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John F. Williams, SVP National Director - Governmental Consulting and Planning

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  1. P3 PROJECT MANAGEMENT John F. Williams, SVP National Director - Governmental Consulting and Planning HDR Engineering, Inc. New York City

  2. P3 P R O J E C T M A N A G E M E N T Beginning with a Common Understanding • Definitions • Variations • Dimensions United Nations SU/SSC Training Course 2 Source: * Hermann Scheer, author of A Solar Manifesto

  3. P3 P R O J E C T M A N A G E M E N T In the U.S. We Call It … P3 United Nations SU/SSC Training Course 3 Source: * Hermann Scheer, author of A Solar Manifesto

  4. P3 P R O J E C T M A N A G E M E N T In Canada We Call it … 3P United Nations SU/SSC Training Course 4 Source: * Hermann Scheer, author of A Solar Manifesto

  5. P3 P R O J E C T M A N A G E M E N T In Europe We Call It ... PFI United Nations SU/SSC Training Course 5 Source: * Hermann Scheer, author of A Solar Manifesto

  6. P3 P R O J E C T M A N A G E M E N T What Do You Call It? ? United Nations SU/SSC Training Course 6 Source: * Hermann Scheer, author of A Solar Manifesto

  7. P3 P R O J E C T M A N A G E M E N T Different Acronyms – Same Process With Many Variations United Nations SU/SSC Training Course 7 Source: * Hermann Scheer, author of A Solar Manifesto

  8. P3 P R O J E C T M A N A G E M E N T P3 What is It? A public-private partnership exists when public sector agencies (federal, state, or local) join with private sector entities (companies, foundations, academic institutions or citizens) and enter into a business relationship to attain a commonly shared goal that also achieves objectives of the individual partners. United Nations SU/SSC Training Course 8 Source: * Hermann Scheer, author of A Solar Manifesto

  9. P3 P R O J E C T M A N A G E M E N T Three Basic Dimensions of P3 • Although each is unique, all P3’s include three basic characteristics • shared goals • shared resources (time, money, expertise, people) • shared risks and benefits • Without all three there is no reason to create or continue a partnership. Place landfill photo United Nations SU/SSC Training Course 9 Source: * Hermann Scheer, author of A Solar Manifesto

  10. P3 P R O J E C T M A N A G E M E N T Why? Governments can bring private sector efficiency, expertise and competitiveness into projects and operations, while still being responsible for public interest issues and ensuring delivery at specified service levels. In short, P3 is a tool that can help governments meet demands for the development of modern and efficient facilities, infrastructure and services while providing value for taxpayers. United Nations SU/SSC Training Course 10 Source: * Hermann Scheer, author of A Solar Manifesto

  11. P3 P R O J E C T M A N A G E M E N T Getting Started • How do you create one? • How do you implement one? A Public entity’s perspective of finding and contracting with the best private sector partner. United Nations SU/SSC Training Course 11

  12. P3 P R O J E C T M A N A G E M E N T How Is It Done? Place landfill photo P3PMSM Process United Nations SU/SSC Training Course 12

  13. P3 CRAFT IMPLEMENTATION P R O J E C T M A N A G E M E N T Two Major Steps • Crafting the Partnership • Implementing the Partnership United Nations SU/SSC Training Course 13

  14. P3 P R O J E C T M A N A G E M E N T Two Steps Down to Six Phases • Genesis • Feasibility • Plan & Test • Procure • Design & Build • Operate & Maintain OPERATE & MAINTAIN PLAN & TEST DESIGN & BUILD GENESIS FEASIBILITY PROCURE United Nations SU/SSC Training Course 14

  15. P3 Definition Rationale Market Research Economic Analysis Program Budget Schedule Risk Assess- ment Confirm Demand Master Plan Delivery/ Deal Structure Pre-Qualify Select & Negotiate Design Build Start-up Maintain Disposal Risk/Deal Structure Pro Forma P R O J E C T M A N A G E M E N T Six Phases to 18 – Sub Phases United Nations SU/SSC Training Course 15

  16. P3 P R O J E C T M A N A G E M E N T 18 Phases to 40 Milestones United Nations SU/SSC Training Course 16

  17. P3 P R O J E C T M A N A G E M E N T 40 Milestones to 100s of tasks Place landfill photo United Nations SU/SSC Training Course 17

  18. P3 P R O J E C T M A N A G E M E N T P3 Project Management – A Process Linked to Critical Path Scheduling CRAFT IMPLEMENTATION GENESIS FEASIBILITY PLAN & TEST PROCURE DEVELOP OPERATE Definition Rationale Market Research Economic Analysis Program Budget Schedule Risk Assess- ment Confirm Demand Master Plan Risk/Deal Structure Pro Forma Delivery/ Deal Structure Pre-Qualify Select & Negotiate Design Build Start-up Maintain Disposal United Nations SU/SSC Training Course 18

  19. P3 P R O J E C T M A N A G E M E N T Practical Guide for P3 Program Management Place landfill photo United Nations SU/SSC Training Course 19

