Governments should focus on financing infrastructure projects rather than directly constructing and operating them, according to Bob Hellman, CEO of American Infrastructure Partners, who argues that private-sector discipline is necessary to control rising costs and repeated delays on major public works projects.
In an opinion piece published by Smart Cities Dive, Hellman pointed to several high-profile infrastructure projects that have experienced significant budget overruns and schedule delays, including the Gateway Hudson Tunnel project, California’s high-speed rail system and Honolulu’s Skyline rail project.
“The failure is as sickening as it is predictable,” Hellman wrote. “Hitting taxpayers harder is not the answer to constant budgetary and execution failures. The answer is to bring operational and fiscal discipline to critical infrastructure that only private-sector capital and oversight can.”
The Gateway Hudson Tunnel project, originally projected to cost $13.5 billion, has already surpassed $16 billion, with completion delayed several years beyond its initial target. Similarly, California’s high-speed rail project has grown from an original estimate of $33 billion to between $89 billion and $128 billion, with passenger service not expected before 2033.
Hellman argued that these examples illustrate a broader pattern in publicly managed megaprojects.
According to the opinion article, a study of 258 transportation projects across 20 countries found that 86% experienced cost overruns. Rail projects averaged 45% above initial estimates, while bridge and tunnel projects exceeded budgets by an average of 34%.
Hellman also cited findings from a recent review of National Nuclear Security Administration projects, where cost overruns reportedly increased from $2.1 billion to $4.8 billion in just two years, while schedule delays expanded from nine years to 30 years.
“The federal government can always raise the debt ceiling, issue bonds or appropriate more funds — but the problem is that everybody knows it,” Hellman wrote. “When escalation carries no financial consequence, that escalation becomes part of the plan.”
He contrasted public-sector contracting with private-sector investment models, where investors, contractors and operators often bear direct financial consequences for delays and overruns.
“That simply doesn’t work in the private sector, where project escalation can end careers,” Hellman wrote. “Investors lose equity. Contractors are replaced. Projects are rebid under fixed-price terms. Capital demands outcomes.”
Hellman highlighted several public-private partnership models that he said demonstrate stronger fiscal discipline and project accountability.
He pointed to the Golden Gate Bridge, which was financed through a $35 million bond issue backed by property across six California counties and repaid entirely through toll revenue without state or federal construction funding. The bridge reportedly opened ahead of schedule and under budget.
Hellman also referenced the Transportation Infrastructure Finance and Innovation Act program, which allows federal funds to leverage significantly larger private-sector investments.
“Federal dollars act as catalytic capital rather than blank checks,” he wrote. “Private equity stands in front of overruns. Revenue projections matter. Delivery schedules matter.”
Other examples cited included Indiana’s toll road lease agreement and the redevelopment of LaGuardia Airport’s Terminal B, which combined public oversight with private financing and operational risk-sharing.
Hellman argued that future infrastructure projects should rely more heavily on fixed-price contracts and private co-investment structures rather than assuming federal agencies can independently manage billions of dollars in construction risk.
“If a project is economically sound, it should withstand rebidding under fixed-price terms and attract private co-investment,” Hellman wrote. “If it can’t, escalation will continue regardless of how many times Congress writes another check.”
Originally reported by Bob Hellman in Smart Cities Dive.
