MESSAGE TO STAFF Review... · the magnitude of the Consent Decree program and to minimize impacts...

Consent Decree Mid-Point Review Response Plan March 2016

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MESSAGE TO STAFF The extensive system of sewer and drainage infrastructure stretching across the Louisville area is the most critical system supporting the community’s prosperity and public health. Over the past 10 years, the neighborhoods and commercial areas across Louisville and Jefferson County have benefitted from more than $400 million in investment toward achieving compliance with a federal Consent Decree meant to improve area waterways and ensure continued economic growth while enhancing citizens’ quality of life. The more than 590 professionals that make up the Louisville and Jefferson County Metropolitan Sewer District (MSD) agency are responsible for this Consent Decree program, and every individual within the organization plays a critical role.

Given that the Consent Decree is a 19-year commitment, an independent third-party review was conducted at the 10-year mark – the Consent Decree Mid-Point Review - to assess performance to date and offer an assessment of the program risks moving forward. MSD can proudly report that the Consent Decree program over the first 10 years has been fully compliant, on-time and under budget. This reflects the recognition by every Division within MSD that the Consent Decree program is a legacy investment for the community that must be well managed and properly executed.

While this is a significant achievement, the program is still nearly a decade away from completion and MSD is committed to continual improvement. MSD leadership and staff conducted an in-depth examination of the Mid-Point Review findings and recommendations, including the business practices that could be strengthened with key enhancements.

One of the Mid-Point Review findings was that a substantial change in the local construction market appeared to be causing a rapid escalation in construction costs as compared to the early years of the program. Given the potential implications of this for overall costs, MSD initiated a third-party review to dive deeper into causes of this phenomenon. This Construction Cost Escalation Risks Review revealed the recent cost escalation resulted from numerous high dollar construction projects flooding the local market which allowed contractors to be more selective in the jobs they bid including considering the business practices of the owner (the firm or agency requesting the bid) in their decision. The report found that MSD did not enjoy a favorable view from contractors with regard to business practices. The report offered recommendations to mitigate these issues.

The MSD analysis of the Mid-Point Review conclusions also revealed that a portion of the reported overall cost escalation was in fact the result of the adaptive management process negotiated with the regulators. The adaptive management approach was pursued because it provides the ability to make project adjustments based on system performance updates as new projects are completed over the course of the 19-year program. This ensures the community that the substantial investment being made to comply with the Consent Decree will deliver long-term results based on real-world performance of the system. From the outset of the Consent Decree program, it was acknowledged by MSD and the regulators that fluctuations of both increasing and decreasing scope and cost refinements are to be expected in the years leading

“This Consent Decree Mid-Point Review Response Plan offers an assurance to the Louisville community that MSD leadership and staff are well prepared to continue to successfully lead the Consent Program effort while also delivering on the agency’s core mission of exceptional wastewater and drainage services.”


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to final completion as some projects are expanded and others are revised down. In other words, the cost status of the overall program at any given time is subject to change in subsequent years as adjustments are made. In the end, the benefits of the adaptive management process will be a highly functional system for generations to come.

Using the findings of both the Mid-Point Review and the Construction Cost Escalation Risks Review, MSD initiated an extensive process to address areas for improvement. The resulting Consent Decree Mid-Point Review Response Plan provides a formalized path forward for all MSD Divisions to ensure cost-effective and regulatory compliant implementation. The Response Plan includes eight initiatives with 40 higher level tasks supported by 140 activities, all targeted for completion by the end of 2016. The initiatives include:

Project Management to standardize practices, processes, and tools consistent with “best in class” project delivery;

Training to ensure that staff have the knowledge and skills to perform their roles competently and safely;

Program Scheduling and Budgeting to improve the ability of MSD to effectively track schedule and budget progress, thereby allowing proactive management of both;

Project Bidding to increase the number and competitiveness of MSD bidders, reducing overall bid prices;

Risk Management to apply a rigorous approach to projecting and mitigating project risks of all kinds;

Cost Management to institute a structured change management approach through scheduled “Gateway” meetings that ensure management review of project issues affecting scope and budget;

Performance Measurement to apply industry standard metrics that roll overall Capital Improvements Plan (CIP) objectives down to project targets and staff goals; and

Staffing to provide the right people with the right skills today, and to develop people to fill future roles in the organization of tomorrow.

Tasks have deliverables and target dates to track progress and ensure timely implementation of the initiatives.

As the Consent Decree Mid-Point Review noted, “MSD has excellent resources with which to implement the program, most importantly, capable and motivated staff.” All MSD employees play a role – either directly or indirectly – in successful Consent Decree compliance, therefore full participation in the Mid-Point Review Response Plan is required. The effort is being led by the Engineering Division in close coordination with the Operations, Human Resources, Finance, Information Technology and Legal Divisions. In addition, the Legal Division is leading an additional initiative focused on supplier diversity.

Significant strides have already been made to implement the initiatives defined in the Mid-Point Review Response Plan, and efforts are moving forward on target to continue full implementation. It is important to note that the document presented here represents a “snapshot” of the Response Plan implementation based on current understanding and conditions. It is imperative that continual updates and refinements be made to the Response Plan, as the effort advances through 2016, to reflect the changing dynamics of a program with the complexity of the Consent Decree.


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The Response Plan is also an indication that it is a new day at MSD, and business as usual is no longer the acceptable standard. With the formalization of the Consent Decree Mid-Point Review Response Plan, the entire MSD staff across all Divisions is committing to a path forward that ensures cost-effective and regulatory compliant implementation. A continual improvement approach striving for enhanced business practices has been adopted in every aspect of the agency’s operation. This new approach is critical given the magnitude of effort underway even as the Consent Decree is being implemented – millions of dollars in capital improvement projects, as well as ongoing maintenance and operations of existing facilities. Given the magnitude of the Consent Decree program and to minimize impacts on ratepayers, investment in non-Consent Decree wastewater, stormwater, flood protection and asset management infrastructure was reduced as the Consent Decree spending ramped up. However, by 2013, the level of investment being made in the non-Consent Decree service areas was recognized as not adequate to sustain acceptable levels of service. In response to this, MSD is in the middle of a comprehensive planning effort to define and prioritize long term investments for the rest of the vital services MSD provides for needs not associated with the Consent Decree. The expectation from MSD leadership is for continual improvement initiatives of this type to continue long after the Consent Decree mandate has been fulfilled.

Thanks to the stewardship and commitment of MSD leadership and staff, as well as partner agencies and contractors, MSD is on track to not only meet regulatory requirements but also provide cleaner water and enhanced quality of life for the community. This Consent Decree Mid-Point Review Response Plan offers an assurance to the Louisville community that MSD is well prepared to continue to successfully lead the Consent Decree program while also delivering on the agency’s core mission of exceptional wastewater, stormwater and flood protection services. The Louisville community deserves no less. Respectfully submitted,

James A. “Tony” Parrott Angela Akridge, PE Executive Director MSD Chief Engineer

“The Response Plan is also an indication that it is a new day at MSD, and business as usual is no longer the acceptable standard.”


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TABLE OF CONTENTS

BACKGROUND – CONSENT DECREE REDEFINES PRIORITIES .......................................... 5

Adaptive Management Implications ........................................................................................ 6

2015 Basin Balancing and Cost Implications .......................................................................... 7

IOAP Implementation Benefits ................................................................................................ 8

COMMUNITY INVESTMENT BENEFITS TO DATE................................................................... 9

New Connections due to System Capacity Assurance Program ............................................12

Green Infrastructure ..............................................................................................................12

Job Creation ..........................................................................................................................14

INTERNAL CHANGES DEEMED CRITICAL TO FUTURE SUCCESS .....................................15

Initiative 1 – Project Management ..........................................................................................16

Initiative 2 – Training .............................................................................................................18

Initiative 3 – Program Schedule and Budget ..........................................................................19

Initiative 4 – Project Bidding ..................................................................................................20

Initiative 5 – Risk Management ..............................................................................................23

Initiative 6 – Cost Management .............................................................................................24

Initiative 7 – Performance Management ................................................................................25

Initiative 8 – Staffing ..............................................................................................................26

Overall Response Plan Implementation Progress ..................................................................28

LOOKING FORWARD ..............................................................................................................29

Continued Focus on Consent Decree Projects ......................................................................29

Transition from Consent Decree to Facility Plan ....................................................................30

CONCLUSION ..........................................................................................................................30

ATTACHMENTS .......................................................................................................................31

Attachment A - Construction Cost Escalation Review ............................................................31

Attachment B - Consent Decree Mid-Point Review ................................................................31


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BACKGROUND – CONSENT DECREE REDEFINES PRIORITIES MSD provides a wide variety of services that are the most vital components of the community’s backbone - wastewater collection and treatment, drainage, stormwater management and reliable flood protection. This means the agency has numerous high value priorities that compete for resources. From 1985 to 2003, MSD spent close to $1 billion on improvements to the wastewater collection and treatment system. The focus during this time was to provide safe, reliable sewer service by eliminating failing treatment facilities and septic tanks that were jeopardizing public health and safety on a daily basis. MSD built over 1,000 miles of new sewer interceptor and collector sewers that eliminated more than 300 poor performing package treatment plants which had outlived their useful operation. These package plants were small treatment systems privately built some 60 years ago as part of the post-WWII building boom, and subsequently owned and operated by MSD. The new collector sewers also allowed the elimination of over 40,000 failing septic tanks on private property by providing properties access to the sanitary sewer system.

