MDOT ~ Public-Private Partnerships (P3 s) Metro Region Freeway Lighting P3

Transcription

1 MDOT ~ Public-Private Partnerships (P3 s) Metro Region Freeway Lighting P3

2 P3 Definition FHWA defines Public-Private Partnerships (P3 s) as contractual agreements formed between a public agency and a private sector entity that allow for greater private sector participation in the delivery and financing of transportation project.

3 P3 Advantages Ability to shift specific risks to the private sector Ability to use private funds to advance projects Schedule and Price certainty over the term Ability to refocus our resources and efforts Innovation

4 P3 Project Screening Initial Screening Items and Project Evaluation Potential that private partner could provide value Market Interest Financial Feasibility Project Scope Risk Allocation

5 P3 Procurements Steps Request for Letters of Interest (RFLOI) Request for Qualifications (RFQ) Shortlist (typically 3-5 teams) Site Visits and One-on-One Meetings Request For Proposals (RFP) ITP, Project Agreement, Schedules, etc One-on-One Meetings Commercial Close Financial Close

6 P3 Unique Procurement Multiple Specialty Areas Financial KPMG provides these services for us through the Governor s Office Legal It is recommended that legal counsel be procured to help develop the contract language. Engineering Depending on the project, a multitude of specialty areas will need to review contract language Contract Services Plan to have conversations with contract services, both professional services and construction contracts. FHWA FHWA will need to be involved throughout the process (finance, legal and engineering) Insurance Plan to discuss required insurances and minimum requirements at length

7 Freeway Lighting P3 - Schedule Request for Letters of Interest posted July 25, 2013 MDOT received 12 responses on August 12, 2013 Request for Qualifications developed posted March 6, 2014 Received 9 proposals MDOT short-listed 4 firms announced short-list May 16, 2014 Short-listed firms DTE Energy, Freeway Lighting Partners, Citelum, Energy Systems Group

8 Freeway Lighting P3 - Schedule Developed Request For Proposals (RFP) Multiple meetings held with the bidders Final Version of the RFP posted February 27, 2015 Technical Submittals and Bids due on March 27, 2015 Announcement of Preferred Proposer May 26, 2015 Commercial and Financial Close August 24, 2015

9 Freeway Lighting P3 Key Terms Project Company will Design, Build, Finance, Operate & Maintain 14,870 freeway lights Consisting of all freeway lights within limited access Right of Way 15 year term Energy Savings Payment Project Company will be incentivized to provide energy efficient equipment Lane Rentals are included in the Contract Non-Compliance points assessed if not in compliance with Contract Example 10 days to correct a non-operating light Example 7 days to correct a group of non-operating lights First point is $450 per occurrence If not remedied, increased to $1,000

10 So Why a P3 Contract Structure? Significant upfront capital costs required to improve the existing system Energy costs can be significantly reduced if re-lamped to something more efficient Estimated $21M in Construction Costs to convert lamps to LED Use of energy savings can help reduce the overall payment Allows shift of MDOT staff functions to focus on other electrical infrastructure Shift the Risk New technologies are always being developed Allows use of emerging tech more quickly Shifts risk of failure onto the project company Allows the possibility of energy savings to offset some of the contract cost Theft Prevention

11 Freeway Lighting P3 Risk Sharing Theft Project Company first $150,000 50/50 share up to $250,000 Department any costs over $250,000 Damage to Infrastructure Vehicle damage Department responsible for costs associated with damage caused by errant vehicles Department will then pursue reclamation from insurance company

12 Freeway Lighting P3 Cost & Payment Structure Project Company will Design, Build, Finance, Operate & Maintain Payment Structure Milestone 1 - $6,000,000, paid once lights are operating at 90% Milestone 2 - $6,000,000, paid upon Substantial Completion 100% operational After Substantial Completion Operate & Maintain Quarterly Service Payments (est =$2.1 w/o power) Plan to use a mix of Federal and State funds $21.86 Total Cost of P3 contract = $145M (includes energy) Lights operating between 70-80% (current scenario) Expected costs = $140M Based on average costs expended over the last 8 years Lights operating at 100%, using High Pressure Sodium lights Estimated costs = $183M $46.03 $77.26 Capital Improvement Costs O&M Costs Power Costs

13 Freeway Lighting P3 Technical Requirements Technical Requirements Schedule 16 Development of the Project Management Plan (PMP) Design Requirements Non-Tunnels AASHTO Roadway Lighting Design Guide / IES RP-8 Tunnels AASHTO Roadway Lighting Design Guide (Chp 5) / IES RP-22 Non-Lighting Elements need to adhere to MDOT Standards, AASHTO, etc Must develop a Maintenance Management Information System (MMIS) Traffic Management Plan

14 Freeway Lighting P3 Non-Compliance Points These are all defined within Schedule 3 Payment Mechanism $450 per occurrence If the root cause of the problem is substantially the same Deduction is increased to $1000, indexed Mitigation Period timeframe is dependent on the type of failure Remedy Period timeframe is dependent on the type of failure

15 Freeway Lighting P3 Handback Criteria Handback Criteria for specific elements Exhibit C of Schedule 16 A complete condition survey and inspection must be completed within 1 year of handback Required to supply a 60 day supply of parts and materials quantity based upon a 60 day typical period for repairs as documented in the MMIS Handback requirements are variable dependent on the component Luminaires (including ballast/driver) 5 years Posts/Standards before term require inspections, during term 10 years & inspection High Mast before term require inspections, during term 15 years & inspection

16 Lessons Learned from the 1 st P3 Document and Version Control Need for the full team to be on-board at the development of the RFQ Identify and include as much information that we have readily available RFQ should provide detail on the planned structure of the P3 agreement as well as the expected closing process Risk workshops and updates to the financial model and engineering estimates should be done often and reflect the current risk profile of the contract Updated term sheets should be readily available to inform management when asked

17 Next Steps and Potential P3 project The Governor s Office is working on specific P3 legislation two bills introduced HB 4940 SB 627 Requests for Letters of Interest developed for Pump Stations Responses received November 24 th 16 responses received Evaluation of responses, risk assessment and estimates are being developed to present to Leadership.

18 P3 Resources FHWA has a very informative website: MDOT s Innovative Contracting website: Other State DOT s and agencies have good information Virginia and California Google is great

19 Questions? Charlie Stein, PE Innovative Contracting Unit