CMAA Owners ForumMay 3, 2010

Ronaldo T. Nicholson, P.E. Chief Engineer District Department of Transportation

Past, Present, and Future• USA Past

– National Road 1806 - 1839– The Federal Aid Road Act of 1916,

(established a federal-state partnership)– USA 1920’s and 1930’s

• Toll roads or “free” roads?• Needs based or public works programs?

– Federal-Aid Highway Act of 1956

Past, Present, and Future

• The funding debate – Toll roads or free [taxed] roads?– A public works program or a needs based system?

• Bureau of Public Roads [FHWA]– 1939 Report to Congress– Fundamental premise of the Interstate Highway System– Toll roads would not satisfy all needs– Promoted tax based system of funding

Past, Present, and Future

Current Nationwide Transportation Fund Trends

• Reliance on Federal funds increased • Revenue was static• Buying power diminished• Maintenance and Operations Cost increased• Transportation needs increased

Past, Present, and Future• Present Challenges

• The highway system is aging • Maintenance requires increasingly larger share of budget• Population and economy are growing• Current needs exceed available funds• A strong economy requires efficient transportation

For FY-10•Maintenance cost increased as services decrease•Construction funding remained static; •Down turn in economy was reflected by reduced state revenues

Owner’s Challenges

• Funding• 100-year tradition

– Design – Bid – Build• Means and methods• Design-Bid-Build are DOT’s most common project

delivery method• Match delivery method to project needs

D-B-B and DB and P3 are Fundamentally different

DB Time Savings

Public-Private Partnerships

• Policy– A public need for timely transportation development– Current methods may not be adequate– Private development or operation may be more

timely or more efficient or less costly – thereby serving the public interest

• Intent is to encourage private investment in transportation facilities– Innovative improvements– Investment of private funds/equity of funds not

otherwise available– Risk sharing

• Such partnerships are for carefully selected projects

Project Delivery Options

DesignBid

Build

PrivateContract

FeeServices

DesignBuild

DesignBuild

OperateMaintain(DBOM)

LongTermLease

Agreement

DesignBuild

FinanceOperate(DBFO)

DesignBuildOwn

Operate(BOO)

Public Agency Controlled Concessions / PrivatizationsMore Private Sector Control

Public Pays

Tax Exempt Financing

Public Control

Public Equity

User Pays

Taxable Financing

Private Control

Private Equity

Public Private Partnerships

Degr

ee o

f Ris

k

Time

Project’s Life Cycle Risk Profile

Development Design and Construction Operations & Maintenance

Legal

Financin

g

Political

Environmen

tal

Sched

ule

CostChan

ges

Quality

O&M Costs

Perform

ance

Availab

ility

Traffic

and Reve

nue

FinancialClose Startup-

Turnover

P3 Risk/Cost Management

• P3 – lowest cost program delivery

– Parallel interests with Owner

– DB a phase prior to O&M

– Rewarded for managing life-cycle costs

– Business deal must make sense, but successful relationship is essential

PPTA DB Contract Issues• Concession agreement between owner and

concessionaire• DB terms

– Contract between Concessionaire and DB– Concession agreement describes

• Scope• Reference standards• Relationship between Owner’s IA/IV and

Concessionaire’s independent engineer

PPTA Concession Agreement

• A comprehensive DBOM or O&M contract with single-source delivery

• Applies to various funding schemes– Public funds– Private financing– Mixed funding sources– Not limited to revenue positive projects

• Concessionaire is responsible for service delivery

Past, Present, and Future

• Future PPTA or P3s - A fundamentally different way of doing business– Long-term partnerships that accommodate change– Shared risks/rewards based on effective, long-term

successful performance– An important part of a DOT’s solutions – applicable to

select few projects

Industry’s Challenges• What is your business objective?

– Design - construct - get out

– DBOM - long-term stake in outcome

– P3 is fundamentally different

• Primary project delivery methods

– Design-Bid-Build

– Design-Build

– PPTA• Private companies can succeed or fail, and they do both

equally well

• Engineering is the easy part …

Public Perceptions

• P3 is not a panacea– Most roads are not attractive as an investment– Choose projects carefully– Create a fair and competitive procurement

environment– Optimize use of public and private funds

Other Virginia PPTA Efforts

• Mid-Town Tunnel, Petersburg Va• Dulles Corridor Metro Extension, Fairfax

Virginia• US 460 Corridor Improvements, City of

Suffolk Virginia to Prince George County Virginia

• Route 28 Improvements, Fairfax & Loudoun County Va

Current PPTACurrent PPTAVirginia Hot LanesVirginia Hot Lanes•Two separate projects in different stages:

–Capital Beltway –I-95/395

•Proposed 70-mile, seamless network•Adds new lanes to region’s most congested routes•Expands public transportation and carpooling•Provides new option to pay a toll for faster, more reliable trip time with a free alternative always available

Capital Beltway HotlanesContractual Arrangements

Capital Beltway Express LLC

Design-Build Contractor Operations & Maintenance

Consultants/Subcontractors Subcontractors

TMS Integrator – TBD

ETC System Integrator - TBD

Amended ReinstatedComprehensive Agreement

Design-BuildContract

O&MContract

• 14-miles of two new lanes in each direction

• Beginning this summer construction is expected to take 4-1/2 years

• Scheduled to begin operation in 2013

• Replacement of more than $260 million of aging infrastructure,

• including more than 50 bridges & overpasses, with pedestrian and recreational facilities. 70,000 lf of Soundwalls.

• Average toll expected to be $5-$6 during rush hour

Capital Beltway HOT LanesCapital Beltway HOT Lanes

11th STREET BRIDGE PROJECT

11th Street Bridge Project 11th street over the Anacostia

River

PROJECT LOCATION IN DISTRICT OF COLUMBIA

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Project Site

PROPOSED TRANSPORTATION IMPROVEMENTS

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KEY 11TH STREET BRIDGE PROJECT ASPECTS

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• Improve mobility through separate new freeway and local connections

• Provide shared pedestrian/bicycle path and streetcar rails

• Provide alternative evacuation route from Nation’s capital

• Include environmental investments

SOUTHEAST/SOUTHWEST FREEWAY

M STREET SE

NAVY YARD

MARITIMEPLAZA

FREEWAYBRIDGES

LOCAL BRIDGE

GOOD HOPE ROAD

ANACOSTIAPARK

DC 295/I-

295

ANACOSTIA RIVER

MAR

TIN

LU

THER

KI

NG

JR A

VEN

UE

SE

MULTI-MODAL TRANSPORTATION OPTIONS

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DESIGN-BUILD-TO-BUDGET• Performed by an integrated construction

contractor and designer (design-build team)• Increases opportunities for innovation,

flexibility, and cost-savings• Allows construction to begin sooner after the

project is awarded• Differs from the traditional design-bid-build

method in which project awarded to the lowest bidder for construction.

• $260 million design-build contract

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DESIGN AND CONSTRUCTION CONTRACTOR

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A joint venture of Skanska USA Civil of Alexandria, Va., and Facchina Construction of La Plata, Md