  20. P3 P R O J E C T M A N A G E M E N T Six Distinct Phases Genesis: What’s the need, what’s driving the need, and is there a need for a Public/Private Partnership? GENESIS FEASIBILITY Feasibility: Is a Public/Private Partnership feasible, not only financially, but practically? Can it be done? PLAN & TEST Plan & Test: What is the best way to complete the project? Has the plan been thoroughly tested to assess market demand, public and stakeholder feedback, economics and potential “fatal flaws” that could derail the project? PROCURE Procure: How do you choose and contract with the best-value private partner? What’s the best method and what do current statutes allow? Implement: How can the project best be delivered — financed, designed, built, operated and maintained? IMPLEMENT OPERATE Operations: Is the private sector partner fulfilling its obligations, and is it necessary to negotiate changes to the contract? Is everything running smoothly? United Nations SU/SSC Training Course 20

  21. P3 P R O J E C T M A N A G E M E N T Genesis – What’s the Need? • Will a P3 Satisfy It? • Kick-off and Vision Overview • Data Collection and Analysis • On-site Tours/Condition Survey and Analysis • Vision Refinement • Objectives Setting United Nations SU/SSC Training Course 21

  22. P3 P R O J E C T M A N A G E M E N T Genesis – Preliminary Project Definition • Preliminary Test Plan • Preliminary Risk Analysis (RAP) • Development Options/Frame of Reference (FoR) United Nations SU/SSC Training Course 22

  23. P3 P R O J E C T M A N A G E M E N T Genesis – Preliminary Feasibility Check/Validation • Fatal Flaws • Development Options Testing • Process Map and Strategy • Master Schedule United Nations SU/SSC Training Course 23

  24. P3 P R O J E C T M A N A G E M E N T Genesis – Phase 1 Process Map United Nations SU/SSC Training Course 24

  25. P3 P R O J E C T M A N A G E M E N T Feasibility – Can It Be Done? • Is a P3 Practical? • Call for Ideas • Request for Expression of Interest • “Case Study” Tours • Environmental and Geotechnical Analysis • Infrastructure Analysis Place landfill photo United Nations SU/SSC Training Course 25

  26. P3 P R O J E C T M A N A G E M E N T Feasibility – Return on Investment • Master Development Budget • Preliminary Development Pro-Forma • Market Focused Interviews • Input Workshops • Economic Analysis • RAP Session Place landfill photo United Nations SU/SSC Training Course 26

  27. P3 P R O J E C T M A N A G E M E N T Feasibility – Risk • P3 Delivery & Risk Management Workshop • Final Test Plan • Fatal Flaw Update • Sales and Communications Strategy • Risk-Allocation, Procurement Strategy & Delivery Methodology • Commercial Terms & Contract Principles Place landfill photo United Nations SU/SSC Training Course 27

  28. P3 P R O J E C T M A N A G E M E N T Feasibility – Phase 2 Process Map Place landfill photo United Nations SU/SSC Training Course 28

  29. P3 P R O J E C T M A N A G E M E N T Plan and Test • Market Based Feedback • Are Concepts Sufficient? • Constant Check for Fatal Flaws • Is the Project Real? • Feedback Based Adjustments Place landfill photo United Nations SU/SSC Training Course 29

  30. P3 P R O J E C T M A N A G E M E N T Plan and Test – Is There a Sound Business Case? Place landfill photo United Nations SU/SSC Training Course 30

  31. P3 P R O J E C T M A N A G E M E N T Plan and Test - Phase 3 Process Map Place landfill photo United Nations SU/SSC Training Course 31

  32. P3 P R O J E C T M A N A G E M E N T Procurement and Contracting • Delivery/Deal Structure • Pre-Qualify • Select & Negotiate Place landfill photo United Nations SU/SSC Training Course 32

  33. P3 P R O J E C T M A N A G E M E N T Structural Framework • A Matter of Balance Financing “Ownership”/Occupancy Project Delivery Procurement Approach Contracting Methodology • Structure Drivers Project Goals Public Entities Characteristics Marketplace Realities Place landfill photo United Nations SU/SSC Training Course 33

  34. P3 P R O J E C T M A N A G E M E N T “Ownership”/Occupancy • Direct Ownership • Traditional Lease Build-to-suit Lease Lease/Purchase (fixed or variable) • Synthetic Lease United Nations SU/SSC Training Course 34

  35. P3 P R O J E C T M A N A G E M E N T Financing • Cash Purchase • Debt Financing (bonds/mortgage) • Leasing (many variations) • Lease/purchase Place landfill photo United Nations SU/SSC Training Course 35

  36. P3 P R O J E C T M A N A G E M E N T Project Delivery – “Mainstream” • Traditional (design-bid-build) • Multi-prime • Construction Management at Risk • Design-Build Place landfill photo United Nations SU/SSC Training Course 36

