Cso s partnerships can save money and provide solutions
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Hawkins Delafield & Wood LLP. United States Conference of Mayors Mayors Water Summit Washington, DC December 9, 2010. CSO’S: PARTNERSHIPS CAN SAVE MONEY AND PROVIDE SOLUTIONS. Eric S. Petersen Partner Hawkins Delafield & Wood LLP New York , NY. OVERVIEW.

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Cso s partnerships can save money and provide solutions

HawkinsDelafield & Wood LLP

United States Conference of MayorsMayors Water Summit

Washington, DC

December 9, 2010

CSO’S:PARTNERSHIPS CAN SAVE MONEYAND PROVIDE SOLUTIONS

Eric S. Petersen

Partner

Hawkins Delafield & Wood LLP

New York, NY


Overview

OVERVIEW

Traditional Project Delivery and Alternative Delivery

Design-Build

3 CSO Competitive Design-Build Success Stories

The Business Case Approach to Selecting an Alternative Project Delivery Method


Hawkins perspective

HAWKINS PERSPECTIVE

90 Attorney Municipal Contract and Finance Boutique

Leading Special Counsel Law Firm Practicing Nationally in Alternative Project Delivery

Water Contract Specialists

Municipal Representation Exclusively

Perspective of 80 Water Projects in 20 States


Traditional project delivery design bid build

TRADITIONAL PROJECT DELIVERY: DESIGN-BID-BUILD

Separate Design Contract

Separate Construction Contract–Low Bid

Owner Retains Design Liability

Contractor Not Responsible for Project “Working”

Dispute Prone

No Collaboration


Design build description

DESIGN-BUILD DESCRIPTION

Single Entity Contracts For Both Design and Construction: One Contract

Fixed Design-Build Price

Competitive Proposal Process

Multiple Evaluation Factors – Best Value

Design Requirements

Performance Standards

5-10% + Savings in Time and Money

Growing Use in Public Sector


Design build benefits

DESIGN-BUILD BENEFITS

Qualifications-Based Selection

Shortens Project Delivery Time

Increases Collaboration

Competition on Non-Price Factors

Cuts Capital Costs

Earliest Price Certainty

Transfers Performance Risk

Promotes Innovation

One Point of Responsibility

Minimization of Change Orders


Db challenges

DB CHALLENGES

Less Control Over Design Details

Less Familiarity

Possibility of Smaller Number of Competitors

More Complex Selection

More Involved Negotiations


Design build operate maintain

DESIGN-BUILD-OPERATE-MAINTAIN

Single Entity Contracts for Design, Construction, Operation and Maintenance

Design Requirements and Acceptance Test

Long Term Operation and Maintenance

Long Term Repair and Replacement

Fixed Operation and Maintenance Fee

Performance Guarantees

Law Compliance


Cso s partnerships can save money and provide solutions

3 PROJECT PROFILES


The cso dilemma

THE CSO DILEMMA

CSO Projects Are Typically Procured Conventionally – DBB

Extensive and Expensive Planning and Design Efforts

Resistance to Regulators and Eventual Settlements

Many Cities Are Facing Unaffordable CSO Costs


Can partnerships solve the cso dilemma and save money

CAN PARTNERSHIPS SOLVE THE CSO DILEMMAAND SAVE MONEY?

Yes!

Design-Build, Design-Build-Operate-Maintain

How?

Design Competition

Self-Selected, Collaborative D-B Teams

Innovative, Lower-Cost Ideas

Performance Guarantees

Useful Even for “Buried Infrastructure”


Lynn ma

LYNN (MA)

CSO Judicial Consent Decree from 1990

“Storage, Pump-Back” Mandated

DEP, EPA Active Assistance

First In Nation “DBO” For a “CSO”

All Technical Approaches Allowed

Vendors Proposed Total Sewer Separation

New Sewers, Not New Storm Drains

Subsurface Risk Constrained

Spread Out Construction Avoided “Rate Spike”

DBO Saved $100 M


San diego county water authority ca

SAN DIEGO COUNTYWATER AUTHORITY (CA)

Design-Build Contract

Lake Hodges to Olivenhain Pipeline Project

Design and Construction Requirements

Competition As To Means and Methods, Layout Within Right-of-Way

Cost Savings Against Design-Bid-Build Benchmark

Differing Site Conditions Relief Based on Geotech Report

Fixed DB Price; Concrete and Steel Adjustment

Transfer of Design Liability

Call-Back Warranty


Holyoke ma

HOLYOKE (MA)