While MSD was focused on the these high priority public health and safety issues, a program for managing intermittent wet weather sewer overflows was also underway. This program invested nearly $134 million, as a part of the larger $1 billion investment, to study the system behavior, and subsequently design and construct several important sewer overflow abatement facilities. However, the investment made to tackle sewer overflows was not deemed sufficient to meet water quality goals within timeframes established by the federal and state regulators. Figure 1 shows CSOs along Beargrass Creek.

In 2003, MSD received a notice of alleged Clean Water Act violations from the US Environmental Protection Agency (EPA) and the Kentucky Department for Environmental Protection (KDEP). This resulted in a negotiated settlement between these parties in 2005. This settlement, most commonly referred to as the Consent Decree, outlined the compliance program and schedules for achieving specific objectives including the development and implementation of discharge abatement plans. With the filing of the enforcement action, sewer overflows became the critical priority, and MSD shifted resources and investments agency-wide to tackle this massive federally-mandated undertaking.

In response to the Consent Decree, MSD developed the Integrated Overflow Abatement Plan (IOAP), a long-term plan to control combined sewer overflows (CSOs) and eliminate sanitary sewer overflows (SSOs) and other unauthorized discharges in MSD’s sewer system. This plan was submitted in 2008 and approved by EPA and KDEP in 2009. It included definition of $850 million in capital improvements, associated incremental operating costs, and a high level

Figure 1 - Typical CSOs along Beargrass Creek


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financial plan that included cash flow projections, projected borrowing schedules, and projected rate increases through the year 2024.

Concurrently with the final stages of the IOAP completion, EPA and KDEP initiated a second enforcement action related to Water Quality Treatment Center (WQTC) performance, recordkeeping and reporting. This resulted in an amendment to the Consent Decree that was approved in 2009. The IOAP, also approved in 2009, fully addressed the amendment. This Consent Decree as amended is the legal document that MSD is currently required to comply with through the completion date in 2024, and beyond.

Adaptive Management Implications

Recognizing the 19-year long-term nature of the IOAP, MSD negotiated a Consent Decree with the regulators that committed to an adaptive management process based on demonstrating

compliance. Under the adaptive management process, system performance assumptions are continually validated and mid-course corrections are made as more is learned about project performance and the related response of the sewerage system. The benefit of this approach to the community is an assurance that the significant investment being made to comply with the Consent Decree will be based on continual updates about the system rather than static assumptions made during the early years of the program. It was understood from the outset by MSD and the regulators that changes developed due to the adaptive management process can result in

fluctuations of both increasing and decreasing scope and cost refinements in the years leading to final completion, meaning the cost status of the overall program at any given time is subject to change in subsequent years as adjustments are made. Figure 2 shows Regulatory Compliance Life Cycle.

In 2011, MSD had the opportunity to evaluate four more years of flow monitoring data and to perform a planned recalibration of the hydraulic models used to develop, evaluate, and design overflow abatement projects. As a result of this recalibration, MSD found opportunities to revise the proposed suite of projects, providing increased levels of overflow abatement faster, and for approximately the same cost. In 2012, an IOAP Modification was submitted to account for project changes in technology, size, and schedule, and the resultant benefits of making those changes. MSD developed a programmatic justification for this 2012 IOAP Modification utilizing the same benefit/cost methodology as the 2009 approved plan. The modifications, approved by EPA and KDEP in May 2014, will achieve a higher overall benefit to the community through earlier overflow reduction, increased use of green infrastructure and acknowledgement of public input.

With the filing of the enforcement action, sewer overflows became the critical priority, and MSD shifted resources and investments agency-wide to tackle this massive federally-mandated undertaking.

Figure 2 - Regulatory Compliance Life Cycle


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2015 Basin Balancing and Cost Implications

As part of the adaptive management approach outlined in the IOAP, MSD has been expanding the monitoring network throughout its sewer system. MSD has been utilizing data from this network to recalibrate the hydrologic and hydraulic models used to size overflow abatement projects, and to further refine individual project approaches and sizes based on an improved understanding of the sewer system operation and the relationship of certain overflows to one another. This process to-date has led to two negotiations with regulators that "balanced" the system model based on actual data and allowed MSD to more accurately size storage basins and other IOAP projects.

In 2015, this approach was applied when new monitoring data and enhanced modeling indicated that the size of the proposed Southwestern Parkway Storage Basin should be increased, resulting in a re-evaluation of the design level of control for this basin. Using the same approach approved by EPA and KDEP for setting level of control in the IOAP, this evaluation indicated that the Southwestern Parkway Storage Basin should be designed for

eight overflows per year in the ‘”typical year” rather than zero as originally determined in the IOAP. Preliminary discussions with the regulators indicated that the resulting increase in the average annual overflow volume would not be approved. MSD was challenged to find an approach to adjusting basin sizing to minimize costs while avoiding any increase in the approved level of residual sewer overflows. MSD confronted this challenge head-on, and in August, 2015 submitted a Basin Balancing Justification Memo documenting the programmatic justification for optimizing the size of five hydraulically connected basins, including the Southwestern Parkway Storage Basin. MSD demonstrated through this submittal that the combined optimized suite of five proposed modifications resulted

in a net reduction in the residual annual average overflow volume at the lowest additional cost to MSD’s customers. Additionally, the optimization of basin sizes resulted in an overall benefit to the community by reducing residual overflow levels in the Ohio River from the Beargrass Creek confluence all the way to the downstream end of Shawnee Park. This reduces the potential for public contact with Ohio River sewer overflows following rain events. EPA and KDEP acknowledged MSD’s successful efforts, and approved the submittal in September 2015.

As previously stated, the adaptive management approach has positive impacts that are beneficial to the environment and cost-justified by using consistent IOAP benefit/cost methodology, however the approach can have programmatic cost impacts. The adaptive management process to-date has lowered the cost of some projects and increased the cost of other projects. The 2015 Basin Balancing Justification Memo contributed to escalating IOAP programmatic costs at that time by approximately $33 million. In addition, the Consent Decree Mid-Point Review projected an additional $23 million increase to the overall program cost due to an escalation in recent project bids resulting from changes in the local construction market and MSD business practices. This resulted in revised program costs that are currently projected to be seven percent over the original IOAP estimate. Addressing these issues is where the Mid-Point Review Response Plan has focused its efforts. Adaptive management evaluations and business practice improvements will continue through all planning, design and construction

MSD demonstrated…that the combined optimized suite of five proposed modifications resulted in a net reduction in the residual annual average overflow volume at the lowest additional cost to MSD’s customers. Additionally, (this) resulted in an overall benefit to the community by reducing residual overflow levels at discharge locations upstream of Waterfront and Shawnee Parks.


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activities until the IOAP is complete. It is likely that continued adjustments (either up or down) will be required prior to program completion.

