portsmouth bypass p3 project performance based delivery october 29, 2014
TRANSCRIPT
Portsmouth Bypass P3 ProjectPerformance Based Delivery
October 29, 2014
2
Presenters
Shawn Thompson, PE, CQECH2M HILL
16 years experienceDesign Manager on $200M I-71/670 Columbus CrossroadsServes as a Technical Lead on PBP Procurement Team (Owner’s Advisory Role)
Mike Wawszkiewicz, PEOhio DOT
16 years experienceSenior Project Manager - Division of Innovative DeliveryProject Manager of the PBP Procurement Team
Presentation Outline
» Project Background» Design-Build-Finance-Operate-Maintain (DBFOM) Model
‒ Delivery Structure/Roles‒ Payment Structure
» Maximizing Asset Performance/Availability‒ Availability Payments‒ Handback‒ Maintenance Performance Obligations‒ Noncompliance Event/Deductions‒ Unavailability Deductions
» Outcome and Upcoming Schedule» Questions?
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Portsmouth Bypass (PBP) - Overview
» Last Segment in Ohio on Appalachian System‒ Economically depressed area
» Originally a Design-Bid-Build Project‒ Three phases‒ Various levels of design completed
» Bypass Scope‒ 16 mile, 4 lane, limited access highway‒ Bypasses 26 miles of US 23 and US 52‒ 5 interchanges and various RR crossings‒ 16 minute time savings
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Project BackgroundDBFOM Model Performance/Availability Outcome/Next Steps
Key Characteristics of the Project
» Reference Design‒ Not contractual
» Significant Earthwork‒ ~25M Cubic Yards of excavation, mainly rock‒ ~20M Cubic Yards of embankment
» 20 Bridges and 17 Retaining Walls‒ Two horizontally curved bridges over US 23‒ Long bridge over Little Scioto River with 100’
tall piers
» High Fill Embankments (> 180’) and Deep Culverts (> 170’)
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Project BackgroundDBFOM Model Performance/Availability Outcome/Next Steps
Public-Private-Partnership (P3) Timeline
6
Project BackgroundDBFOM Model Performance/Availability Outcome/Next Steps
P3 Project Scope
7
Project BackgroundDBFOM Model Performance/Availability Outcome/Next Steps
RFQ RFP Financial Close
Design & Construction
2Q 2013 1Q 2014 1Q / 2Q 2015
2015 through4Q 2018
» DBFOM Approach» ~4 year Design and Construction
Period (DCP)‒ Starts Spring 2015
» 35 year Operations & Maintenance (O&M) Period
‒ O&M Period begins at Substantial Completion
» Availability Payment Mechanism» Competitive, Fixed Price» Appropriate Risk Transfer to
Private Sector
Financing Approach
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Project BackgroundDBFOM Model Performance/Availability Outcome/Next Steps
» Transportation Infrastructure Finance and Innovation Act (TIFIA)‒ Critical to obtaining value for money‒ Authorization to use TIFIA rural rate provided significant savings
‒ Status of TIFIA rural rate was unknown during Delivery Options Analysis‒ Baseline TIFIA Term Sheet
‒ DOT coordination on behalf of the Proposers
Performance-Based Methodology
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Project BackgroundDBFOM Model Performance/Availability Outcome/Next Steps
» Basic Configuration‒ Mandatory features defining the Project’s operational characteristics
» Applicable Standards‒ NOT using ODOT CMS or most ODOT manuals – AASHTO as baseline‒ NOT dictating means and methods
» Guiding Principles – Project Management Plan (PMP)‒ Design Quality Management Plan (DQMP)‒ Construction Quality Management Plan (CQMP)‒ Maintenance Management Plan (MMP)‒ Operations Management Plan (OMP)