MA DEP-Mandated CSO Collection Facility

CSO Solution Involved CSO Facility, Treatment Plant Improvements, and Operations

Competitive, Collaborative RFP-Based Solution

Contractor Guaranteed Maximum of Four CSO Overflows for a “Design Storm”

Contractor Provided Partial CSO Financing


Cso s partnerships can save money and provide solutions

THE BUSINESS CASEAPPROACH TO SELECTING A PROJECT DELIVERY METHOD


Benefits of business case

BENEFITS OF BUSINESS CASE

Maximize “Value for Money”

Allows Trade-Offs and Weighing of Qualitative Factors

Ties Goals, Cost and Risk Considerations Together

Involves, Educates Owner’s Senior Management and Staff

Provides Strong Basis for Elected Officials and Managers To Support and Defend a Decision To Use Alternative Delivery


Multiple criteria analysis

MULTIPLE CRITERIA ANALYSIS

MCA Assesses Qualitative Considerations Pertaining to Each Selected Delivery Method

Thorough Canvassing of All Goals and Objectives For the Project

Weigh Each Goal Relative to the Others

Determine Extent to Which Each Selected Delivery Method is Likely to Achieve Each Stated Goal

Establish Ranking of the Selected Project Delivery Methods Based on Non-cost Factors


Example business goals 1

EXAMPLE BUSINESS GOALS (1)

Use a Procurement Method Familiar To Owner

Expedite Procurement

Avoid Bid/Proposal Protests

Expedite Design and Construction

Assure a Sufficiently Competitive Proposer Market

Meet Project Quality Objectives

Promote Innovation

Know the Construction Cost With Certainty As Early As Possible

Avoid Construction Change Orders


Example business goals 2

EXAMPLE BUSINESS GOALS (2)

Shield Owner From Disputes Between Designer, Builder and Equipment Supplier

Maximize Effective Collaboration Between Designer, Builder, and Operator

Maximize Competition

Minimize Capital Maintenance

Allocate Risk To Party Best Able To Manage and Control It

Maximize Risk Transfer


Cso s partnerships can save money and provide solutions

COST PROJECTIONS

Project Projections For Each Method

Experience From Other Comparable Projects

To What Extent Will Proposers Price Transferred Risk

Life Cycle Cost Projections


Risk quantification

RISK QUANTIFICATION

For DBB and Each Alternative Option:

Determine Whether the Risk is Likely To Be “Retained” Or “Transferred”

Determine Likelihood Of Occurrence

Estimate Percent Of Costs Impacted If Risk Occurs

Calculate An Amount For The “Retained Risk” For Each Option

Add The Amount For Quantified Risk To The Projected Cost For Each Alternative Option


Risk examples

RISK EXAMPLES

Delay In Construction

  • Delays Raise Construction Costs

  • DBB Has Higher Delay Risk

  • Burden DBB With Imputed Cost Of Delay

    Project Does Not Work As Intended

  • Costs Will Be Incurred To Fix It

  • In DBB, Owner Bears Cost

  • In Alternatives, Contractor Bears Costs

  • Burden DBB With Imputed Cost Of Fixes


Example business case scoring table clark county

EXAMPLE BUSINESS CASESCORING TABLE (CLARK COUNTY)


Owners using a structured formal decision process

OWNERS USING A STRUCTURED, FORMAL DECISION PROCESS

Municipalities

  • Phoenix, AZ

  • San Antonio Water System, TX

  • Washington, DC

    States

  • California

  • New Jersey

  • British Columbia (Mandated)


Conclusions

CONCLUSIONS

Consider Alternative Project Delivery For Your CSO Projects

Alternative Project Delivery Can Deliver Better “Value for Money” In Schedule, Cost And Performance

Make Sure Staff And Consultants Are Open To Alternative Delivery

Use a “Business Case” Approach In Selecting a Delivery Option

Conduct The Business Case Analysis Early In the Project Cycle


Cso s partnerships can save money and provide solutions

“All This, My Friend, Is Offered Merely For Your Consideration And Judgment, And Without Presuming To Anticipate What You Alone Are Qualified To Decide For Yourself.”

Thomas Jefferson


Thank you

THANK YOU

Eric S. Petersen

Hawkins Delafield & Wood LLP

One Chase Manhattan Plaza

New York, NY 10005

(212) 820-9401

[email protected]

www.hawkins.com


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