IOAP Implementation Benefits

Benefits of the IOAP implementation to-date are evidenced across the entire community. The IOAP prioritized projects in a way that dealt first with some of the most serious public health and safety issues impacting Louisville neighborhoods, while at the same time balancing cash flows over the 19-year program, and providing time to perform the analysis and monitoring necessary to fully characterize combined sewer system behavior during wet weather. This resulted in a phased approach allowing MSD to concentrate on one particular suite of projects at a time, achieving significant overflow reduction with each subsequent phase. The four phases have been loosely defined as follows:

Phase 1 – Major SSO Eliminations (the “big four” SSO areas representing almost 60 percent of MSD’s pre-2005 SSO volumes)

Phase 2 – WQTC Eliminations (the Jeffersontown WQTC, five small WQTCs in Prospect, and the remaining package plants in MSD’s system)

Phase 3 – CSO Abatement (the major CSO Storage Basins that perform most significantly in the CSO program).

Phase 4 – Remainder of SSO Eliminations

The IOAP specifically identified long-range benefits to the community. The suite of projects selected for CSO abatement will result in approximately 98 percent capture and treatment of wet weather combined sewage during a ”Typical Year” as defined in the IOAP. This benefit represents an 89 percent reduction in CSO volume compared to 2008 conditions. It is worth noting that MSD’s 98 percent capture and treatment result will not only meet but will exceed EPA’s own presumptive approach for compliance which sets the bar at 85 percent in the Clean Water Act CSO Control Policy. Remaining CSO loads alone will no longer cause fecal coliform water quality standards violations in the Ohio River or Beargrass Creek.

The suite of projects selected for SSO control will result in the elimination of capacity-related SSOs up to the site-specific level of protection. The SSO projects are anticipated to eliminate an average of 145 SSO events per year (290 million gallons {MG} of overflow volume), based on 2005–2007 data normalized for rainfall. In terms of water quality, SSO projects will eliminate approximately 100 tons of five-day biochemical oxygen demand (BOD5) and approximately 200 tons of suspended solids annually.

Along with delivering water quality improvements from sewer overflow control, MSD participates in other community water quality improvement efforts. Sewer overflow control is essential to improving water quality, but sewer overflow control alone is not sufficient to meet

It is worth noting that MSD’s 98 percent capture and treatment result will not only meet but will exceed EPA’s own presumptive approach for compliance which sets the bar at 85 percent in the Clean Water Act CSO Control Policy.


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water quality standards. In light of this challenge, MSD continues to leverage its role in supporting broader water quality improvement efforts in the community. The IOAP is just one of the key elements of MSD’s participation.

COMMUNITY INVESTMENT BENEFITS TO DATE Under the Consent Decree, MSD refocused on sewer overflows and vigorously pursued overflow abatement and elimination across the county. Benefits to-date - discussed in more detail below - include:

Elimination of small package treatment plants that are costly to operate and subject to failure;

Addition of 100 million gallons per day (MGD) of wet weather treatment capacity, with an additional 50 MGD under construction;

Addition of 100 MGD of wet weather flow equalization capacity, with an additional 44 MGD under construction;

Rehabilitation or replacement of 46 miles of sewer; Elimination of 200 SSOs of the 346 documented in 2005; Significant improvement of downstream water quality after rainstorms; Reduction of CSO discharges by over 50 percent since 2001; Implementation of a post-construction compliance monitoring program to proactively

assess the performance of IOAP projects as they are completed; Development of a wet weather reduction credit program that limited a moratorium on

new sewer connections to the Jeffersontown area, (that moratorium was lifted when the treatment facility was eliminated in 2015); and

Regulator approval to commit $47 million of the $850 million Consent Decree program to implement green infrastructure.

While the Consent Decree program is only midway through completion, the results to date have been impressive. Within the next month, MSD will have eliminated the last 15 small package plants and routed all wastewater to five modern, well-operated regional water quality treatment centers. MSD added over 100 MGD of wet weather treatment capacity at the Derek R. Guthrie WQTC, and has another 50 MGD of wet weather treatment capacity under construction at the Bells Lane Wet Weather Treatment Facility near the Morris Forman WQTC. MSD has added over 100 million gallons of wet weather flow equalization capacity, with over 44 million gallons of additional capacity already under construction. Forty-six miles of sewer has been rehabilitated or replaced, including large parts of the “temporary facilities” still in service in the Camp Taylor area. These facilities were deemed temporary because when they were constructed in 1917, the intent was they would only be used during the time that area served as a WWI US Army training facility. While some of the 100-year old pipes at these facilities were able to be repaired and rehabilitated, much of the old pipe has been and is continuing to be completely replaced.

Of the 346 SSOs documented in 2005, over 200 have been eliminated as defined per the IOAP and as shown by the green dots on the map in Figure 3.


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Some of the SSOs eliminated include numerous locations of pumped overflows in the residential areas of Beechwood Village, Hikes Point, and Highgate Springs. In these neighborhoods, developer-constructed sewers from the 1960’s allowed significant infiltration and inflow into the pipes during wet weather, forcing MSD to pump untreated wastewater directly from the collection system to nearby waterways to prevent widespread basement sewage backups. These pumped overflow locations have been eliminated per the IOAP. Downstream water quality after rainstorms has also significantly improved, as illustrated by the graph in Figure 4.

Figure 3 - Service Area Map Indicating SSO/CSO Locations and Eliminations


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In the combined sewer system, MSD’s overflow abatement efforts predated the Consent Decree enforcement action. Since 2001, CSO discharges have been reduced by over 50 percent as shown by the graph in Figure 5.

Figure 5 - Residual Average Annual Combined Sewer Overflow Volume Reduction 2001 - 2024

MSD has implemented a post-construction compliance monitoring program to proactively assess the performance of IOAP projects as they are completed. This will ensure that the desired levels of control will be achieved for the entire system when the IOAP construction is

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Figure 4 - A Comparison of Pre- and Post-Construction Wet Weather Sampling Showing Water Quality Improvements to Beargrass Creek


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complete. Monitoring results to date have demonstrated that the constructed projects will, in fact, achieve the desired performance objectives.

New Connections due to System Capacity Assurance Program

In response to the Consent Decree, MSD faced the potential for a complete moratorium on new sewer connections. This would have effectively shut down economic growth and development in the entire county. To avoid this, MSD was able to negotiate an approach to offset new connections with documented reductions in wet weather infiltration and inflow, developing a credit program to track flow reductions and new connections.

Credits are gained when projects are completed that increase system capacity and credits are used when new connections to the system are made. The number of credits that are gained depends upon the type and size of the project. Currently there is a positive credit balance in all sewershed basins. Proposing this program limited the connection moratorium to the Jeffersontown area, however, that moratorium was lifted when the treatment facility was eliminated in 2015.

Maintaining this program allows the development community to continue building in the MSD service area, a critical factor in continued prosperity for citizens and businesses alike.

Green Infrastructure

Removing stormwater from the sanitary sewer system is a cost effective way to reduce sewer overflows, while also providing enhancements to the community. While the IOAP is made up of mostly ‘gray’ infrastructure, such as storage basins and interceptors, modeling in some areas supported strategic integration between ‘gray’ and ‘green’ elements. In considering the broader contribution to quality of life that was possible through the significant investment being made in the Consent Decree program, the Wet Weather Team Stakeholder Group urged MSD to propose to EPA that a portion of the integrated wet weather IOAP and Consent Decree response be performed with green infrastructure. The IOAP was initially

proposed as a ‘gray’ plan with financial commitments to implement green infrastructure controls only for ‘right-sizing’ solutions. The Wet Weather Team stakeholders encouraged MSD to look beyond that and explore the use of green infrastructure to reduce the volume and frequency of CSOs. In response, and to demonstrate MSD’s commitment to leveraging community investments above ground as well as below, MSD initiated a robust green infrastructure program, which integrates

green project and program elements with traditional gray solutions. As a result, $47 million of the $850 million Consent Decree Program has been identified for use to implement green infrastructure. MSD initially completed 19 green demonstration projects at a cost of approximately $3 million as part of our commitment to implementing and testing the

Community Benefits of Green Infrastructure

Achieve multiple objectives and benefits beyond reduction of sewer overflows

Improve air and water quality Increase green space and wildlife

habitat Reduce heat island effect in the

urban core Reduce overflow volume and

frequency Beautify community

Figure 6 - Streetscape and Tree Well Story Avenue


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effectiveness of a variety of green management practice types. The suite of green infrastructure technologies considered were green alleys, green streets, green parking, rain gardens/biofiltration, infiltration trenches and green roofs. These demonstration projects were used to direct the on-going program to the most effective use of green infrastructure as it applies in Louisville Metro.

