Northwest Corridor Project

AUGUST 11, 2014

Darryl D. VanMeter, P.E.State Innovative Delivery Engineer

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Project Overview

• Project length of 29.7 miles• Utilizes Public Private Partnership (P3)

delivery• Design-Build-Finance (DBF) contract of

$598.5M• Begins at Akers Mill Road and

terminates at Hickory Grove Road on I-75 and Sixes Road on I-575

• Two (2) reversible barrier separated express lanes along the west side of I-75 from I-285 to I-575/I-75 interchange

• One (1) reversible barrier separated express lane in the median on both I-75 and I-575 from the I-75/I-575 interchange

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Project Overview

• Southbound operations in morning and reverses to northbound operations in evening• Six (6) express lane interchanges on I-75; three (3) slip ramp locations on I-575• Dynamic tolls manage volumes in express lanes

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Northwest Corridor Project RenderingBarrier separated express lanes on I-75 south of the I-575 and I-75 interchange

Barrier gate to enter the Northwest Corridor (NWC) express lanes at Roswell Road

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Northwest Corridor Project Rendering

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Northwest Corridor Project RenderingNorthbound slip ramp to enter NWC express lanes

• Increased travel options between general purpose and express lanes

• Reliable trip times - travel time savings to range from 5.4 to 43.5 minutes, depending on the trip segment and travel direction*

• Supports transit service and expansion - transit buses and registered vanpools travel free in the express lanes allowing customers to enjoy the benefits of the express lanes without paying anything beyond the normal transit fare

• Supports economic growth by improving access to jobs and attracting new businesses to the region and state

* Compared to the No-Build Alternative for 2018

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Project Benefits

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Project Status

• Private sector partner, also known as Developer, is Northwest Express Roadbuilders (NWER) a joint venture of Archer Western and Hubbard Construction

• Project contract with NWER was executed in November 2013

• Design and pre-construction activities underway

• Construction expected to begin in summer/fall of 2014

• Project anticipated to open to traffic in summer of 2018

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Innovative Project Delivery

Delivery Options Considered

•Public-Financed Design-Bid-Build

•Public-Financed Design-Build

•Public Private Partnership (P3) Design-Build-Finance (DBF)

•P3 Design-Build-Operate-Maintain

•P3 Design-Build-Finance-Operate-Maintain

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Innovative Project DeliveryEvaluation Factors•Project cost•Open to traffic•Number of contracts•Price and date certainty of delivery•Potential benefits from private section innovation•Transportation Infrastructure Finance and Innovation Act (TIFIA) credit worthiness •Lifecycle optimization•Private sector term of commitment•Risk allocation to State and Developer•Toll rate control after open to traffic

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Innovative Project DeliveryP3 Design-Build-Finance Selected

•Provided shortest time for FHWA environmental approval

•Included single contract approach oAvoided coordination risk on GDOToMaximized innovationoLeast cost for overall project management and overhead

•Allowed for design-construction innovation and cost savings via implementation of Alternative Technical Concepts (ATCs)

•Maximize cost and risk sharing

•State maintains control to set toll rate

•Developer financing – Allows flexibility in GDOT program finances and delay debt issuance

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Innovative Project Delivery

• First P3 DBF project for GDOT

• Sophisticated procurement required technical, legal, and financial expertise in P3

• Enhanced collaboration with industry to ensure procurement transparency and contract clarity

o Proposers reviewed draft DBF documentso Extensive one-on-one meetings with each proposer

• Procurement goalso Keep construction cost low by inviting innovationso Select the “right” team o Let procurement work for GDOT

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Innovative Project Delivery

• Technical Advisor – Magnitude of project and innovation placed additional challenges on overall decision making requiring collaboration of multiple GDOT Divisions with Technical Advisor to obtain technical recommendations and develop technical contract documents

• Legal Advisor – Typically provided internally, however development of new DBF contract and extent of potential risk required outside experience from a firm with previous P3 experience

• Financial Advisor – GDOT’s first privately funded project prompted retaining of a financial firm with expertise in P3

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Project Procurement• Alternative Technical Concept (ATC) process – Confidential process that

allowed for innovations and project savings (ATCs are proposer requested deviations from contract requirements)

• Developer financing at 10% of design-build-finance contract cost

• Design-build approach reduced utility relocation costs

• GDOT initiated ROW activities during procurement phase to accelerate start of construction

• First use of a web-based project management system – Design submittal review, contract change request, monthly invoice review, noncompliance management, construction document review, etc.