  37. P3 P R O J E C T M A N A G E M E N T Project Delivery – Variations on a Theme • Finance-Design-Build (turnkey) • Finance-Design-Build-Leaseback (typical) • Finance-Design-Build-Operate • Finance-Design-Build-Operate & Maintain • Sale-Leaseback (user develops) • Build-Operate • Build-Operate-Transfer • Build-Own-Operate-Transfer Place landfill photo United Nations SU/SSC Training Course 37

  38. P3 P R O J E C T M A N A G E M E N T Project Delivery – Many Acronyms • DBB • DB • FDB or DBF • DBO • DBOM • BO • BOT • BOOT United Nations SU/SSC Training Course 38

  39. P3 P R O J E C T M A N A G E M E N T Procurement Approach • Price A Key Factor? The Only Factor? How Much Can Be Done Before Price is Set? • Selection Low-Bid Weighed Criteria Equivalent Design/Lower-Bid Fixed Budget/Best Design Meets Criteria/Low Bid Best Value (adjusted low bid, weighted criteria including price) Place landfill photo United Nations SU/SSC Training Course 39

  40. P3 Qualitative Score (60 max.) Price Proposal Total Score (100 max.) Price Score (40 max.) Proposer Firm “A” Firm “B” Firm “C” 1,629,000 1,546,000 1,510,000 51 53 44 37 39 40 88 92* 84 P R O J E C T M A N A G E M E N T Best Value – Weighted Criteria United Nations SU/SSC Training Course 40

  41. P3 Proposer Qualitative Score Adjusted Price Price Proposal Firm “A” Firm “B” Firm “C” 1,000,000 1,300,000 800,000 0.85 0.95 0.50 1,176,471 1,368,421 1,600,000 P R O J E C T M A N A G E M E N T Best Value – Adjusted Low-Bid United Nations SU/SSC Training Course 41

  42. P3 P R O J E C T M A N A G E M E N T Procurement Approach • Sole Source • RFP • RFQ/RFP (pre-qualify, then select) • RFEOI/RFQ/RFP (determine interest, pre-qualify, select) • Contingent Designation and Simultaneous Negotiations United Nations SU/SSC Training Course 42

  43. P3 P R O J E C T M A N A G E M E N T Contract Methods • Lump Sum • Cost Plus • Cost Plus with GMP • Unit Price • Bonus/Merit Awards Place landfill photo United Nations SU/SSC Training Course 43

  44. P3 P R O J E C T M A N A G E M E N T Procurement & Contracting – Phase 4 Process Map Place landfill photo United Nations SU/SSC Training Course 44

  45. P3 P R O J E C T M A N A G E M E N T Implementation – Phase 5 • Design Compliance • Construction Oversight • Commissioning and Administration Place landfill photo United Nations SU/SSC Training Course 45

  46. P3 P R O J E C T M A N A G E M E N T Operations - Phase 6 • Startup • Monitoring • Assessment • Enhancement • Contract Modifications • Contract Renegotiations Place landfill photo United Nations SU/SSC Training Course 46

  47. P3 P R O J E C T M A N A G E M E N T P3 – Process Players • Sponsors/Users • Finance/Accounting • Legal • Owner/Developer • Program Manager • Brokerage/Marketing • Design/Engineering • Construction • Relocation • Property/Facility Management Place landfill photo United Nations SU/SSC Training Course 47

  48. P3 Define Basic Needs R Sponsor/User/Tenant Finance/Accounting Legal Owner/Developer Program Manager Brokerage/Marketing Designer/Engineer Constructor Relocation Property Manager Source& Uses R Budget R R Market Analysis P R O J E C T M A N A G E M E N T P3 – Process Responsibilities Place landfill photo United Nations SU/SSC Training Course 48

  49. P3 P R O J E C T M A N A G E M E N T P3 Program Management Summary GENESIS FEASIBILITY PLAN & TEST PROCURE IMPLEMENT OPERATE • Prelim Project Definition • Seed Funding • Objectives Register • Alternatives Index • Prelim Schedule/ Budget • Prelim Economic/ Financial Analysis • Qualitative Analysis • Fatal Flaw Analysis • Process Map & Strategy • Feasibility Report/ Project Approval • Asset/System Evaluation • Site Selection/ Analysis • Environmental/ Permitting Analysis • Final Project Definition • Master Schedule/ Budget • Political Climate Assessment • Procurement Strategy • Prelim Business Plan • Public/Vendor Outreach & Stakeholder Consultation • Business Plan • Risk Assessment/ Allocation • Delivery Methodology • Commercial Terms • /Contract Principles • Deal Structuring • Concept Design/ Performance Specs • Procurement Documents • Vendor Pre- Qualification • Vendor Proposal Evaluation • Contract Negotiations • Design Compliance • Construction Oversight • Commissioning Administration • Startup • Monitoring • Assessment • Enhancement • Contract Mods • Contract Renegotiations United Nations SU/SSC Training Course 49

  50. P3 PROJECT MANAGEMENT John F. Williams, SVP National Director - Governmental Consulting and Planning HDR Engineering, Inc. New York City