The current Green Infrastructure initiatives include streetscapes, reforestation and stipends (incentives for private development of green infrastructure). During the 2012 IOAP Modification, the CSO 130 and CSO 190 projects converted gray infrastructure to green at a lower cost to the community. In addition to overflow control, the green elements provide enhancements to the urban landscape and reduction of urban heat island impacts by removal of impervious surfaces. Figure 6 is an example of green infrastructure implemented along Story Avenue.

National Recognition for MSD’s Green Infrastructure Program

MSD was an early adopter of strategic green infrastructure as a wet weather management tool. Regulatory agencies, as well as industry organizations, were extremely interested in MSD’s efforts and followed them closely as the projects were built. Recognition of the environmental and community benefits garnered include:

Inaugural EPA Region 4 Rain Catcher Award for the CSO 130 Green Infrastructure Project;

KY/TN Water Environment Association Outstanding Watershed Management Award for the Central Louisville Green Infrastructure Partnership;

Water Environment Federation Silver Level Certification-Program Management for large MS4 communities;

Water Environment Federation Silver Level Certification-Innovation for large MS4 communities; and

National Association of Clean Water Agencies (NACWA) Award for Environmental Achievement – CSO 130 Green Infrastructure Project.

Figure 7 identifies components of MSD’s Green Infrastructure Program.

To demonstrate MSD’s commitment to leveraging community investments above ground as well as below, MSD initiated a more robust green infrastructure program, which integrates green project and program elements with traditional gray solutions.


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MSD Green Infrastructure by the Numbers

Job Creation The Department of Commerce estimates that each job created in the local water and wastewater industry creates 3.68 jobs in the national economy and each public dollar spent yields $2.62 dollars in economic output in other industries. The Value of Water Coalition estimates that 16 jobs are created for every $1 million spent. Based on extrapolations of a recent study by the Water Environment Research Foundation, the economic impact in Louisville is $3.4 billion and 2,310 jobs over 10 years, as shown in Figure 8. It is clear the $850 million infrastructure investment mandated by the Consent Decree will have a significant and positive economic impact on the Louisville area, in addition to its environmental and public health benefits.

Figure 7 - Components of MSD's Green Infrastructure Program

Figure 8 - National Economic and Labor Impacts of the Water Utility Sector, WERF Study


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INTERNAL CHANGES DEEMED CRITICAL TO FUTURE SUCCESS As with most utilities operating under a federal Consent Decree, many of MSD’s day-to-day processes were not robust enough to allow a five-fold increase in capital project spending required to comply with the Consent Decree. The limitations reached across all MSD Divisions. Consent Decree support from the Engineering, Operations, Finance, Information Technology, Legal and Human Resources Divisions continues to be critical to success.

For the first 10 years of the Consent Decree, MSD led the program through an on-time and under budget delivery. However, as the Consent Decree program entered the most complex part of implementation, MSD experienced rapidly escalating construction costs and other factors that impacted several critical project schedules.

In response, MSD initiated an independent third-party review of the performance to date and an assessment of the program risks moving forward – The Consent Decree Mid-Point Review. The results confirmed that while MSD’s past performance was fully compliant, current business practices needed to be strengthened to mitigate vulnerabilities and exposure to risks that could affect the ability to meet future mandated milestones and could lead to escalation of program costs.

In addition to the $33 million increase in program costs resulting from the 2015 Basin Balancing initiative mentioned previously, the Mid-Point Review identified an escalation in recent project bids that added an additional $23 million to the program, resulting in revised program cost projections that could be seven percent over the original IOAP estimate. The Mid-Point Review also recommended that the budgets for projects not yet bid should have an increased contingency factor to account for changing market conditions and the preliminary nature of the planning-level costs. To dive deeper into the cost issues, MSD initiated a review of potential causes of the construction escalation phenomenon. The Construction Cost Escalation Risks Review identified the causes and made several recommendations to mitigate.

The Consent Decree Mid-Point Review and the Construction Cost Escalation Risks Review both resulted in a set of viable recommendations and are summarized under the following categories:

Organizational Structure and Assets – restructuring to eliminate the inefficiency of project “hand-offs”, and providing the people, processes and tools to effectively manage the expanding capital improvements program;

Budget Management – responding to recent bid escalation in the local contracting market, and also managing external expectations of program performance that has been focused on the initial $850 million program estimate without recognizing the adaptive management approach to adjust long-term program costs to future conditions as they change;

Schedule Management – recognizing that the major CSO storage basins will be the most controversial projects in the IOAP, adjust schedules to account for an enhanced level of public involvement and ensure adequate time for design and construction; and

Risk Management – establishing an industry-standard risk management program to anticipate and mitigate technical, fiscal, environmental, health and safety, legal and management risks.


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In order to acknowledge the issues identified and to ensure gaps were fully addressed in subsequent years, MSD went through a comprehensive process to develop specific “change” initiatives by business process function. The Response Plan identified eight initiatives with 40 higher level tasks supported by 140 activities, all targeted to be completed by the end of the 2016. Each task has deliverables and target dates for the Engineering Division to deliver along with support from Operations, Finance, Information Technology, Legal and Human Resources Divisions. A ninth initiative focused on supplier diversity and is being delivered by the Legal Division and is not addressed in this document.

Each of the initiatives will be implemented in a systematic approach across all of the MSD business unit areas with responsibility for the business process. With the formalization of the Consent Decree Mid-Point Review Response Plan, the entire MSD leadership and staff are committing to a path forward that ensures cost-effective and regulatory compliant implementation. The eight initiatives are outlined below.

Initiative 1 – Project Management

Project managers are the cornerstone of a well-executed capital program, and even more essential given the pace and volume of a federally-mandated Consent Decree. A project manager moves a project from milestone to milestone by, among other things, procuring design firms and contractors, reviewing submittals, and garnering the necessary permits and approvals, all to ensure that the project meets its intended level of service, schedule and budget. It is recognized that recent retirements and departures have left the current team of project managers with little or no history of the CD/IOAP development and amendments to date.

Cradle to commissioning project management was identified as one of the most critical tasks coming out of the Consent Decree Mid-Point Review. Prior handoffs led to unanticipated scope changes and schedule creep that may not have always been in the best interest of MSD’s Consent Decree compliance.

MSD will expand project management strategies to include:

Centralizing document management and record keeping protocols to improve transparency and historical documentation;

Updating processes and procedures to ensure standardized, consistent, and duplicable approaches are utilized;

Providing highly qualified and skilled inspection and construction management resources for projects including both capital and developer contributed infrastructure;

Providing appropriate internal and contracted support for property/easement acquisitions, public outreach, document management, to complement the work of project management, consolidate program management functions and supplement peak workflow conditions; and

Standardizing contract management including compliance with prevailing wage regulations and local labor policies.


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See Figure 9 for a summary of Project Management Initiatives.

Significant Achievements to Date

Both the Consent Decree Mid-Point Review and the Construction Cost Escalation Risks Review recommended that MSD modify the organizational structure of the Engineering Division to increase project delivery accountability; avoid rework/scope changes by minimizing project handoffs through ‘cradle to commissioning’ project management; enhance collaboration with Operations; set project and project manager performance expectations; and track performance.

The reorganization included:

Aligning all planning functions for remaining IOAP projects and 20-Year Facilities Plan under Infrastructure Planning Management – also uncouple regulatory compliance function from the planning element and create separate department;

Combining the design and construction areas of responsibility; Consolidating inspections under single areas of responsibility; Adding Capital Project Controls Management resources; and

Figure 9 - Summary of Project Management Activities


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Adding resources to GIS and Records Management to oversee document libraries and provide technical support for asset management.

Teams are enhancing and revising procedural handbooks for project managers and inspectors to provide for consistent application of project management principles. Program responsibility for prevailing wage and local labor preference tracking and compliance has been centralized within Purchasing with detailed procedures currently under development. A responsibility matrix has been developed for all the roles needed for successful project delivery from project initiation through commissioning. A strategic approach has been developed to include the Engineer of Record throughout the project life cycle and to bring on an experienced Resident Project Representative working under the Engineer of Record for the construction phase of large and/or complex projects.

Initiative 2 – Training

The remaining IOAP program components and the upcoming facility plan forecasts the need for annual investments of nearly $200M for the foreseeable future. Given this level of investment is double the annual CIP of the last decade, it is imperative that institutional knowledge is maintained over this 20-year period. This approach will necessitate training of existing staff and succession planning to ensure the long-term program viability.

