Nilaksh Kothari, Manitowoc Public Utilities (MPU) - Speaker at the marcus evans Water & Wastewater Management Summit held in Summerlin, NV, May 3-4, 2012 delivered his presentation entitled Construction Projects Delivery Methods

1. Manitowoc Public Utilities
Alternative Delivery Methods for
Alt ti D li M th d f
Construction Projects
at
WATER AND WASTEWATER SUMMIT – 2012
LAS VEGAS, NV
MAY 3, 2012
3
Presenter
Nilaksh Kothari P.E.
Kothari, P E
General Manager
Manitowoc, Wisconsin

2. Outline of Presentation Manitowoc Public Utilities
• Background
g
• Capital Project Goals and Considerations
• Capital Project Delivery Methods
• Implementing a Capital Project – A Case
Study
St d
• Summary and Conclusions

3. Acknowledgements
g Manitowoc Public Utilities
• Manitowoc Public Utilities Commission
• American Water Works Association
• The Evolving Water Utility P bli ti
Th E l i W t Utilit Publication
• CDM Smith Consulting Engineers

4. Manitowoc Public Utilities
BACKGROUND

5. America’s Infrastructure – D Manitowoc Public Utilities
• Aviation
A i ti D
• Bridges C
• Dams D
• Drinking Water D-
• Energy D+
• Hazardous Waste D
Source: American Society of Civil Engineers

6. America’s Infrastructure – D Manitowoc Public Utilities
• Solid W t
S lid Waste C+
C
• Transit D
• Wastewater D-
• OVERALL – GPA D
5 year Estimated Need - 2.2 Trillion
• Drinking Water Shortfall – $ 11 billion
Source: American Society of Civil Engineers

7. National League of Cities Survey
g y Manitowoc Public Utilities

8. Background
g Manitowoc Public Utilities
• Gap between needs and revenues will
continue t grow over the next decade.
ti to th td d
• More pressure on local and regional
governing bodies
• Need to be smart about investing to avoid
g
cannibalizing generations of infrastructure
investment in the U.S. & avoid crises

9. Manitowoc Public Utilities
CAPITAL PROJECT GOALS AND
CONSIDERATIONS

10. Project Delivery Options Manitowoc Public Utilities
Traditional
Delivery
Alternative Delivery
Alt ti D li
Construction “Progressive” Fixed Price Design-Build-
Design-Bid-Build Management at Risk Design-Build Design-Build Operate/
(DBB) (CMAR) (GMP) (FP) Fi t
Finance, etc.

11. Goals for Capital Projects Manitowoc Public Utilities
• Quality of the designed and constructed project
• Life cycle costs
• Effective and efficient O & M
• Project schedule
• Meet regulatory requirements
g y q

12. Key Considerations
y Manitowoc Public Utilities
• Degree of Utility control
– I t
Integration of expertise
ti f ti
• Legal Authority
– Law varies state by state
• Risk Management
– Performance requirements
q
– Permitting
– Site conditions
• I t
Internal and External Influences
l dE t l I fl
– Philosophical beliefs
– Influences/politics

13. Key Considerations
y Manitowoc Public Utilities
• Utility Experience
– C f t level
Comfort l l
– Motivation
– Expertise/experience
• Schedule
– Driver
• Costs
– Lowest life cycle costs
– F t
Future expansion
i
• Public or Private Utility
– Flexibility

14. Manitowoc Public Utilities
CAPITAL PROJECT DELIVERY
METHODS

15. Project Delivery Options Manitowoc Public Utilities
Traditional
Delivery
Alternative Delivery
Alt ti D li
Construction “Progressive” Fixed Price Design-Build-
Design-Bid-Build Management at Risk Design-Build Design-Build Operate/
(DBB) (CMAR) (GMP) (FP) Fi t
Finance, etc.

16. Design Bid Build
Design-Bid-Build Manitowoc Public Utilities
• Advantages
– Decades of successful use by utilities
– Well understood and accepted
• Disadvantages
– Does not integrate design, construction, and
operations
– Growing concern on low bid contractor
– Overhead burden (i.e., 30-40%)
– Change order process cumbersome
– Life cycle costs

17. Factors for Alternative Methods Manitowoc Public Utilities
• Private enterprise actively promoting alternative
methods
th d
– Lower costs
– Faster schedule
• Capabilities of utilities employees
• Concern on low bid quality
• Flexibility in state laws

18. Design-Build (DB) Methods
g ( ) Manitowoc Public Utilities
• Perceived Benefits
– A single point of responsibility for design and
construction teams
– Reduced administrative burden for the owner
– Improved scheduling
– Potential for savings in capital costs
– Reduced claims and disputes

19. Design-Build Methods (cont’d)
g ( ) Manitowoc Public Utilities
• Perceived Challenges
– F t and cheaper - project quality
Faster d h j t lit
– Less influence over the project’s outcome
– The design-build team assumes greater risk
– The procurement process is more
complicated
li t d
– Motivation to make a profit could influence
equipment and l
i t d long-term maintenance
t i t

20. Design-Build Fixed Price
g Manitowoc Public Utilities
Advantages to Owner Disadvantages to Owner
• Construction cost is known at the • Work with multiple designers: one
time of initial contract signing
g g with design/builder; one for
g ;
procurement development
• Technical scope is proposed and • Can be expensive and protracted
can be evaluated with proposals procurement process
and weighed against cost factors
• Stipend oftentimes needed to offset
significant investment cost to
• Shortest schedule for actual proposers
delivery once contract awarded • Scope as proposed is usually different
than scope anticipated
• Procurement documents can define • Limited participation in scope
key Owner criteria and features to advancement without triggering change
be included orders

