Concession Agreements The Focus Georgia Conference
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Transcript of Concession Agreements The Focus Georgia Conference
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Concession AgreementsThe Focus Georgia Conference
Thomas W. Pelnik III, P.E.Director, Innovative Project Delivery DivisionApril 26, 2007
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Overview
• Concession Agreements and
VDOT’s PPTA Program– Program Status / Summary
– Past, Present and Future
– Concessions• A fundamentally different way of doing business
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PPTA Program Status
• Summary of VDOT’s PPTA Portfolio
• Value of All Projects ~ $6 Billion
• Value of Completed Projects = $767 Million
• Value of Active Projects + $5 Billion
• Value of Active Proposals ~ $1.5 Billion
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VDOT Past and Present
• Vast majority of VDOT work by
design-bid-build
• Interstate outsourcing by 2009
• Public-Private Partnerships cannot
save us, but can help
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US Interstate Planning and Toll RoadsBureau of Public Roads, 1939
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US Interstate Planning and Toll RoadsBureau of Public Roads, 1939
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US Interstate Planning and Toll RoadsBureau of Public Roads, 1939
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Public-Private Transportation Act
• PPTA §56-556 et. seq.• Policy
– Encourage private investment
• Opportunities– Brownfields– Greenfields
• Potential Scope– DB– DBF– DBFOM– FOM– …
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Route 895 PPTA (2002)
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Route 895 PPTA (2002)
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Route 895, Richmond, VA
• Four lane, limited access toll highway
• ~ Nine miles
• DBF Contract, PPTA, $346M 1998-2002
• FOM Concession Agreement, PPTA, 2006-2105+ $500 million transaction June 2006
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DB Contract Incentives / Risks
• Design - construct - get out
– Design
– Constructability
– Schedule
– Inflation
– QC/QA
– Limited performance bond obligations
– Limited warranty obligations
• Lowest cost project delivery
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Concessions
• Lowest cost program delivery– Parallel interests with Owner– DB a phase prior to O&M
• Rewarded for managing life-cycle costs– Build quality at low cost, – Operate a well-maintained facility– Provide good customer service
• Business deal must make sense, but successful relationship is essential
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Concessions
• Not a sale of property – Commonwealth maintains ownership – Concession transfers rights for the use
or control of the facility to the lease holder
– Rights return to owner at end of term
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Looking Ahead
• Continue to require pertinent standards– AASHTO– FHWA– VDOT
• Consider opportunities for corridor management, and lessons learned from projects such as London M25
• Flexible framework accommodates change – Laws, policies and specifications
• No free money
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Conclusions / Recommendations
• You’ll get what you contract for
• Direct your program– Communicate your objectives– Know the value of your assets– Know the costs of your operations– Fair procurement– Time is money
• Each project is unique
• It’s not easy
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VDOT’s PPTA Program
http://www.virginiadot.org/business/ppta-default.asp
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Concession AgreementsThe Focus Georgia Conference
Thomas W. Pelnik III, P.E.Director, Innovative Project Delivery DivisionApril 26, 2007