MSD will expand the training program to include work-shop based and one-on-one mentoring in the areas of:

Project management fundamentals; Risk management; Change management; Performance metrics and accountability expectations; Employee safety; and Consent Decree requirements.

See Figure 10 for a summary of Training Initiatives.


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Figure 10 - Summary of Training Activities


The first phase of training – Fundamentals of Project Management – was held in January 2016 with 36 employees in attendance. Upcoming training sessions will focus on risk management and change management. The second phase of training will be held this summer and will roll out the processes and procedures from the updated Capital Project Management Handbook. New project manager orientation, as well as annual refresher courses for all project managers, will be a part of the sustainable improvement approach.

Initiative 3 – Program Schedule and Budget

This initiative is focused on the implementation of a comprehensive schedule and budget system to support the cost and performance management strategies outlined in Initiatives 6 and 7.

MSD will build integrated schedule and budget tracking tools to provide:

Standardized scheduling with identified critical path and linkages to predecessor/successor projects and/or activities;

Restructure project schedules to address internal approval processes, public engagement activities and operational reviews;

Comprehensive data collection and verification to support cash flow forecasting and variance tracking from baseline; and

Platform for project manager to communicate information regarding changes, risks and issues needing management direction.

See Figure 11 for a summary of Program Schedule and Budget Initiatives.


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Figure 11 - Summary of Schedule and Budgeting Activities


Microsoft Project was selected in 2015 as the scheduling system to be utilized. IOAP project schedules have been uploaded and base-lined. Variance reports are being used to highlight potential issues and challenges. The budget and cost tracking components of the system, which include an integration with MSD’s financial system (SAP), are currently in the planning phase and will be implemented during FY17.

Initiative 4 – Project Bidding

The Construction Cost Escalation Risks Review noted that improvement in the local construction market had created more opportunities for contractors. This allowed contractors to be more selective on which projects they bid and contractors that were interviewed revealed that MSD was not an “owner of choice,” due to some MSD business practices and perceived adversarial attitudes. This reduced the number of bidders responding to MSD projects and often caused contractors to add a “premium” to their bids if they did choose to respond.

MSD will expand project bidding strategies to include:

Advertising across a broader geography and scheduling bids so as not to be in direct competition with other local agencies;

Modifying bidding procedures in consideration of noted challenges voiced by the contracting community; and

Reaching out to contractors to encourage participation and provide notice regarding the changes underway in MSD practices.

See Figure 12 for a summary of Project Bidding Initiatives.


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Figure 12 - Summary of Project Bidding Activities


Communications with contractors and vendors began more than six months ago and culminated in January 2016 with the first Contractor Outreach Meeting, which will subsequently be held semi-annually. This meeting focused on the upcoming capital program and also gave the Executive Director, Chief Engineer, Engineering Director and Purchasing Director opportunities to talk about the internal improvements and stress that the ‘new day’ in doing business at MSD extends to an environment of cooperation and partnership with the contracting community. There were 163 in attendance and feedback was very positive.

Since MSD began implementing the changes in business practices, the average number of bidders per project has been on a steady incline, as has the number of companies represented at pre-bid meetings. At the recent Clifton Heights pre-bid meeting, 58 attendees showed interest in the project with several new companies represented. The initial benefits of this initiative are depicted in Figure 13.

From 2010 into 2015, the bid prices were increasing as related to the Engineer’s Estimate. That trend is already reversing in fiscal year 2016, based on 51 projects representing almost $40 million in construction costs. That is a potential savings of over $6 million just in the first half of the fiscal year.


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Figure 13 - Average Bidders per Project, July - Jan FY 2016

The desired outcome of the increase in bidders is to ‘bend’ the curve as presented in Figure 14. From 2010 into 2015, the bid prices were increasing as related to the Engineer’s Estimate. That trend is already reversing into 2016, based on 51 projects representing almost $40 million in construction costs. That is a potential savings of over $6 million just in the first half of the fiscal year.

Figure 14 - Deviation of Low Bid compared to Engineer's Estimate

2.7 3.2 2.6 3.2 3.5 3.8

6

July Aug Sep Oct Nov Dec Jan

Avg Bidder Per Project


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Initiative 5 – Risk Management

Risk in a project is the probability that an adverse event will impact the project in some negative way. Given the size and scope of the Consent Decree, unmitigated risks can lead to missed milestones, culminating in stipulated penalties and loss of stakeholder trust. MSD will develop risk management strategies to include:

Conforming construction contract documents with industry standards as a measure to control cost escalation;

Involving stakeholders early in the project lifecycle to inform on the intent of the project, and seek input regarding project integration within the neighborhood;

Building a formal risk management framework to identify and mitigate risks early in the project life cycle;

Continuing proactive post-construction monitoring focused on the performance of the constructed facility; and

Utilizing “lessons-learned” reviews to support improvements in project scope and execution.

See Figure 15 for a summary of Risk Management Initiatives.

Figure 15 - Summary of Risk Management Activities


The construction contract documents are in the final stages of modifications and are intended to be utilized with the Clifton Heights and Camp Taylor projects now out for bid. The next step will be to work towards adopting Engineers Joint Contract Documents Committee (EJCDC) standard documents.

Post Construction Compliance Monitoring (PCCM) is a focused effort of the Planning and Regulatory Compliance sections. Beginning with the FY14 Annual Report, MSD has reported on performance findings for completed projects and self-identified cases where remedial measures may be required based on comparison of actual data to the committed level of


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control. It is the intent that performance analyses will be conducted for all constructed IOAP projects as monitoring data is available for assessment. For the IOAP specifically, the PCCM efforts will allow for an evaluation of the efficacy of various projects in meeting regulatory targets with mid-course corrections performed when deemed necessary.

An industry standard risk framework has been adopted and the first risk training was conducted in January 2016. Eight IOAP project risk registers were completed by the project teams and presented to the Engineering Division leadership for review. These risk registers will be utilized by the project team to track their mitigation activities throughout the project life cycle, as well as in management review sessions.

Initiative 6 – Cost Management

Escalating costs of the Consent Decree has resulted from the saturated construction market and premiums added to contractor bids, as previously stated. Additionally, in August 2015 MSD presented EPA and KDEP with findings from flow monitoring and hydraulic modeling calculations indicating a need to increase the size of five CSO storage basins to ultimately meet the intent of the Consent Decree. EPA and KDEP approved the modification in September 2015.

MSD will expand cost management strategies to include:

Refined cash flow forecasting from project level to activity level; Quantification of confidence of cost estimates throughout project life cycle; Instituting a robust, independent value engineering program for significant capital

projects; Exploring alternative delivery procurement options; Expanding management review and garnering Engineering and Operations leadership

consensus on requested scope, schedule and budget changes; and Ensuring that MSD is building the assets that are operational and meet the level of

service needed.

See Figure 16 for a summary of Cost Management Initiatives.


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Figure 16 - Summary of Cost Management Activities


Regular senior management reviews began in February 2016. Monthly coordination and gateway meetings bring Operations and Engineering managers, directors and chiefs together to build consensus regarding project scopes, budgets and schedules, as well as requested changes.

Value review workshops have occurred on three major projects (Southwestern Parkway, Clifton, and Portland CSO Storage Basins). Many recommendations from the value review workshops were accepted either completely or in part, providing the potential for several million dollars in savings to MSD’s customers.

Design-Build delivery has been identified as the preferred delivery approach for the Southwestern Parkway CSO Storage Basin. A lessons-learned workshop was held in January with MSD staff and prior Design-Build teams to identify vulnerabilities and necessary improvements to the process. MSD will consider design-build delivery for other major projects, and implement this delivery approach where it appears to bring benefits to the community.

Initiative 7 – Performance Management

MSD has historically had a robust Consent Decree reporting program which reports on the IOAP program performance from a regulatory perspective. Under this initiative this program will


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be expanded to communicate detailed CIP project performance to the public and to staff. It is important to be able to determine that a project met its schedule and budget objectives. Success or failure is determined by specific measures applied at both the program and the project level. Recommendations in the Mid-Point Review included the implementation of performance metrics, displaying project/program information in a dashboard format, and making project performance part of the annual employee performance assessment.

