Best Practices for Infrastructure Cost Reduction Strategies TCMA 2018 SPRING CONFERENCE WEDNESDAY, APRIL 11, 2018

Transcription

1 Best Practices for Infrastructure Cost Reduction Strategies TCMA 2018 SPRING CONFERENCE WEDNESDAY, APRIL 11, 2018

2 Introductions Chuck Downham, Assistant City Administrator, City of Spring Hill Andrew Johnson, PE -- Principal, Smith Seckman Reid (SSR) Brian Trotter, PE Principal, HDR

3 Panel Session Agenda Introductions Panel Session Agenda Chuck Downham, Assistant City Administrator, Spring Hill Challenges Facing Municipalities Andrew Johnson, PE Best Practices for Infrastructure Cost Reduction Strategies Part 1 Brian Trotter, PE Best Practices for Infrastructure Cost Reduction Strategies Part 2 Questions

4 Challenges Facing Municipalities The American Society of Civil Engineers rated U.S. infrastructure a D+ or Poor rating with an estimated cost to bring U.S. infrastructure to a state of good repair by 2025 at $4.6 Trillion of which only about 55 percent has been committed.[1] According to the 2016 Report Card for Tennessee s Infrastructure published by ASCE: Infrastructure Tennessee USA Bridges B Good: Adequate for Now C+ Drinking Water C Mediocre: Requires Attention D Roads C+ -- Mediocre: Requires Attention D Transit D+ -- Poor: At Risk D Wastewater D+ -- Poor: At Risk D [1] Source: 2017 Report Card for America s Infrastructure, American Society of Civil Engineers, March

5 Challenges Facing Municipalities Infrastructure spending is down across all levels of government. Tennessee s public infrastructure is aging and will require significant investment to refurbish or replace. Increasing need for cities to justify infrastructure projects that provide high value and return on investment and measurable public benefit. Investment in public infrastructure fuels economic growth and prosperity while also improving quality of life. Financial challenges continue for communities attempting to balance ever-increasing operational expenses along with growing capital infrastructure needs.

6 Challenges Facing Municipalities Best Practices Organizing the Capital Improvement Plan Inventorying Assets Assess condition of capital assets Project Justification Return on Investment/Public Benefit Prioritization Consensus building with leadership Cost Estimation and Budgeting

7 Challenges Facing Municipalities Best Practices Expand CIP planning horizon to 10 years to help local officials see long term perspective Set clear project priorities with a focus on desired outcomes Identify Funding Options Multitude of traditional funding sources Alternative funding sources including P3s Special Assessment District Adopting CIP and Capital Budget with Annual Budget Process Project Timing Timing is everything in a busy economy

8 Challenges Facing Municipalities Best Practices Project Execution Seek innovative cost-savings measures and continuously improve project delivery Planning, Design and Estimates of Probable Cost Improve project initiation and procurement Starts with Bid Package Project performance tracking scheduling and open item tracking Improve communication Asset Management Reduce O&M costs including improving energy efficiency Extend asset useful life where practical/repurposing opportunities Reinvesting with life-cycle view

9 Challenges Facing Municipalities Cost Overruns Cost overruns and schedule delays are more likely to occur on larger and more complex public infrastructure projects while smaller and shorter duration projects are less likely to incur cost overruns and schedule delays. Cost overruns and schedule delays often result from: Scope changes and change orders Poor project coordination between owner/contractors/subcontractors Ever changing labor and material costs Inadequate project management and monitoring

10 Challenges Facing Municipalities Strategies to Avoid Cost Overruns Project Planning, Design and Cost Estimating Invest in Design Qualifications and past project performance do matter Make performance management a priority Monitoring, reporting, and communication/coordination Reward performance Liquidated damages for late project delivery AND incentive rewards for completion on-time and under budget. Project management Training Accountability

11 Andrew Johnson, PE Smith Seckman Reid

12 Smith Seckman Reid, Inc. Who is?

13 Infrastructure Program Over 60 Tennessee Focused Engineers and Technical Staff. Program stands to understand and provide innovative and efficient solutions in the following principle areas: Water / Wastewater Storm Water Transportation Structural Asset Management

14 Winning the Fixed Price Bid Day Contractor carries greatest Risk Contractors do not accept Risk, they Price it! 3C Keys to Winning Confidence Comfort Competition Amongst the bidding contractors is essential

15 C 1 : Confidence Confidence is Built from Quality Design and Design Processes Attack the never been a perfect project stigma. Allow Time in the schedule for specific QA/QC review and documentation at project milestones. Owner Engagement in Review Process Seek contractor Inputs in regards to constructability when possible

16 QA/QC Project Examples Clean Water Nashville OAP Program Eliminate Bid Day Surprises Specific QA/QC Process in Design Scope Specific Cost Estimating Process in Design Scope

17 C 1 : A Project Result Ewing Creek - Brick Church Equalization Facility 10.6 million gallon pre-stressed concrete tank and an 18 million gallons per day pump station 100% OPCC $10,424,844 Top 3 Bids: 1) $10,140,000 2) $10,241,562 3) $10,402,000 CWN has avoided surprises by pushing mandating specific Quality measures in the Design Scope. Contractor feedback has been very Positive

18 C 2 : Comfort Comfort is Built from Confidence, but bolstered by: Information Transparency Fairness Information is key, Risk = Fear = $$$ Don t slight Data Collection Phase of project Create a clear and transparent Bid Form Make use of Built In Contingencies /Allowances to Build Comfort Contract Time / Liquidated Damages must be equitable Unless Time is the most critical project element, don t make it the most influential bid item.

