dream that would reduce congestion on heavily used I-15 in Las Vegas, the state agency is looking to engage in a public-private partnership to cover three phases of work. The P3 will be based on an “availability payment” option, where the contractor will foot the bill and receive money from NDOT when certain milestones are hit. The agreement is expected to last 35 years and also will cover maintenance.

I-15 carries about 250,000 cars a day between the infamous Spaghetti Bowl and Sahara Avenue in Las Vegas, and is one of the most dangerous stretches of highway in the state. Project Neon would reconfigure interchanges and ramps to help improve safety, and also link up carpool lanes from U.S. 95.

The availability payment P3 agreement is more common in Canada, Australia and Europe, and many believe it helps prevent overruns because the road builder is the one financing the job up front. If all goes according to plan, a contractor will be chosen before the end of 2013 with construction beginning in 2015.

NDOT, however, is banking on money from the federal government in order to make most of the milestone payments in the P3 arrangement. With deteriorating gas-tax receipts, some industry experts believe that’s a high risk to take.