Case Detail

Case Summary

High-Speed Rail in Portugal

Case Number: 5-410-751, Year Published: 2010, Revision Date: November 18, 2013

HBS Number: KEL513

Request PreviewBuy

Authors: David Besanko; João Tenreiro Gonçalves

Key Concepts

Privatization, Infrastructure, Public-Private Partnerships, Benefit-Cost Analysis

Abstract

Rede Alta Velocidade, SA (RAVE), the state-owned company responsible for planning and developing a major high-speed rail project in Portugal, must persuade both public officials and lenders that the project is worth undertaking. It must also make a recommendation on the appropriate organizational form for the enterprise. Specifically, it must determine the role of the Portuguese government in financing and operating the high-speed rail network, with options ranging from full development and management of the project by the public sector to completely private development and management. Lying in between these two polar cases were a variety of hybrid models, often referred to as public-private partnerships (PPPs). Using data in the case, students have the opportunity to perform a benefit-cost analysis of the project. They also must think carefully about the optimal role of the government in a major new infrastructure project.

Learning Objectives

  • Allows students to apply basic techniques in social benefit-cost analysis in an important real-world setting
  • Highlights key economic and organizational issues related to the roles of government and the private sector in major infrastructure projects
  • Number of Pages: 37

    Extended Case Information

    Teaching Areas: Economics

    Geographic: Portugal

    Industry: Transporation, Government

    Organization Name: Rede Alta Velocidade, SA

    Organization Size: Large

    Year of Case: 2007-2008