» Performance Criteria to be Measured and Monitored During O&M
Quality Oversight
DBT
IQF
ODOT
Developer
After Substantial Completion
PPA
Operations Maintenance
» Department’s First DBFOM Public-Private Agreement (PPA)
‒ DBFOM‒ Performance criteria‒ Developer has freedom to choose‒ Payment tied to facility performance and
adherence to contract requirements
PBP Is A First-Of-Its-Kind Project
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PPA
Project BackgroundDBFOM Model
Performance/Availability Outcome/Next Steps
Developer Owns Risk/Reward
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16 mile greenfield, limited access, 4-lane freeway
5 new interchanges
19 bridges
16 ramps
Side street improvements
1 bridge
Design-Build-Finance
Locally Maintained
DBFOMQuality
Oversight
DBT
IQF
ODOT
After Substantial Completion
PPA
Operations Maintenance
Developer
Project BackgroundDBFOM Model
Performance/Availability Outcome/Next Steps
Quality Oversight
IQF
ODOT
Developer
After Substantial Completion
PPA
Operations Maintenance
Design-Build Team Drives Delivery
» Developer’s Lead Contractor‒ Component of Statement of Qualifications
used by Department to short-list Proposers‒ Assembles a prequalified DBT‒ Develop detailed design‒ Determine specifications with Applicable
Standards as baseline‒ Complete construction work‒ ~4 year DCP
DBT
12Project BackgroundDBFOM Model
Performance/Availability Outcome/Next Steps
Quality Oversight
DBT
IQF
ODOT
Developer
After Substantial Completion
PPA
Operations Maintenance
Independent Quality Firm Accepts Conforming Work» Developer’s IQF
‒ Component of Statement of Qualifications used by Department to short-list Proposers
‒ Provides quality assurance‒ Accepts conforming work‒ Reports nonconforming work‒ Delivers project record
» May Not Be Same During O&M‒ Verifies and accepts renewal work
IQF
13Project BackgroundDBFOM Model
Performance/Availability Outcome/Next Steps
Private Sector O&M Responsibility
» Developer Maintains O&M‒ 35-year Operating Period‒ In coordination with DBT, determines asset lifecycle
strategies‒ ODOT to keep minor roles (e.g., snow/ice control,
incident/emergency management)‒ Self reports non-conformances with performance
requirements‒ Routine (mowing, MOT, etc.) and
renewal (pavement resurfacing, bridge rehabilitation, drainage, etc.)
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DBT
IQF
ODOT
Developer
After Substantial Completion
PPA
Project BackgroundDBFOM Model
Performance/Availability Outcome/Next Steps
Operations Maintenance
Quality Oversight
Quality Oversight Team Protects Department Interests » ODOT Hires a Quality Oversight Team
‒ Serve as the Department’s agent‒ Must not ‘direct’ the Developer ‒ Perform submittals compliance review‒ Validate IQF’s project records
‒ 16 miles of R&D‒ Safety recalls
Quality Oversight
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DBT
IQF
ODOT
Developer
After Substantial Completion
PPA
Operations Maintenance
Project BackgroundDBFOM Model
Performance/Availability Outcome/Next Steps
How Is The Developer Compensated?
» Milestone Payments – During the Construction Period‒ Appalachian Development Highway System (ADHS) funds paid at 70% complete, 80% complete,
and Substantial Completion‒ Substantial Completion milestone is subject to deductions regime for non-compliance
» Availability Payments – During the Operating Period‒ Begin only after Substantial Completion is reached‒ Mitigates cost and delay risk
16Project BackgroundDBFOM Model
Performance/Availability Outcome/Next Steps
How Is The Developer Compensated?
