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Portsmouth Bypass P3 Project Performance Based Delivery October 29, 2014.

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Presentation on theme: "Portsmouth Bypass P3 Project Performance Based Delivery October 29, 2014."— Presentation transcript:

1 Portsmouth Bypass P3 Project Performance Based Delivery October 29, 2014

2 Presenters 2 Shawn Thompson, PE, CQE CH2M HILL 16 years experience Design Manager on $200M I- 71/670 Columbus Crossroads Serves as a Technical Lead on PBP Procurement Team (Owner’s Advisory Role) Mike Wawszkiewicz, PE Ohio DOT 16 years experience Senior Project Manager - Division of Innovative Delivery Project Manager of the PBP Procurement Team

3 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? 3

4 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 4 Project Background DBFOM Model Performance/AvailabilityOutcome/Next Steps

5 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’) 5 Project Background DBFOM Model Performance/AvailabilityOutcome/Next Steps

6 Public-Private-Partnership (P3) Timeline 6 Project Background DBFOM Model Performance/AvailabilityOutcome/Next Steps The project is of significant regional importance, providing needed infrastructure that allows the area to compete for new jobs in a region with 50% higher unemployment than the rest of Ohio As a P3, the project can be built in a single phase and delivered eight years earlier Due to funding constraints, ODOT proposed building the Bypass as a DBB in three phases over 13 years The Portsmouth Transportation Study, initiated in 1999, recommended a new 16-mile freeway

7 P3 Project Scope 7 Project Background DBFOM Model Performance/AvailabilityOutcome/Next Steps RFQ RFP Financial Close Design & Construction 2Q 20131Q 20141Q / 2Q through 4Q 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

8 Financing Approach 8 Project Background DBFOM Model Performance/AvailabilityOutcome/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

9 Performance-Based Methodology 9 Project Background DBFOM Model Performance/AvailabilityOutcome/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

10 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 10 PPA Project Background DBFOM Model Performance/Availability Outcome/Next Steps

11 Developer Owns Risk/Reward mile greenfield, limited access, 4-lane freeway 5 new interchanges 19 bridges 16 ramps Side street improvements 1 bridge Design-Build-Finance Quality Oversight DBT IQF ODOT After Substantial Completion PPA Operations Maintenance Developer Project Background DBFOM Model Performance/Availability Outcome/Next Steps

12 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 12 Project Background DBFOM Model Performance/Availability Outcome/Next Steps

13 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 13 Project Background DBFOM Model Performance/Availability Outcome/Next Steps

14 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.) 14 DBT IQF ODOT Developer After Substantial Completion PPA Project Background DBFOM Model Performance/Availability Outcome/Next Steps Operations Maintenance Quality Oversight

15 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 15 DBT IQF ODOT Developer After Substantial Completion PPA Operations Maintenance Project Background DBFOM Model Performance/Availability Outcome/Next Steps

16 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 16 Project Background DBFOM Model Performance/Availability Outcome/Next Steps

17 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 17 PPA Understanding No Learning Curve COMPLIANCE VALIDATION Why CH2M HILL? PPA Understanding DBFOM Model Performance/ Availability Outcome/Next Steps

18 Public-Private-Partnership Math 18 PPA Understanding DBFOM Model Outcome/Next Steps Performance/ Availability

19 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 19 PPA Understanding No Learning Curve COMPLIANCE VALIDATION Why CH2M HILL? PPA Understanding DBFOM Model Performance/ Availability Outcome/Next Steps

20 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 20 PPA Understanding No Learning Curve COMPLIANCE VALIDATION Why CH2M HILL? PPA Understanding DBFOM Model Performance/ Availability Outcome/Next Steps TABLE 21-1 Schedule of Handback Activities Months to End of Term Handback ActivityStartEndDuration (Months) Handback Schedule-60- Residual Life Methodology-60- Department Review60582 Initial Handback Inspections58526 Initial Handback Inspection Report52502 Department Review50482 Handback Work Period480 Calculation of Handback Reserve Amount26 0 Handback Period240 Second Handback Inspections18153 Second Handback Inspection Report15123 Calculation of Handback Reserve Amount14 0 Department Review12102 Final Handback Inspections303 Final Handback Inspection Report101 End of Term00

21 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” 21 PPA Understanding No Learning Curve COMPLIANCE VALIDATION Why CH2M HILL? PPA Understanding DBFOM Model Performance/ Availability Outcome/Next Steps

22 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 22 PPA Understanding No Learning Curve COMPLIANCE VALIDATION Why CH2M HILL? PPA Understanding DBFOM Model Performance/ Availability Outcome/Next Steps

23 Noncompliance Events »During DCP ‒Affects Substantial Completion payment »During O&M ‒Affects monthly Availability Payment »Points Based on Severity of Noncompliance ‒Focus on safety »Cure Period Used To Assess Noncompliance Points 23 PPA Understanding No Learning Curve COMPLIANCE VALIDATION Why CH2M HILL? PPA Understanding DBFOM Model Performance/ Availability Outcome/Next Steps

24 Monthly Unavailability Deduction 24 PPA Understanding No Learning Curve COMPLIANCE VALIDATION Why CH2M HILL? PPA Understanding DBFOM Model Performance/ Availability Outcome/Next Steps

25 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 25 PPA Understanding No Learning Curve COMPLIANCE VALIDATION Why CH2M HILL? PPA Understanding DBFOM Model Performance/ Availability Outcome/Next Steps

26 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 26 PPA Understanding No Learning Curve COMPLIANCE VALIDATION Why CH2M HILL? PPA Understanding DBFOM Model Performance/ Availability Outcome/Next Steps

27 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 27 PPA Understanding DBFOM Model Performance/Availability Outcome/ Next Steps

28 PPA Understanding DBFOM Model Performance/Availability Outcome/ Next Steps Savings & Next Steps 28 »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 1 st Quarter of 2015 ‒Bypass open to traffic in the 4 th Quarter of 2018

29 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 29 PPA Understanding No Learning Curve COMPLIANCE VALIDATION Why CH2M HILL? PPA Understanding DBFOM Model Performance/Availability Outcome/ Next Steps

30 Portsmouth Bypass P3 Project Questions?


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