Utilizing the Scheduling/Budgeting tools implemented under Initiative 3, MSD will expand performance management strategies to include:

Instituting a dedicated program controls team to monitor the performance of project implementation from planning through commissioning;

Reporting the variances between approved annual capital plan and actual expenditures and progress;

Developing detailed project budget and schedule recovery plans as needed with project managers;

Establishing MSD-based change management targets and historical performance trends; and

Expanding program performance communication to the MSD Board, staff, the public and other key stakeholders.

See Figure 17 for a summary of Performance Measurement Initiatives.

Figure 17 - Summary of Performance Measurement Activities


Project metrics have been tentatively identified and are under review through the first cycles of the Gateway Coordination meetings. Schedule and budget variances, including loss of float to Consent Decree milestones, will be utilized to determine the overall project health.

Initiative 8 – Staffing

Building the overflow abatement infrastructure alone does not satisfy the requirements of a “demonstrative-type” Consent Decree. The infrastructure has to perform according to the required level of service in perpetuity. Beyond that, it is MSD’s strong commitment to environmental stewardship that requires high quality operation, which demands on-going


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replacement and renewal investment, and most importantly, appropriate levels of well-trained staff.

MSD will develop comprehensive staffing plans to:

Provide the adequate internal staffing levels to deliver best-in-class service levels to the customers and satisfy regulatory requirements;

Implement succession planning and staff retention plans to maintain internal staffing resources and institutional knowledge;

Deliver the appropriate skill sets to operate and maintain the assets built under the capital program; and

Operate and maintain the treatment and collection systems to avoid repeating operating conditions and practices cited by the federal and state regulators that led to the Consent Decree.

See Figure 18 for a summary of Staffing Initiatives.

Figure 18 - Summary of Staffing Activities


A workshop with Operations Division staff validated the IOAP-projected staffing targets and compared it against the current approved staffing levels. This exercise will support the fiscal year 2017 operating budget request for increased Operations Division staffing levels to fully operate and maintain the new infrastructure as required by WQTC permits.


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Overall Response Plan Implementation Progress

The MSD Board Infrastructure Committee is extremely interested in the continued progress on the Consent Decree Mid-Point Review Response Plan. The following charts are updated monthly and presented to the committee. Figure 19 displays the percent completion for each initiative, regardless of target dates. Figure 20 tracks actual vs. target completions across all initiatives.

Figure 19 - Completion Rates by Initiative


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LOOKING FORWARD Continued Focus on Consent Decree Projects

The top priority for the Engineering Division must remain the completion of the remaining IOAP projects. All CSO projects must be completed by December 31, 2020, and SSO projects by December 31, 2024.

Process improvement efforts identified in the initiatives above are targeted for completion by the end of 2016. Through these efforts and others, MSD must become an “Owner of Choice” to ensure that bids come in at or below fair market value.

2007 2009 2011 2013 2015 2017 2019 2021 2023

WQTCEliminations +other CSO &SSO Projects($160M)

Phase 1 Phase 2 Phase 3 Phase 4

“Big 4”SSOs plus other SeparateSewer System Projects

($230M)CombinedSewer SystemBasin Projects

($400M) SSO Projects($60M)

Overflow

Occurances

Figure 21 - MSD Consent Decree by Phase


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Transition from Consent Decree to Facility Plan

The IOAP focused on responding to the Consent Decree and the financial plan projection was developed with levels of contingency lower than the industry standard for this type of long-term planning. Given the magnitude of the Consent Decree program and to minimize impacts on ratepayers, investment in non-Consent Decree wastewater, stormwater, flood protection and asset management infrastructure was reduced as the Consent Decree spending ramped up. However, by 2013, the level of investment being made in the non-Consent Decree service areas was recognized as not adequate to sustain acceptable levels of service. In response to this, MSD is in the middle of a comprehensive planning effort to define and prioritize long term investments for the rest of the vital services MSD provides for needs not associated with the Consent Decree.

The need for a comprehensive plan to consolidate previous disparate planning efforts, identify and address any gaps found in previous plans, and develop an integrated approach to project prioritization and scheduling across MSD’s core business services was identified. A preliminary project list has been developed by the Facility Plan team. This preliminary list is currently being reviewed to determine which projects should be considered for inclusion into the 2017 – 2021 CIP, pending budget availability.

CONCLUSION MSDs mission is to protect the Louisville community’s public health and safety through wastewater, stormwater and flood protection services. The Consent Decree Mid-Point Review

Response Plan reflects the commitment of MSD leadership and staff to institutionalize best business practices and deliver these services in new and innovative ways. With the support of all MSD divisions and departments, significant strides have already been made towards implementing the initiatives defined in this Response Plan. There are still many challenges to overcome before complete success can be declared. However, the preliminary indications are that

the Response Plan is moving solidly in the proper direction. Establishing a synergy between the Response Plan initiatives creates sustainable improvements allowing delivery of ‘best in class’ service to our community.

MSD’s Mission

Providing Exceptional Wastewater, Drainage and Flood Protection Services

for Our Community

Given the magnitude of the Consent Decree program and to minimize impacts on ratepayers, investment in non-Consent Decree wastewater, stormwater, flood protection and asset management infrastructure was minimized through 2024. However, by 2013, the minimal numbers used in the IOAP financial plan were deemed inadequate to represent the actual investments required to sustain acceptable levels of service.


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ATTACHMENTS Attachment A - Construction Cost Escalation Review

Attachment B - Consent Decree Mid-Point Review


Attachment A - Construction Cost Escalation Review

F I N A L R E P O R T

Construction Cost Escalation Risks Review‐ Phase 1

Prepared for

Louisville and Jefferson County Metropolitan Sewer District

March 1, 2016

CH2M HILL Engineers, Inc. 402 W. Broadway Ste. 1450 San Diego, CA 92101 (619) 687‐0110 (619) 687‐0111

CONSTRUCTION COST ESCALATON RISKS REVIEW – PHASE 1

MARCH 1, 2016 ES‐1

Executive Summary In a Request for Proposals dated June 15, 2015, the Louisville and Jefferson County Metropolitan Sewer District (MSD) asked CH2M HILL Engineers, Inc. (CH2M) to review the FY16‐FY20 proposed Capital Improvement Plan (CIP) to identify cost saving opportunities, increase efficiency of MSD staff resources and to improve project delivery timelines. This report is a documentation of the Phase 1 effort.

This Phase 1 assessment was a high level review and documentation of MSD's existing CIP delivery systems and recommendations of what to explore in greater detail in a Phase 2 effort. In addition to a review of MSD’s bidding and contract conditions, the Phase 1 analysis involved an MSD steering committee, and interviews with, and information received from, stakeholders including MSD management and staff, the design engineering community, and the construction community. Phase 2 will include further analysis and quantifications of issues identified in Phase 1 and will develop a specific implementation plan for recommendations accepted by MSD.

Recent construction bid prices have been increasing due to a number of factors. While project scope changes have impacted the differences between planning costs and bid prices, there has also been an observed increase in bid prices compared to the final engineer’s estimate that are not related to scope changes. The increase in construction prices was discussed with a broad range of internal and external stakeholders. From these meetings, it is apparent the biggest factors causing increased bid prices are the robust construction market and the construction industry’s perception of how MSD does business. MSD’s business practices result in MSD not being an “owner of choice” among contractors. This reduces bid competition and greatly increases MSD’s bid prices when the construction market is busy. This is clearly indicated by a review of favorable Integrated Overflow Abatement Plan (IOAP) bid prices during the weak market in 2008 – 2012, and the very unfavorable prices received when the construction market strengthened after 2012.

The assessment developed a number of recommendations for MSD to consider. These have been consolidated into the following categories:

Project management – develop project management processes and tools to standardize approaches to cost, scope, and change management, then train MSD project managers to use the processes and tools as intended. Consider “cradle to commissioning” project management to avoid rework and scope changes due to project hand‐offs. Increase the engagement of the design engineer of record in construction support on complex projects to improve the speed of decisions and ensure compliance with Kentucky Building Code requirements. Clarify the roles and responsibilities of MSD project managers on different types of projects (line work versus complex process/mechanical) and consider outside construction management assistance for complex projects that stretch MSD’s available resources. Increase the speed of decisions and shorten the payment cycle that impacts the contractor’s cash flow and increases the “MSD factor” in bidding.