• Use of TIFIA Loan

• Best value selection – Based on a combination of the price and evaluation criteria

• Payment for Work Product

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Project Procurement

Alternative Technical Concepts (ATCs)

•Developed State’s first web-based ATC process

•Three teams submitted 146 ATCs during process leading up to final proposal submission

•Process included incentives for revenue generation and enhanced operation since long-term maintenance of the Northwest Corridor project was under State control

•Total estimated savings from ATC process reduced the project cost by an estimate of $60 million

•Further reductions were realized through negotiation of unsuccessful proposers’ ATCs into final contract with NWER

•GDOT shared schedule risk to further enhance innovations without penalizing Developer

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Project Procurement

Payment for Work Product

•Non-selected proposers (2) received a payment of $1.5M each for their ATCs – Proposers’ choice

•Encouraged competition by generating market interest

•Encouraged proposers to expend the time, money, and resources to provide creative and innovative solutions

•Provided proposers compensation in exchange for innovative ideas (ATCs) included in their proposals

•Demonstrated State’s commitment to the project

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Design-Build Phase

• Considered a “Major” Project by Federal Highway Administration (FHWA) – Projects with Federal financial assistance with an estimated total cost of $500M or more

• Required to satisfy FHWA Major Project requirements – Annual Financial Plan and Project Management Plan

• GDOT and State Road and Tollway Authority (SRTA) share project delivery responsibilities

Design Overview•Typical GDOT project provides all design reviews internally with no consultant assistance•GDOT retained a Submittal Review Consultant who is providing subject matter experts for review of design submittals in all disciplines of design•Review times specified by contract•Submittal process conducted via a web-based project management program to provide accountability and decrease review times by prescribing exact review period for each step of the review process•Coordination and communication between design-build team and Submittal Review Consultant SMEs to minimized “surprises” for both sides

Design-Build Phase

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Construction Overview•Typical GDOT day to day construction management provided by GDOT Division of Construction via either internal staff or consultants know as construction engineering and inspection (CEI)•NWC GDOT Project Manager responsible for day to day management during construction•Design-build team required by contract to retain its own CEI services – First ever in GDOT history•Design-build team CEI performs quality control and quality assurance activities including materials testing and inspection•Owner’s Construction Engineering and Inspection (OCEI) Consultant responsible for construction quality oversight – Quality assurance to ensure design-build team CEI is performing to contract requirements•GDOT Division of Construction provides limited construction oversight responsibilities known as independent assurance•FHWA approval required for project Quality Assurance Plan

Design-Build Phase

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Project Management Structure

GDOT SRTA

• Procurement

• Project Management (Design-Build Phase)

• Long Term Roadway-Related Operations and Maintenance (O&M) and Renewal and Replacement (R&R) Costs

• Financial Backstop of Tolling O&M and R&R Costs

•Intergovernmental Agreements

•Memorandum of Understanding (“MOU”)

•Estate for Years (Ground Lease) for Life of the Project

•Design-Build-Finance Agreement

•TIFIA Application

• Toll Rate Management

• Toll Collection and Enforcement

• Customer Service Center Operations

• Toll Revenue Bonds

• TIFIA Borrower

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Project Financial

SOURCES OF FUNDS AMOUNTGDOT Transportation Improvement Program $ 265,879,855

Motor Fuel $ 232,938,325

Private Sector Financing / Developer Financing $ 59,853,386

TIFIA Loan $ 275,000,000

TOTAL SOURCES OF FUNDS $ 833,671,566

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Project Financial

USE OF FUNDS AMOUNTDesign-Build-Finance Costs $ 598,533,817 Preliminary Engineering $ 35,000,000 Right of Way $ 26,000,000 Prior Preliminary Engineer Costs $ 37,033,872 GDOT Agency Costs $ 113,976,612 Project Contingencies $ 23,127,265

TOTAL PROJECT COSTS $ 833,671,566

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Project Financial

• DBF Contract with Developer for an amount of $598,533,817 for design and construction of project

• Developer provided financing is $59,853,386 (10% of DBF Contract)

• Repayment of 50% to Developer begins upon Substantial Completion

• Final repayment of 50% to Developer is anticipated upon project Final Acceptance

• Provides incentive for Developer to complete all punch list items

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Project Financial

Developer Financing

•Developer provided basis of financial contribution timing and amount with proposal

•10% of Developer financing made on monthly basis – Included as part of monthly payment requests

•Amount of monthly Developer financing update at beginning of every fiscal year

•Developer financing required to be fully funded no later than one year (12 months) prior to Substantial Completion

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Project FinancialMonthly Payment Requests

•Monthly payments to Developer based on progress during design-build phase

•Total payment requests for each fiscal year cannot exceed maximum available public fund – No monthly maximum established

•Payment requests are reviewed and verified for completion of work

•Amount of monthly Developer financing included on payment requests also verified

•Monthly progress payments managed by GDOT and SRTA

•Looking for compliance with DBF contract invoice by invoice

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Conclusion• The Northwest Corridor project is vital to the State of Georgia because it

will help reduce congestion, provide more reliable travel times, and help improve air quality in a heavily travelled region

• Northwest corridor project will continue the vibrant economic development in the area and will enhance the quality of life for residents of Cobb County and students of Kennesaw State University

• Largest toll project in State’s history lead to unique challenges

• Model for future large managed lane project

• Emphasis on innovation

• Approximately 10 years to obtain environmental approval and 4 ½ years for design and construction of project

• Overall project implementation period of 15 years – Challenges resulting from changes in State leadership

Questions

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Questions & Answers

Contact: Darryl D. VanMeter, P.E.State Innovative Delivery EngineerGeorgia Department of TransportationOne Georgia Center600 West Peachtree StreetAtlanta, Georgia 30308Telephone: (404) 631-1703

Email: dvanmeter@dot.ga.gov