Chicago Parking Meters
Practice this intermediate merger & acquisition case interview question in the Public-Private Partnership sector. Includes detailed problem prompt, clarifying questions, structured framework, and expert recommendation. Part of ProHub's 835+ consulting case library.
ProHub Comment
This case requires a robust quantitative valuation approach (NPV calculation) for a public-private partnership, followed by qualitative brainstorming on pricing strategies and technological advancements. It tests a candidate's ability to structure a complex financial model, make logical assumptions, and think creatively about market dynamics and operational improvements.
Estimated Time
26 minutes
Difficulty
Medium
Source
Wharton
10
/ 100
Your consulting firm has been hired by the Company Parking GenNext to give a reasonable price for the rights to collect all money* from Chicago’s meters over a 20 year timeframe to win the competitive bid. How would you go about estimating it? *Money collected on parking tickets goes to the city, not the company.
Clarifying Information
- In Chicago, there are ~40,000 metered spaces.
- In Chicago, there is a three-ring structure when setting meter rates:
- Ring I Description: Downtown Loop, Price per Hour: 3, % Meters: 3%
- Ring II Description: Central Business District, Price per Hour: 2, % Meters: 16%
- Ring III Description: Suburbs + Others, Price per Hour: 1, % Meters: 81%
- Assume Ring I usage is 12 hours per day, Ring II 8 hours per day, Ring III 4 hours per day.
- Assume weekend / weekday usage are same.
- Assume 30 days a month, 12 months a year.
- One-time investment to upgrade the parking meters to accept cash, credit and debit cards. For simplicity, we can assume that the newly installed meters will have a life of 20 years and the bidder will not be expected to change them during the period.
- Recurring operating expenses – labor costs, maintenance costs, etc.
- We can assume (or help lead the candidate to assume) that the 40,000 old single-space coin-operated meters will be replaced 5,000 new meters (such that each meter is capable of handling 8 spaces).
- Unit cost for one parking meter could be assumed to be in $20K, including installation costs.
- Candidates should be expected to estimate how many people will be required, the hourly wage per worker, ongoing maintenance costs, etc.