January 14, 2009 Transportation Research Board A HOCHTIEF Company Washington, DC Public-Private...
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January 14, 2009 Transportation Research Board A HOCHTIEF Company Washington, DC Public-Private Partnerships & Risk Management The Contractor’s Perspective Matt Girard Vice President Business Development Flatiron E-mail: [email protected] Direct: 720-494-8110 Cell: 303-994-4609
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Transcript of January 14, 2009 Transportation Research Board A HOCHTIEF Company Washington, DC Public-Private...
January 14, 2009Transportation Research Board
A HOCHTIEF Company
Washington, DC
Public-Private Partnerships & Risk Management
The Contractor’s Perspective
Matt GirardVice President Business DevelopmentFlatiron E-mail: [email protected] Direct: 720-494-8110Cell: 303-994-4609
January 14, 2009Transportation Research Board
A HOCHTIEF Company
Washington, DC
Contractors have 2 overall categories of P3 risks -
1 – Pursuit Risks: Pre-bid
2 – Contract Risks: Project
January 14, 2009Transportation Research Board
A HOCHTIEF Company
Washington, DC
1) Elevated Pursuit risks -
• Why is this even a risk if it’s during Pre-bid phase?
Contractor’s investment
Extensive senior management time - potential for lost
opportunity
Spend ~1.0 – 1.5% of project value - (engineering, estimating,
legal)
Does NOT include Concessionaire costs, which are typically much higher
January 14, 2009Transportation Research Board
A HOCHTIEF Company
Washington, DC
1) Elevated Pursuit risks -
• How does a risk get realized in this phase?
A project does not happen – “it melts away”
Political or public policy issues (Miami Tunnel)
Legal authority or challenges (Penn Turnpike)
Permit challenges (Foothills South, Legacy)
Funding limitations or budgets (BART’s OAC, MoDOT’s 800 Bridges)
Financial feasibility does not work (OR bridges)
Procurement completely changed (SH121)
A LONG list of such projects in the U.S.
January 14, 2009Transportation Research Board
A HOCHTIEF Company
Washington, DC
1) Elevated Pursuit risks -
• How does a contractor manage this Pursuit risk?
DON’T pursue a project where there is a reasonable chance the project will “melt away”
Pursue projects with reasonable stipends that will cover a share of these expenses
January 14, 2009Transportation Research Board
A HOCHTIEF Company
Washington, DC
2) Elevated Contract risks -
• DB type risk – and then some
LD amount – tied to financing amount (I-35W example - $200k/day)
Force Majeure – VERY limited protection
Site Conditions and Geotech
Cost escalation
Longer term warranty (latent and patent)
Cashflow matters (behind and ahead)
January 14, 2009Transportation Research Board
A HOCHTIEF Company
Washington, DC
2) Elevated Contract risks -
• How are these elevated risks evaluated & managed?
More pre-bid research
Better planning pre-bid and post-bid
Some insurance, but also some contingencies
“Survival of the Fittest” (i.e. manage it better)
January 14, 2009Transportation Research Board
A HOCHTIEF Company
Washington, DC
3) How does a lender or Concessionaire look at construction risks?
• Contractor has to guarantee their performance - period
High liability caps
Letter-of-Credit
Parent Company Guarantees
January 14, 2009Transportation Research Board
A HOCHTIEF Company
Washington, DC
Matt GirardVice President Business DevelopmentFlatiron E-mail: [email protected] Direct: 720-494-8110Cell: 303-994-4609
Q & A ?