Project bidding – provide broader geographic advertising of large, complex projects that could interest contractors outside the Kentuckiana region. Provide adequate time for bid preparation, and coordinate with other public utility owners in the area (LWC, Louisville Metro, LG&E, KTC etc.) to reduce the number of bid calendar conflicts. Revise bid requirements to be more industry‐standard in regards to bid submittal requirements and bid bonds.

Risk Management – review MSD’s risk management approach relative to construction contracts. Consider revising MSD’s Contract Conditions to align better with industry standards and the practices of peer utilities. Recognize that MSD’s current strict assignment of project risks results in extremely low change orders but higher bid prices. This includes risks of hidden or unforeseen conditions, weather, and other interferences outside the contractor’s control. Review current standardized schedule of liquidated


MARCH 1, 2016 ES‐2

damages (LDs) and consider more industry‐normal approach to establishing project specific LDs, including proportional assessment of Consent Decree stipulated penalties based on cause. Optimized risk sharing strategies can lower overall construction costs but will result in an increased amount of change orders. Prior to making any changes in this regard MSD should clarify expectations relative to risk and change management, as staff are reluctant to bring forward change orders, regardless of the business case for doing so.

Cost Management – institute regular management reviews of cost, scope, and schedule at critical project milestones to allow proactive adjustments as projects move through the development cycle from planning to implementation. Reconsider the use of design/build or other alternate delivery approaches where market forces could improve cost, schedule or risk management performance. Restore the use of structured value engineering or value review workshops led by an experienced value specialist for complex or risky projects, or those over a certain threshold value.

Performance Measurement ‐ Develop performance measures that “flow down” from CIP implementation to specific project performance, project manager performance, and staff/inspector performance.

The interview process also identified the potential for significant cost impacts due to the Supplier Diversity program. Reviewing supplier diversity approaches of other utilities in Kentuckiana and elsewhere could provide examples of other approaches that have been successful in achieving similar goals without the negative cost impacts identified by the contractors interviewed.


1

Contents Section Page

Executive Summary ............................................................................................................................. 1

Section 1 ‐ Purpose and Scope ............................................................................................................. 2 1.1 Scope: .................................................................................................................................. 2

Section 2 ‐ Approach ........................................................................................................................... 3

Section 3 ‐ Key Findings ....................................................................................................................... 4 3.1 Construction Market ........................................................................................................... 4 3.2 MSD Business Practices ...................................................................................................... 5 3.3 MSD Policies ....................................................................................................................... 7 3.4 Supplier Diversity Program ................................................................................................. 7 3.5 Other ................................................................................................................................... 8

Section 4 – Recommendations and Observations ................................................................................ 9

CONSTRUCTION COST ESCALATON RISK REVIEW – PHASE 1

2 MARCH 1, 2016

Section 1 ‐ Purpose and Scope In a Request for Proposals dated June 15, 2015, Louisville and Jefferson County Metropolitan Sewer District (MSD) asked CH2M HILL Engineers, Inc. (CH2M) to review the FY16‐FY20 proposed capital plan to identify opportunities to produce cost savings, be more efficient with MSD staff resources and to improve timeliness of project delivery. This report is a documentation of the Phase 1 effort.

1.1 Scope: Phase 1 Analysis involved an MSD steering committee designated by MSD, and interviews with and information received from stakeholders including MSD management and staff, the design engineering community, and the construction community and included:

1. Review initial budget development costs and project parameters (from IOAP or other planning documents) versus final project parameters and engineer's estimate.

2. Review capital program bidding versus estimate performance and number of bidders per project over the last three to five years.

3. Review current methodologies for procurement including policies, procedures and delivery approaches. Compare MSD's current procurement regulations to state model procurement code and LWC capital construction procurement approaches.

4. Review MSD contract documents and standard specifications vs industry standards for cost and inefficiency drivers.

5. Review current practices for involvement of the engineer of record (typically consulting design engineer) and MSD design and construction management staff in the execution of the construction and impacts of their involvement.

6. Review current inspection practices and processes for requests for changes during construction.

7. Review current project and cost management practices.

8. Any other items as deemed necessary by MSD.

Produce a summary report indicating processes, policies and procedures negatively influencing cost, schedule or efficiency of construction projects. Identify the approach to be used in Phase 2 to develop a plan of improvements for the areas identified as deficient.


3 MARCH 1, 2016

Section 2 ‐ Approach This Phase 1 assessment was a high level review and documentation of MSD's existing capital program delivery systems with recommendations of what to explore in greater detail in a Phase 2 effort. Phase 1 Analysis involved an MSD steering committee, and interviews with and information received from stakeholders including MSD management and staff, the design engineering community, and the construction community. CH2M analyzed bid results for over 250 projects from FY 09 through FY 15. MSD’s bidding and contract terms were also reviewed for comparison with industry‐standard documents and other utilities in the Kentuckiana area.

Stakeholder input was obtained through a combination of structured workshops and individual interviews. To encourage open and honest input, all comments were considered to be “not for attribution” to protect the anonymity of the person making the comments. Stakeholders who provided input included the following:

MSD Staff (titles listed were current at the time of the interviews in June 2015)

Greg Heitzman – Executive Director Angela Akridge – Chief Engineer Brian Bingham – Chief of Operations John Loechle – Infrastructure Manager Greg Powell – Design Manager Vicki Coombs – Operations Performance Manager Jay Thomas – Construction Engineering Supervisor Brad Selch – Design Engineering Supervisor Rene’ Thomas – Purchasing Manager Pat Teeter – Construction Inspection Supervisor Clay Bostic (embedded consultant working as staff) Consultants

Chuck Strubler – CH2M Steve Keiber – HDR Engineering, Inc. Todd Solomon – GRW, Inc. Rob Campbell – Qk4, Inc. Eric Penland – Sabak, Wilson & Lingo, Inc. Mike Harris – Jacobi, Toombs & Lanz Contractors

Travis Unruh ‐ MAC Construction Tony Shade ‐ Hall Contractors Dale Wilson ‐ Judy Construction Tim Courtney – Judy Construction Brian Meyer ‐ Walsh Group Jordan Carrier ‐ Garney Construction


4 MARCH 1, 2016

Section 3 ‐ Key Findings Recent construction bid increases have been rising due to a number of factors. The increase in construction prices was discussed with MSD staff, experienced MSD consulting engineers, and MSD contractors. From these meetings, it is apparent that the biggest factors causing increasing bid prices are the robust construction market, and the perception of how MSD does business. The next sections discuss these findings. Recommendations for future actions are discussed in Section 4.

3.1 Construction Market The overall construction market in the United States and in the Louisville metropolitan area has improved greatly compared to the market three to four years ago during the economic downturn. This has created more opportunities for contractors, allowing them to be more selective on which projects they bid, and less likely to take on uncompensated risk. This results in fewer bidders on MSD projects and higher bid costs. Even though the economy has improved, the compounded inflation rate, using Engineering News Record construction cost index from 2008 – 2015, is about 3.05%. This modest increase in the overall cost of materials and labor indicates that MSD’s rapid increase in bid costs is not due to general inflation, but more to the abundance of opportunities in the overall construction market.

MSD has been experiencing fewer bidders on recent projects. The local construction market as well as the construction market in the Kentucky area are much more robust than a few years ago. All the MSD contractors stated that they are very busy and they are more selective on which projects they bid since they cannot bid all projects. One engineering consultant said that recently another client in Western Kentucky had to bid their wastewater treatment plant twice since they receive no bids the first time. Fewer numbers of bidders is an indication that competition is limited and contractors can price work with significant contingencies and risk factors since they are already busy and don’t need to accept more work with poor margins. This causes individual bids to be higher than in a down market, particularly when coupled with MSD practices in managing construction.

The other issue of concern is the contractors’ relationship with the agencies they work for. In a lean construction market, contractors must bid many projects with very aggressive pricing to ensure they keep their key employees busy and to cover their costs. In a robust construction market, contractors will bid fewer projects and be more selective of the projects they bid and the owners they bid for. Contractors interviewed stated that MSD in not an owner of choice: if there are projects bidding at similar times, contractors will chose to bid a non‐MSD project over an MSD project. This is primarily due to MSD’s business practices and the perception that MSD views contractors as adversaries and not partners. This is discussed further in Section 3.2.