21. Top 10 Strategies for DB Manitowoc Public Utilities
1. Involve key stakeholders early in process
2. Choose the qualified people you want to work with
3. Consider the approach presented by the potential design-
builder
4. Establish a decision-making process for the project to
promote rapid decision-making
decision making
5. Senior management (designer-builder and owner) to meet
regularly to review project status and issues

22. Top 10 Strategies for DB
p g Manitowoc Public Utilities
6. Jointly address permitting issues, track them and press
agencies for action
7. Manage land acquisition as early as possible, including
in particular, construction easements
8. Communicate capital availability and constraints so they
can be integrated into execution plan
9. Incent the project results you wish to accomplish
10. Celebrate interim success milestones

23. Manitowoc Public Utilities
IMPLEMENTING A CAPITAL
PROJECT - A CASE STUDY
MANITOWOC, WISCONSIN, USA

24. A Case Study Manitowoc Public Utilities
• 80 miles MINNESOTA
North of
Milwaukee
WISCONSIN
• 40 miles
South of MICHIGAN
Green Bay IOWA
ILLINOIS

25. The Project
Manitowoc Public Utilities
• History
– Central Brown County Water Authority (CBCWA) formed in 1999
to combine efforts to tackle water problems
– CBCWA communities on groundwater wells
– St Peter Sandstone aquifer cannot meet demands for the
St.
CBCWA
– Most CBCWA wells did not meet EPA standards for radium
– CBCWA must meet EPA radium standards by December 2006
• Options Considered
– Sign a long-term contract with the City of Green Bay to buy water
from Green Bay for use by its municipal members
– Construct and operate an independent Lake Michigan water
supply system
– Purchase water from Manitowoc Public Utilities

26. The Project Manitowoc Public Utilities
• Raw water – 48-inch intake & 25 MGD pump station
expandable to 40 MGD
• Water treatment plant – 25 MGD submerged
microfiltration technology (CMF-S)
• 3 MG finished water reservoir and 25 MGD pump
station
• 65-mile transmission main from MPU water treatment
plant to serve six communities

27. The Project Manitowoc Public Utilities

28. Route of Proposed
Transmission Main Manitowoc Public Utilities

29. Capital Costs
p Manitowoc Public Utilities
Item
COSTS
2200 LF New Intake $ 2,500,000
New Raw Water Pump Station $ 2,500,000
Existing Raw Water Pump Station Modifications $ 415,000
New Raw Water Main and Strainer Building $ 734,000
Water Treatment Plant Modifications $ 15,000,000
Membrane Testing $ 200,000
3 MG Reservoir and Pump Station $ 5,000,000
Transmission Main from MPU to Brown County $ 57,750,000
Pressure Reducing/Increasing Station $ 3,200,000
CBCWA Finished Water System $ 34,500,000
Total Capital $ 121,799,000

30. Project Schedule Manitowoc Public Utilities
• October 2003: CBCWA executed an agreement to
initiate
i iti t good f ith di
d faith discussions f purchase of water f
i for h f t from
MPU
• February 2004: CBCWA accepts MPU offer to sell water
• July 2004: Approval and execution of agreement
• December 2006: Water to be delivered to CBCWA

31. Implementation Plan
p Manitowoc Public Utilities

32. Communication Manitowoc Public Utilities

33. Project Management
j g Manitowoc Public Utilities
• Monitoring project progress
versus project baseline
– Schedule
– Budget
• Identifying deviations between
progress and baseline
• Causes for deviation:
– Regulatory
– Unforeseen site conditions
– Internal
– Contractor
– Consultant
• Taking action to correct
deviations

34. The Projects Manitowoc Public Utilities
• MPU responsibility:
– Capital Costs: $ 27 million
– Lake Intake – 60 inch
– 28 MGD - RRaw W t Pump St ti
Water P Station
– 3 MG - Reservoir
– 25 MGD - Finished Water Pump Station
– 25 MGD - Membrane Plant
– Two years from conception to completion
• CBCWA – 65 miles transmission

35. Enhanced Design Bid Build Manitowoc Public Utilities
• Hired an employee with construction experience
• Internal champion to guide process
• Clearly defined and documented goals and objectives
• Operator involvement
O t i l t
• Communication plan w/decision making process
• Evaluate life cycle costs of equipment
• Risk allocation between MPU, manufacturer and
contractor
• 18 Equipment contracts & 3 General Contractors
• MPU coordinator!

36. Raw Water Lake Intake Manitowoc Public Utilities

37. Raw Water Pump Station Manitowoc Public Utilities

38. Finished Water Pump Station
p Manitowoc Public Utilities

39. Submerged Microfiltration Manitowoc Public Utilities

40. Enhanced Design Bid Build Manitowoc Public Utilities
• Strategies for Success
– Experienced project/site coordinator – not a
consultant
– Weekly Meetings
– Recognize coordination issues
– Understand warranty implications
– Accept the life-cycle costs approach
– Lower cost
– Streamlined decision making pg process

41. Manitowoc Public Utilities
SUMMARY AND CONCLUSIONS

42. Summary
y Manitowoc Public Utilities
• Gap between needs and revenues will
continue t grow over the next decade
ti to th td d
• Utilities need to look at alternatives for
construction projects – stretch the $$
• No single p j
g project delivery method is best
y
for every utility
• Maximize sy e gy a o g des g e ,
a e synergy among designer,
manufacturer, contractor and utility

43. Summary
y Manitowoc Public Utilities
• Consider & Evaluate alternative capital
projects delivery methods –
j t d li th d
– Understand the risks and rewards
– Involve the stakeholders
– Define goals and objectives
• No single capital project delivery method
for all utilities
• Regulations and laws differ by state
• Enhanced Design, bid, build – best of both
worlds – MPU approach

44. Manitowoc Public Utilities
QUESTIONS