» Bypass Will be a Non-Tolled Facility» Availability Payments
‒ Monthly payments subject to “unavailability” and “non-compliance” deductions‒ Payment deductions are tracked in Monthly Performance Reports generated by the
Developer and reviewed by IQF and the Department ‒ Equity investors and debt providers are at-risk if payments or portions of payments are not
earned
17PPA Understanding No Learning CurveCOMPLIANCE VALIDATION Why CH2M HILL?PPA Understanding DBFOM Model
Performance/ Availability Outcome/Next Steps
Public-Private-Partnership Math
» Availability Payment (AP) for any month (m) after Substantial Completion:
APm = MaxAPm – MPDm-1
‒ MPDm-1 = Monthly payment deduct for month (m-1) ‒ MaxAPm = Maximum Availability Payment for month (m):
MPDm = MNDm + MUDm
- MNDm = Monthly noncompliance deduction for month (m) - MUDm = Monthly unavailability deduction for month (m)
18PPA Understanding DBFOM Model Outcome/Next StepsPerformance/
Availability
What Happens At The End Of The PPA?
» Handback‒ Developer “hands back” project R/W
and assets to Department‒ Not looking for a new road‒ Residual vs. Useful
19PPA Understanding No Learning Curve
COMPLIANCE VALIDATION Why CH2M HILL?PPA Understanding DBFOM Model
Performance/ Availability Outcome/Next Steps
How Handback Works
» Facilities to Be Functional ‒ Scheduled activities‒ Inspections/renewal work
‒ Bridge inspection manual‒ Independent assessment
‒ ‘Crystal Ball’ via Durability Plan to measure conditions
‒ Handback Reserve‒ Lower performing asset = Developer
pays more
20PPA Understanding No Learning CurveCOMPLIANCE VALIDATION Why CH2M HILL?PPA Understanding DBFOM Model
Performance/ Availability Outcome/Next Steps
TABLE 21-1Schedule of Handback Activities
Months to End of TermHandback Activity Start End Duration (Months)
Handback Schedule - 60 -Residual Life Methodology - 60 -Department Review 60 58 2Initial Handback Inspections 58 52 6Initial Handback Inspection Report 52 50 2Department Review 50 48 2Handback Work Period 48 0 48Calculation of Handback Reserve Amount 26 26 0Handback Period 24 0 24Second Handback Inspections 18 15 3Second Handback Inspection Report 15 12 3Calculation of Handback Reserve Amount 14 14 0Department Review 12 10 2Final Handback Inspections 3 0 3Final Handback Inspection Report 1 0 1End of Term 0 0
Department ‘Hammer’ To Avoid Delays, Inconvenience, And Reductions In LOS To Users
» Performance Measures‒ Encourage safe, effective, reliable asset
performance‒ Use existing measures and targets when
available‒ Tune performance to similar roads in Ohio
» Noncompliant Asset? ‒ Allow time to correct defects before
applying “incentives”
21PPA Understanding No Learning CurveCOMPLIANCE VALIDATION Why CH2M HILL?PPA Understanding DBFOM Model
Performance/ Availability Outcome/Next Steps
Monthly Noncompliance Deduction
‒ NCPV = unit value for each Non-compliance Point of $5,000 (subject to indexation)‒ NCPm = number of Noncompliance Points accrued in month (m):
» Who Initiated the Defect Notification?‒ If by Developer, Grace Period (if applicable) granted to correct deficiency‒ If by Department, Noncompliance Points begin to accrue
22PPA Understanding No Learning CurveCOMPLIANCE VALIDATION Why CH2M HILL?PPA Understanding DBFOM Model
Performance/ Availability Outcome/Next Steps
n
1x
xym, NCPENCPVMND
Noncompliance Events
»During DCP‒ Affects Substantial
Completion payment
»During O&M‒ Affects monthly
Availability Payment
»Points Based on Severityof Noncompliance
‒ Focus on safety
»Cure Period Used To Assess Noncompliance Points
23PPA Understanding No Learning CurveCOMPLIANCE VALIDATION Why CH2M HILL?PPA Understanding DBFOM Model
Performance/ Availability Outcome/Next Steps
Monthly Unavailability Deduction
