Compare AP And RR Bid Options To Calculate Revenue Risk Premiums

“Why can’t a public sector entity issuing a toll road RFP simply request a response based on either (or both) revenue risk (RR) and availability payment (AP) payment mechanisms? Then the issuer can compare the RR and AP bids received, and the differences between them. That difference can be very readily used to calculate the risk premium built into the RR bids. Then the issuer can easily determine which type of bid saves him money, considering also the AP risk (vis-a-vis actual toll revenues) he may be realized.

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About Bill Reinhardt

Editor of Public Works Financing newsletter
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