19 Built In Contingencies / Allowances Reduce risks Diminish doubt Enable smooth workflow and comfortability in Change Management

20 C 2 : A Project Result City of Franklin, TN Franklin WTP Improvements New raw water intake and submersible raw water pump station, and a new treatment building to house pressurized ultrafiltration membranes, ultraviolet advanced oxidation modules, and granular activated carbon contactors 100% OPCC 14,348,200 Top 3 Bids: 1) $14,018,000 2) $14,388,900 3) $14,930,000 COF receipt of good bid numbers and ability to keep project Below budget has been aided by the comfort and transparency of Contingency & Allowance funding

21 C 3 : Competition via Insightful Timing Contractor pool and availably is key to a Winning Bid Day Competition (C 3 ) coupled with C 1 and C 2 motivates the best price Seasonal considerations must not be ignored Market conditions and Material costs are not always favorable Be Quick, but don t Hurry John Wooden Get things done; keep project plans moving ahead, but maintain a level of patience and knowledge on important factors such as timing when such is possible.

22 C 3 : Competition Timing; It really can be Everything:

23 Summary A 3C Approach to project design and procurement is a proven Best Practice to reduce costs on Bid Day. Confidence Comfort Competition

24 Brian Trotter, PE HDR

25 Introduction to HDR Employee owned consulting firm specializing in engineering, architecture, environmental and construction services 10,000 Employees in over 225 offices. National Rankings No. 8 ENR Top 500 Design Firms No. 1 Bridges No. 5 Highways No. 6 Water No. 5 Sewer & Waste No. 8 Architectural Record Top Architecture Firms No. 1 Healthcare No. 3 - Science

26 Innovative Capital Funding State Funding Tennessee Department of Economic and Community Development Fast Track Infrastructure Program Specific infrastructure projects benefitting one or more companies committed to creating new jobs and/or making new capital investments State Revolving Loan Program Water/wastewater infrastructure

27 Innovative Capital Funding Federal Funding Options US Department of Agriculture Rural Development Service (USDA-RD) Community Facilities Loan & Grant Programs Water & Environmental Programs Economic Development Administration Community Development Block Grants Delta Regional Authority State Economic Assistance Program Transportation Investment Generating Economic Recovery

28 Innovative Capital Funding Tennessee Department of Transportation Grants Bridge Grants Congestion Mitigation and Air Quality Improvement (CMAQ) Transportation Alternatives Tennessee Highway Safety Office Local Programs Development Office Interchange Lighting Surface Transportation Program Local Interstate Connector Safe Routes to Schools RJ Corman Cumberland River Bridge

29 Alternative Delivery/Contracting Design-Build (DB) Single Point of Accountability Reduced Costs (Fewer Claims) Accelerated Schedule Fixed Price Early in Process Construction Management-at-Risk (CMAR) Owner selects the Design Consultant (remains involved in design similar to DBB) Contractor is hired in the early stage of project development (typically at 30% design to gain input in design) Contractor gives a Guaranteed Maximum Price (GMP) (60% to 90% of design) Progressive Design-Build (Prog DB) Single Point of Accountability Qualifications contribute to selection Accelerated Schedule Provides Cost & Schedule Benefits Benefits of DB with accuracy and transparency of GMP

30 Alternative Delivery/Contracting

31 Asset Management Aging infrastructure/obsolete technologies Unexpected asset failures More frequent service disruptions Increasing costs and/or stagnant or decreasing revenues Asset Management focuses on: Sustaining levels of service and reliability O&M of capital resources Minimizing life-cycle cost of asset ownership Justifying maintenance and 3R budget

32 Pavement Management Programs What is Pavement Management? System to regularly collect condition data Sort and store data Analysis program to evaluate repair and preservation strategies Comprehensive plan within available funding limitations Schedule repair & maintenance activities Control worst first scenarios Independent engineering approach Get more bang for the buck

33 Improving Reliability and Minimizing O&M Cost 8 th Avenue Water Reservoir for Metro Water Services 50 MG stone structure constructed in Failed on November 5, 1912 and released 25 MG of water Improvements needed to address water quality concerns and operational deficiencies Build a tank within a tank alternative selected Creative reuse of existing gate house structure 8 th Avenue Water Reservoir

34 WTP/WWTP Optimization Evaluate energy consumption at MSD s Morris Forman Water Quality Treatment Plant Energy costs for a 20 month period was $6.8 million 10 Energy Conservation Measures (ECM) were identified with a potential overall annual reduction of $1.2 million 4 additional ECM s related to gas and water usage identified another $500K in annual savings

35 Additional Cost Management Programs/Plans Water-Loss Management Main Replacement & Repair Program Proactive program to replace/rehab water distribution system to prevent water loss/breaks from occurring Integrated Planning Workshops Workshops with multiple disciplines/services (roadway, stormwater, sanitary, water) to look at opportunities for cost savings and/or co-op projects Water Quality Management Utilizing modeling to help prevent stagnation inside the distribution system prevents water waste or flushing Urban Stormwater Management Plan Utilizing models to help drive storage/retention to eliminate flooding and/or inflow to sewer system Pump Replacement Program Proactive program to pre-purchase pumps for replacement, additional effort to standardize pumps to facilitate easier spare part inventory Potable Indirect or Direct Reuse Recharge of ground water aquifer with treated water from WWTP

36 QUESTIONS?

37 THANK YOU!