‒ UDz = Unavailability Deduction for each Hourly Unavailability Event (h) during Month (m)‒ q = Total number of Hourly Unavailability Events in Month (m)‒ h = An Hourly Unavailability Event in Month (m)
» Permitted Closures Not Assessed a Deduction‒ Permitted maintenance closure‒ Emergency/incidents, including 30 minutes after roadway back in service
24PPA Understanding No Learning CurveCOMPLIANCE VALIDATION Why CH2M HILL?PPA Understanding DBFOM Model
Performance/ Availability Outcome/Next Steps
Unavailability Events - Conditions
» Hourly assessment ends when circumstances giving rise to Unavailability Event no longer apply or the lanes affected by the event have been re-opened to traffic, whichever is earlier
» Can assess one or more events for any closure not permitted» Simultaneous events affecting Mainline travel lanes in same direction are
not additive; largest deduction shall be assessed» Bypass divided into 3 segments and each day divided into two
unavailability periods: off-peak hours (A) and peak hours (B)» If a closure of less than 60 minutes spans two consecutive hours, an
Hourly Unavailability Event for one hour is assessed
25PPA Understanding No Learning Curve
COMPLIANCE VALIDATION Why CH2M HILL?PPA Understanding DBFOM Model
Performance/ Availability Outcome/Next Steps
Unavailability Deductions
» Modifications‒ Use of shoulder as a replacement travel lane shall
reduce the deduction by 50%‒ During a Holiday, the deduction shall be increased
by 150%‒ During a Weekend, the deduction shall be
decreased by 50%
» Adjustments Allowed over Term‒ Can be amended to reflect shifts in regional travel
patterns‒ No amendments shall exceed the highest
Unavailability Deduction
26PPA Understanding No Learning CurveCOMPLIANCE VALIDATION Why CH2M HILL?PPA Understanding DBFOM Model
Performance/ Availability Outcome/Next Steps
Successful Proposer
» Portsmouth Gateway Group (PGG)‒ Equity Investors: ACS Infrastructure Development,
Inc., Infrared Capital Partners Limited, and Star America Fund GP
‒ Contractors: Design-Build Joint Venture – Dragados, USA, Inc., The Beaver Excavating Company and John R. Jurgensen, Co, Inc.
‒ Designers: ms Consultants, Inc.
» ODOT taking steps to execute contract and move toward Financial Close
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PPA Understanding
PPA Understanding DBFOM Model Performance/AvailabilityOutcome/Next Steps
Proposer Base MAP
PWP Portsmouth $25,935,390.00
Portsmouth Gateway Group $25,884,800.00
Portsmouth Bypass Development Partners $26,229,590.00
PPA Understanding DBFOM Model Performance/AvailabilityOutcome/Next Steps
Savings & Next Steps
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» Savings‒ Base Maximum Availability Payments (MAPs): ~20% below the ODOT “Shadow Bid”
estimate‒ Design and Construction Costs: More than 10% below the 2013 FHWA Cost Estimating
Workshop results‒ Time: Original Design-Bid-Build approach anticipated a 13-year design and construction
schedule to complete the Bypass
» Upcoming Milestone Dates‒ Financial Close in the 1st Quarter of 2015‒ Bypass open to traffic in the 4th Quarter of 2018
In Summary…
» PBP is a performance-based approach to 35-year O&M‒ Asset lifecycle strategy risk is the responsibility of Developer
» Selection based on lowest first-year maximum AP, but actual APs subject to deductions
» Grace and cure periods encourage proactive behavior by Developer» Defect remedy preserved through Noncompliant “hold points”» Safety/operational efficiency of PBP optimized » Inspections and reserve will ensure a good road at Handback
“I would rather earn 1% off a 100 people’s efforts than 100% of my own efforts.”- John D. Rockefeller
29PPA Understanding No Learning CurveCOMPLIANCE VALIDATION Why CH2M HILL?PPA Understanding DBFOM Model Performance/Availability
Outcome/Next Steps
Portsmouth Bypass P3 Project
Questions?