P 3 Innovations in Water and Wastewater

Innovations surround those in the water and wastewater market. This is in part due to the need for improved technology to address the continual West Coast droughts, increased water demand and water safety concerns. The engineers, contractors and architects who focus on this sector are regularly challenged to find new methods to both deliver clean water and filter or remove wastewater. Design-build and public private partnerships (P3s) are improving the workflow and finance aspects of the construction process in many markets. Could they also change how projects are funded and brought to completion for water/wastewater jobs? Pros and Cons Design-build is the proven construction method in the sector. Michael Holt, group manager of the Water/Wastewater Group for The Lane Construction Corp., believes design build has brought owners more into the planning and design process, resulting in reduced costs and improved efficiency. He says, “Marrying the contractor and designer reduces the age-old tension between the builder and the engineer. At the end of the day, the contractor builds the project for which it essentially signed off and guaranteed the price.” Mark Kelly, director of business development at Garney Construction, agrees, saying, “Over the past 15 years, we have seen a steady increase in the use of design-build project delivery. As the delivery method has grown, both construction and engineering firms have adapted to what they believe utility owners are seeking from design build. Firms are consolidating, which puts pressure on the industry to create strategic alignments in attempt to provide the full range of services owners desire.” P3, however, may not be fairing as well in this sector. John Petrous, director of sales and marketing for the ANDRITZ HYDRO – Pump Division, points out that P3 has gained popularity in many markets and has been in existence for more than 50 years across the globe for dams, tollways and infrastructure projects. He believes water/wastewater owners and other utilities are starting to adapt to taking on P3 risks. “There are more than a few P3 projects in North America, but we find most utilities investigate P3 and realize there are ownership issues and terms as well as risk that weigh heavy on the decisions,” he says. “These and other factors can reduce the appeal and benefits of P3.” Kelly agrees that some utility owners turn away from the approach because they don’t want to lose control with an outside party providing their niche service. The size of water/wastewater projects is also a factor. Many are small, so investors are not as attracted to them. “As financial institutions are looking for opportunities to place capital, there was initially a lot of interest from utility owners to understand how they could use the P3 model to solve their utility infrastructure needs,” he says. “That created a lot of momentum and several potential P3 opportunities, but as owners fully understood the process, potential loss of control and level of political support these projects take, we have seen many of those potential opportunities disappear.” Garney Construction has completed three P3 water/wastewater project, with a few more on the horizon. Holt adds, “I think the main challenges lie with the number and diversity, as it relates to size, of the nation’s water authorities. Many of the smaller water districts that account for most of the projects haven’t been convinced that the P3 delivery method would be a benefit to them. The larger ones seem to believe that design-build and progressive design-build are of greater benefit to them relative to their ability to participate in the process at a level with which they are familiar.” P3 in Practice Although not a popular choice in the sector, one noteworthy example is the Claude “Bud” Lewis Carlsbad Desalination Plant, a 50-million-gallonper-day seawater desalination plant in Carlsbad, Calif. The plant opened in 2015 with a buyout option after 10 years of operation and a 30-year Water Purchase Agreement in place between the San Diego County Water Authority and Poseidon Water. This is the largest seawater desalination facility in North America, and it delivers 56,000 acrefeet per year. P3 has been a successful option for Poseidon Water, which reports that P3 “provides a clear framework for assigning roles and responsibilities to those best able to manage various project risks. As the overall project development partner, Poseidon plays a lead role in identifying and optimizing the allocation of risk among all parties. Each contract party is able to focus on its area of greatest expertise. Municipal agencies are able to use their scarce resources more efficiently, and private project partners earn benefits in line with their project contribution and atrisk capital.”