P3 Evolution: How to build the next generation of US highways

Significant investment is required in infrastructure across North America to guarantee economic growth, sustainability objectives, and improved quality of life for everyday citizens, but at a time of tightening Government budgets, delivery is far from straightforward. Public-Private Partnerships (P3s) have emerged as a vital model for infrastructure development in North America, offering innovative ways to finance, build, operate, and maintain infrastructure. 

In our series "P3 Evolution", we’ll explore how P3s are being used across sectors, including highways, rail, aviation, ports, and maritime, to create the transport landscape of tomorrow. 

Public–Private Partnerships (P3s) in highways are the cornerstone of North America’s modern P3 market. Over the past three decades, highway projects have served as testing grounds for virtually every contract structure, from fully private, revenue-risk concessions to long-term availability-payment agreements and models in between.

Today, the highway sector stands out not only for the number of projects delivered but also for the lessons learned. As public and private partners have matured, so too has the sophistication of deal structures. Competitive procurements now encourage proposers to bring forward Alternative Technical Concepts (ATCs), innovations in design, staging, or traffic management that enhance performance and reduce cost without compromising public objectives. This shift signals a more collaborative and outcomes-focused phase of the market: rather than just transferring risk, public owners now expect private teams to add measurable value.

From Early Concessions to Smarter Partnerships

The first wave of highway concessions in the U.S. was driven by fiscal necessity and optimism about private efficiency. Projects such as the Chicago Skyway and the Indiana Toll Road provided large payoffs to the public sector in return for hopes of higher returns through improved private sector operational efficiency. Other projects, such as SR-91 in California or the original SH 130 Segments 5 & 6 in Texas, promised to bring private capital and innovation to congested corridors. Many succeeded in meeting some objectives, such as delivering infrastructure faster, but not all delivered balanced outcomes.

As the market evolved, the public sector refined how they allocate risks and shares returns. Concessions are now structured with clearer performance metrics, revenue-sharing triggers, and refinancing provisions that protect the public interest while preserving investor appeal. The focus has shifted from simply “who pays” to “how the partnership sustains value over time.”

Below are a few examples that highlight the evolution of these arrangements.

SH 130 Segments 5 & 6 (Texas): Lessons in Renewal

The SH 130 Segments 5 & 6 project, connecting Mustang Ridge to Seguin, was among the earliest U.S. highway P3s to test a long-term, revenue-risk model to deliver a greenfield project. Initially financed through aggressive traffic projections and high leverage, the concession fell into bankruptcy less than four years after opening as actual volumes lagged expectations.

While early headlines framed it as a P3 failure, the project’s rebirth under new ownership tells a different story. The restructuring recapitalized the asset and re-aligned operations with realistic traffic forecasts. Under this new framework, SH 130 now performs sustainably and generates public-sector benefits by providing a well-maintained high-speed alternative that offers a reliable travel option to a very congested corridor. The case demonstrates how the P3 model itself can be resilient, capable of correction and recovery when risk is transparently rebalanced.

SH 288 Toll Lanes (Texas): The Limits of Transfer

In contrast, the SH 288 Toll Lanes in Houston highlight another side of the evolution. Procured as a concession where the private partner financed, built, and operated four tolled lanes, the project opened successfully and quickly exceeded traffic projections. However, the revenue stream became so favorable that Texas DOT could not ignore the opportunity to utilize the buyback provision at a price much lower than the updated value.

The episode reinforced an important reality that concession agreements need to be balanced enough and be flexible to include value-sharing mechanisms to preserve benefits to both sides, regardless of how the project evolves. Subsequent concessions elsewhere have incorporated more nuanced revenue-sharing triggers to ensure both sides prosper when projects outperform expectations.

Managed Lanes and the Rise of Revenue-Sharing Mechanisms

Across the U.S., other managed-lane projects, including those in Virginia, Georgia, and North Carolina, have refined the revenue-risk model rather than abandoning it. Instead of fixed concessions, agencies now employ tiered revenue-sharing and dynamic performance incentives. These mechanisms allow the public to capture upside once traffic exceeds predefined thresholds while maintaining private motivation to optimize operations and user experience.

The recent experience of the SR 400 Express Lanes in Georgia is even more of a prime example of the evolution. The project was originally conceived as an availability payment project by the Georgia DOT. But after the selected design was deemed financially unfeasible, it was reprocured as a revenue risk project, and Georgia DOT is receiving a $3.8 billion payment from the winning bidder. To unlock this kind of value, the public sector must be willing to support higher toll rates on managed lanes, rates that reflect both the benefits these assets provide and the public’s willingness to pay for those benefits.

The evolution of managed lanes illustrates a balanced approach: revenue risk is no longer transferred wholesale but shared dynamically, aligning public and private interests over the project’s lifecycle. 

Looking Ahead

Three decades after the first highway P3s broke ground in the U.S., the model continues to mature. The focus has moved from privatization toward partnership, from rigid contracts to flexible frameworks that encourage innovation and protect both parties.

Today’s highway P3s embody the broader evolution of the market: early collaboration through ATCs, smarter revenue-sharing, and a willingness to recalibrate when outcomes diverge from projections. As the public sector prepares the next generation of corridor improvements, the most successful partnerships will be those that continue to innovate while keeping the interests of both parties and the long-term performance of the network at the center.