Media
01/1/11

Creative Design-Build-Operate options can provide value, technology and accountability

By Jerry Maxwell, Retired General Manager
Tampa Bay Water

When Tampa Bay Water looked to develop the $609 million worth of projects that comprise its Master Water Plan, we set out to find the right mix of project delivery options. We had nothing against traditional design and public works bidding procedures. That approach had worked well for us in the past and still does in many cases.

But mandated reductions in groundwater pumping meant that the alternatives (surface water and desalinated water) would be significantly more expensive for the members of our regional utility and their customers. And several of our new projects were big bigger than any single project we'd built before. On top of that, we knew we wanted to deliver high-quality drinking water using the most advanced technology we could find. It wasn't going to come cheap.

So how could we develop large, significant water infrastructure projects while keeping costs affordable for water rate payers? For our new, 66 million-gallons-perday regional surface water treatment plant, the answer was clear: through a DBO option with a private-sector partner.


PUBLIC-PRIVATE PARTNERSHIPS WORK

Public-private partnerships can be customized to a project's and municipality's needs. We were new to public-private partnerships, but our procurement consultants made a convincing case for taking the DBO approach: a single contract for services with one private-sector partner that would design, build and operate the surface water treatment plant under a long-term service agreement. We would own and finance the facility.

The response from the private sector validated our decision. Our Request for Proposals elicited nine strong proposals by four competing teams. After a grueling selection process, in April 2000, we chose the group that our selection team felt had the best technical capabilities and the most operations and maintenance experience. For this project, it was a team led by Veolia Water, with Camp Dresser & McKee as design partner and Clark Construction as the construction partner.
 

WORLD-CLASS TEAM AND TECHNOLOGY MEAN SAVINGS

The project entails approximately $83 million in capital costs and $61 million in operation and maintenance fees over the initial 15-year term, plus a five-year option period. While the technical and operations qualifications experience was key, the most compelling benefit for water rate payers was the savings: This DBO project will save Tampa Bay Water approximately $85 million, or 21 percent, over the project's lifetime. With so many major projects due to come on line at about the same time, it was important that we kept the impact of these costs on end water users manageable. The value provided by the DBO approach we chose is playing an important role in helping us do just that.

Water treatment technology was also an important consideration because we wanted to deliver water to standards even better than current U.S. EPA Safe Drinking Water Act requirements. The surface water treatment plant would be handling a withdrawal schedule that varies with available flows. Raw water quality from the sources—the Alafia and Hillsborough rivers and the Tampa Bypass Canal—would also vary. It was important that the treatment technology effectively handle these variable conditions.

Our private-sector partner offered its own patented ACTIFLO process. The technology is widely used throughout the world and has proven particularly advantageous when treating large flow rates with variable raw water quality. It seemed tailormade for our surface water treatment plant.
 

MAKING THE PRIVATE SECTOR ACCOUNTABLE

Like other utilities, we were concerned about accountability. Could a private partner be as accountable for performance as a government agency? We designed our contract so that there were financial incentives to deliver the project as promised and disincentives if performance fell short. And like other utility projects of this scope and significance, Tampa Bay Water and Veolia Water have had our successes and faced our challenges, but we have celebrated our successes as a team and worked through our challenges in the same way. Overall, I have to say "so far so good." The facility was completed on time and on budget and officially came on line in October 2002.

Utilities are increasingly discovering that public-private partnerships can provide important benefits: access to leading-edge technology, operations expertise and cost savings. As large water supply project partnerships like ours succeed over time, such arrangements will become common, because they provide a win for everyone: the utility, the rate payer and the private partner.