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Highway407 Direct Example


Submitted By kerry
Words 867
Pages 4
GOAL: To alleviate traffic congestion in GTA and especially on the east-west route cost effectively and in as short a time as possible.

INTERVENTION: To establish and privatize a new east-west route (407) to ease the congestion on the main route (401). The new privatized highway is intended to reduce traffic, therefore reducing the amount of time spent commuting, hence encouraging investors and stimulating the economy through productive time gained.

ANALYSIS: This is a DIRECT intervention. The government is directly involved at A in supporting the decision to privatize the highway (407) to improve traffic flow and efficiency. At B: (i) the goal of reduce traffic congestion in the GTA is satisfied since another east-west route is introduced to relieve the pressure on the existing one (401). (ii) the intended goal is achieved by the government’s decision to lay the burden of developing, designing, building operating and maintaining of the new highway on the private sector. (iii) a new state of equilibrium is established because the change in government policies that allow for privatization enabled the government to share the financial burden with the private sector, resulting in quicker and more cost efficient building of highway 407. This curbed the traffic congestion problem faster and more efficiently than if the government was the only player.

This intervention is COERCIVE because when the government makes a decision, it is very hard for anyone to oppose or prevent the outcome. By privatizing, the government separates itself from the market and automatically places the bulk of the burden on the private sector whether they like it or not. In addition, the private companies have to finish the construction or be answerable to the government.

QUALITY DETERMINANTS: ACCURACY is GREATER because the highway is being built specifically for only one purpose; to alleviate traffic congestion in the GTA by providing an additional route for motorists to use. Therefore, all efforts and resources will be directed towards that one goal to enable fast completion and quality work (as failure would mean losses for these private companies). PRECISION is GREATER because the main goal of alleviating traffic congestion is immediately reached through the government's privatizing action of the building and maintenance of the highway. EFFICIENCY is GREATER because the benefits that Canadian government, businesses, and citizens will get are tremendous. The highway will be built but at reduced cost for the government. The “saved” funds can be directed towards other government projects like research and development, health care, etc. Businesses will benefit because their employees can be in on time unlike before when they lost nearly 2 billion dollars annually in lost time and productivity. Citizens will benefit from more free time (from faster commutes) as well as from the job creation that the highway building will generate. In overall, the economy will be boosted because as John Beck says, “public infrastructure is key to a country’s economic success. TIME DELAY is LESS- since the highway building does not depend on tax payers dollars, the period of waiting for funds from government’s general revenue (as was the case with the other highways that had to be built section by section) is eliminated. Private companies do not have to wait for budgetary priorities and can dive in and finish the task faster. In fact, they did so in a period that was 20 years less than what the government had originally forecasted. In addition, the private sector had to finish the project fast because the longer the time taken, the more interest expense is incurred.

ENVIRONMENTAL EFFECTS ON THE PRIVATE SECTOR is DELETRIOUSLY LESS because the government did a lot to fund the private sector on the project. The case notes that the Ontario NDP government decided to bear the financing risk and went on to award 930 million dollars to Canadian Highway International Corporation that was to go towards the development, design and development of highway 407.

As seen from the measurements above, this intervention to privatize the highway, is deemed effective, cost saving and very beneficial to all parties involved i.e the government, businesses, citizens, and the economy alike.

This intervention of privatizing the highway building and development is PURELY REACTIVE as a response on the part of government to visible problems which include: -traffic congestion in the GTA (especially in the east-west route) -government’s perception of huge costs and delays incurred if it (government) was to solely undertake the burden of constructing a new highway. -loss of possible investments as investors would shy away for the GTA due to long waits in traffic. -an economy performing below its potential due to lost time and productivity.

Which of the Quality Determinants is being emphasized in the decision to privatize Highway 407?

Time delay. It is obvious from the model above that time is a very important factor in the highway construction. The problem needed to be solved immediately especially so as not to scare away investors. Also, workers needed to be on time so that the economy can realize the 2 billion dollars that were lost annually through lost productive time.

Submission to discussion board 2430 by Elizabeth Thuo 3/18/2002

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