Washington JTC Staff Working Group Meeting Discussion Materials September 15, 2011 WA JTC Staff Working Group Meeting 1
Day One Agenda Time Item Presenter 9:00 AM Welcome/Overview Mary Fleckenstein, Simon Shekleton 9:15 AM Screening Tool Overview Sam Barend/Simon Shekleton/Susan Kehoe – Discussion - Criteria - Functionality 10:15 AM Screening Criteria Methodology in Other Sam Barend, Liam Kelly States and Nations 10.45 AM Screening Tool Exercise Simon Shekleton - Discussion -Real Project Examples -WA JTC Project Exercise 11:45 AM Break 12:15 Working Lunch Sam Barend, Liam Kelly - Value for Money Overview 1:00 PM Risk Overview/Background Simon Hough 1:45PM Case Study/Interactive Risk Apportionment Group Exercise Exercise 3:00 PM Development of Project Risk Registers Simon Hough 4:00 PM Close WA JTC Staff Working Group Meeting 2
Screening Process WA JTC Staff Working Group Meeting 3
Project Screening Context DB Finance Operate Designated Comparative Maintain (DBFOM) Screening Process Projects Financial Modeling (go/no go for P3) Design-Build Finance Maintain First-stage criteria • Financial model kick-off • I-405/SR 167 (DBFM) • Consistency with • Data collection • I-5/SR 509 statewide transportation GO • Identification of plan Design-Build • SR 167 new segment • Financial feasibility alternative delivery Maintain (DBM) • I-5 Crossing • Affordability scenarios • Environmental approvals • Risk workshop • Monroe Bypass Design-Build Second-stage criteria • Finance plan Finance (DBF) • Value for Money Analysis development • Market Liquidity • Value-for-money model • Availability of TIFIA, PABs • Subsequent projects Design-Build (DB) development NO GO Reassess Project Priority and Scope • Revisit project scope Traditional • Cancel project Delivery • Postpone (for approvals) • Industry outreach • Re-launch (if viable) WA JTC Staff Working Group Meeting 4 4
Procurement Model Selection – Key Requirements Model needs to support Government’s key objectives 1. Must be deliverable – market appetite, precedent transactions 2. Must facilitate Government’s desired risk allocation 3. Private Finance Public Finance Traditional DBFOM Procurement WA JTC Staff Working Group Meeting 5
Development of a Screening Tool for Washington Essential Considerations Local Calibration • Good Screening Tools assess common, • Draft criteria will be presented through comprehensive criteria upcoming material and workshops (now) – • Once the list of criteria is set, we will Public interest – Project viability ascertain and define: – Risk – Fatal Flaws – Numerous others (per following slide) – Weighting of objective criteria • Asking the rights questions is key, but it – Assessment and weighting of subjective is equally important to: criteria – Weigh responses to suit values and objectives of – Potential legal / legislative hurdles the State – Establish clear and objective requirements for inputs to the screening tool for consistency – Establish appropriate fatal flaws WA JTC Staff Working Group Meeting 6
Screening Considerations • Part of capital • Economies of scale plan/demonstrable need • Risk transfer Spending • Technical innovation need/cost • Timing benefit savings • Affordability • Whole life costing • Provides value for money • Current market liquidity • Complex construction Private sector • Return justifies risk • Ability to attract TIFIA, PABs ability to • Suitable size • Approvals Process partner • Risk tolerance • Regulatory risks, issues, or • Political risks or issues Regulatory, flexibility • Accounting and tax treatment legal, and • Need for new or change in • Land ownership issues political legislation • Accounting treatment feasibility • Environmental issues WA JTC Staff Working Group Meeting 7
Project Screening and Prioritization Process: Lessons Learned • Critical to have a process for the selection of transportation projects • A programmatic approach and methodology for screening and selecting candidate projects • A process for pro-actively defining the project pipeline rather than assuming a reactive approach based on legislative priorities and unsolicited proposals • Key decisions, such as public funding commitments, must be made early in the project development process to inform part of the screening and prioritization criteria • Decisions to move forward or not to move forward with projects should be taken early in the process to avoid abortive work on infeasible projects WA JTC Staff Working Group Meeting 8
Project Screening and Prioritization Examples National Road Authority, Ireland Georgia Department of Transportation • • The National Roads Program (2000-2007) was launched with a The Public Private Partnership (PPP) Program was re-launched in clearly identified pipeline of 9 toll road projects 2009 – with a 4 project multimodal pipeline • • NRA periodically examines Ireland’s transport needs and creates an Rules require GDOT to develop a biennial P3 list for Transportation overarching strategic plan to determine which roads are needed and Board consideration where • Comprehensive project screening protocol is carried out to identify • There is a formal screening process near, mid and long-term projects • • The criteria for selection include confirmation of the following: Projects may be proposed by GDOT, other state agencies, local authorities and MPOs via a Project Data Request Form. Projects sit Appropriate size for PPP mechanism; commercially bankable; within the Strategic Transportation Improvement Program ability to attract substantial private finance; ability to attract • sufficient private sector interest to ensure good competition at bid Screening factors include: potential for value added by the private stage and ultimately result in VfM for public sector sector, the Department’s preparedness, public funding, project maturity, market interest, project scope, and financial feasibility Infrastructure Ontario, Canada Texas Department of Transportation • IO launched “ ReNew Ontario” (2005 -2010) – targeting 40 PPP • projects across multiple infrastructure sectors The Comprehensive Development Agreement (CDA) Program was launched in 2002 • The Ministry of Energy and Infrastructure determines PPP eligibility • according to five principles: public interest is paramount, VFM, public There is a formal screening process. At the end of the 2007 ownership must be preserved, accountability must be maintained legislative session, 87 potential projects were identified • • For projects above $50 million, IO is mandated to set project criteria, Screening criteria are based on risks (e.g. system interface, design bring together public and private sector organizations, conduct a and construction, O&M requirements, public acceptability, approvals procurement process to select a private-sector consortia and ensure and scheduling, and demand); financial feasibility; and estimated the public interest is upheld throughout the life of the project time to procurement WA JTC Staff Working Group Meeting 9
PPP Project Screening Frameworks – Detailed Case Study State of Michigan, Office for PPP The project screening framework involves a two-step process: (1) pre- screening evaluation; and an (2) in-depth screening assessment. Outcome: Should the project proceed to Step 2 of the project screening? WA JTC Staff Working Group Meeting 10
PPP Project Screening Frameworks – Detailed Case Study State of Michigan, Office for PPP The State of Michigan’s project screening framework is one step in a comprehensive implementation plan aimed at meeting a variety of objectives, including: Clear Clear Robust Understanding Understanding Protect public accountability Specify desired Stakeholder Specify desired accountability Protect Public Stakeholder buy feasibility Value for Money of private - sector Value for Money of private - sector buy in outcomes policy and decision outcomes policy in analysis perspective perspective making Prioritization Transaction Implementation WA JTC Staff Working Group Meeting 11
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