The issue of preferred owners manifests itself in bid prices. Contractors report that they include an “MSD factor”, or contingency, in their bids. This contingency is larger when they don’t need additional work and will also vary by the size, complexity, and risk elements of the work. Experienced local contractors report they also adjust this factor based on what they know about the business practices of individual project managers (PMs) and inspectors. This is part of the increase in bids for the recent basin projects as compared to earlier projects.

Contractors estimate the costs, overhead, and desired profit as the basic elements of their bids. Every bid, for every owner, also has a level of risk in its price. In addition to the factors already discussed, the risk price is directly related to how quickly owners pay invoices, make decisions on changes, and the willingness to resolve issues in the field at the lowest levels. They add their “risk factor” as compensation to assume risk in their bid based on their understanding of which items an owner will pay for as legitimate changes during construction and which items they will not. With MSD projects,


5 MARCH 1, 2016

contractors are assuming less risk in their bids by pricing a high factor in the risk of construction for MSD in their initial bid. This is different than earlier in the IOAP program.

When the IOAP program began in 2008 the downturn in the economy caused contractors to bid more aggressively to ensure winning enough work to keep their key crews and staff busy. MSD staff analysis of the bid prices in the early years of the program (FY09 – FY13) show total bid prices $60 million below planning estimates.

The Ohio River Bridges projects are generally blamed for the recent increase in construction cost in the Louisville metropolitan area. These projects have caused price increases in three primary areas: trucking, aggregate, and concrete. Even though these are important portions of MSD bid prices, they are only a portion of MSD construction costs. The bridge projects do not have an impact on other items such as valves and pipe, while petroleum based products such as PVC pipe have decreased in cost due to lower oil prices.

Contractors also said they were willing to bid more aggressively on earlier projects assuming MSD would follow previous practices in handling project changes and assuming the “reasonableness” of MSD project management, construction management, and inspection staff. Their experiences were based on the significant capital budgets implemented under the previous Area Team organization structure. Multiple changes in the leadership of the Engineering Division resulted in a move to handle all project and construction management in‐house. Now contractors have an understanding of how MSD will manage construction under the current approach, so they report that they bid more “realistically”. This has manifested in higher bids which has had a greater impact than materials and labor prices. The MSD staff analysis of bid prices in FY14 and FY15 show total bid prices almost $98 million over planning estimates, more than offsetting the early cost savings.

3.2 MSD Business Practices There are a number of MSD business practices that cause increases to project costs and contractor bid prices. As discussed above, these business practices will affect bid prices by how contractors work with MSD. These include:

Slow payment of invoices: Even though MSD has a policy to pay invoices within 30 days of approval, there is no consistency to how quickly invoices will be reviewed and submitted for payment, resulting in a process that can take up to 60 days for resolution. Contractors are including the cost of money to carry their costs for this period of time in their bids. While MSD policy shows good intent, individual project managers and construction inspectors control the timeliness of payments and there do not seem to be any performance metrics currently in place to encourage attention to this important cost factor.

Schedule and cost management from planning through construction: Project budgets are usually developed in the planning phase of projects and many current project schedules are subject to requirements of the MSD Amended Consent Decree. The design of the project tends to change as projects progress through the design phases without a formal change management process to track cost impacts. Also, PMs change as the project progresses from planning to design to construction. This creates a lack of consistent ownership to maintain the initial design intent and frequently there is some redesign when the PM in charge is changed. This typically adds cost to the project and increases the design phase schedule. The construction completion date typically does not change so the construction period is shortened. This increases bids since contractors will include the risk for schedule liquidated damages and the cost of overtime work. The Nightingale Pump Station project is an example of this issue.

Slow decisions: MSD has earned a reputation for not having a sense of urgency when making decisions during construction. This has caused delays at the beginning of a project due to permits


6 MARCH 1, 2016

not being obtained as well as slow responses to change order requests during construction. More than one project has been completed with change orders unresolved from the beginning of the project. The contractor perception is that MSD will typically not extend the schedule for completion. Contractors will complete work to avoid schedule‐related liquidated damages without knowing if they will be compensated. Contractors now believe they know what changes MSD will and will not pay for. They will the price the risk of what they believe MSD will not pay for in their bids.

Staff not familiar with expected role: The perception is that some staff are in project management roles they have not been trained for, with no processes or tools to help them. Construction Management staff are seen as inexperienced and lack senior leadership support due to inadequate cover when key staff are unavailable. Many MSD inspectors are seen as being very experienced with construction, but the approach to procuring and assigning inspectors results in inconsistent approaches to identifying and resolving field issues. Contractors believe the inexperienced PMs and some construction inspectors view contractors as adversaries and not as partners. PMs and inspectors will often default to letter of the contract and not look for solutions in the field that would be a benefit to both MSD and the contractor. Also, many decisions are not made in the field but are passed “downtown” to MSD headquarters, and people not as familiar with the project. This leads to delays and slow decision making.

Construction staff have an inconsistent approach to managing projects: Some PMs, construction managers (CMs) and inspectors are more or less likely to approve changes than others. Some negotiate vigorously on price and time, while some just accept the first number the contractor submits. MSD does not have processes and tools in place to ensure consistency in approach and to bring senior resources to the PMs and CMs to help the inexperienced staff. Construction inspection is handled by a mix of MSD staff and outside resources with a wide range of experience and expertise. There are currently no standard approaches, standard tools, or comprehensive training program for project management.

Staffing levels based on line work complexity: The types of projects MSD is completing are more complex than the line projects most PMs and construction inspectors are experienced with. However, staffing levels have not been adapted to recognize the more complex basin and plant projects with PMs acting as CMs on multiple projects, and many inspectors stretched across more projects than they believe they can effectively keep up with. PMs have too many responsibilities on the current complex projects. Additional support to PMs and CMs, either from the engineer of record or additional in‐house senior resources, would help with response time to issues and dealing with project changes. Construction inspector procurement approaches, capability assessment, and work assignment approaches could be standardized to improve overall performance.

Very limited role for the design consultant of record: Design consultants currently have a very limited role during construction of most projects. The Design Services During Construction scopes are used as an on‐call contract and typically used for Request for Information review and sometimes for construction changes. Design consultants are not included in regular construction progress meetings and rarely visit the construction sites. While this approach has worked on line projects, contractors believe that the more complex plant, pump station, and basin projects are managed better when design consultants are involved in progress meetings. This allows contractors to understand the intent of the design and questions can be answered timely to avoid delays. For projects that fall under the requirements of the Kentucky Building Code (KBC), specific requirements for inspections and certifications by the licensed design professional (Engineer of Record) are required, making on‐going participation essential.

Consultant CM: Contractors believe that projects were completed better in the past when a professional CM from the design consultant worked with an MSD PM on complex projects. This was


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the Area Team model that worked well in the late 1990s and early 2000s. This provided more staff support to PMs so decisions were more timely. Consultant CMs were more experienced in the more complex projects bringing additional construction expertise to projects.

3.3 MSD Policies Interviews indicated that MSD policies and typical approaches have an effect on PM and design consultants approach to their work. Their belief is that MSD management expects the Engineer’s Estimates to be in close agreement with the low bid, and do not understand they are intended to reflect “fair market value” in a typical bidding market. If bids are higher or lower than the Engineer’s Estimate mangement wants to know why there is a deviation. Management is also highly focused on change orders, considering them “mistakes” and expects to not see any changes in the projects that would cost money. This results in the following actions:

PM’s increase the quantities on unit price items so they have contingency in the contract amount and can do no cost or low cost change orders that don’t require Board approval.

PM’s strictly interpret the terms of the MSD standard contract, (including those perceived by contractors to be particularly onerous) so contractors learn to add contingency for change orders that MSD won’t allow. For example, industry‐standard Contract Conditions used by peer utilities in Kentucky provide that in the case of concealed or unknown conditions the contract price or time “may be equitably adjusted”. MSD’s Contract specifically states “increase in the Contract Price shall not be allowed for concealed or unknown conditions”. Contractors report that this and other similar restrictive language in MSD’s construction documents cause them to increase bid prices to account for these risks.

PMs decide not to approve extra work that could be efficiently done by the contractor in place just to avoid a change order. This results in a separate follow‐up contract to address issues that could have been handled better through the change order process.

MSD’s strict risk allocation approach contributes to a very low change order rate, but undoubtedly causes bid prices to be higher and encourages the development of follow‐up projects to complete work that could have been accomplished more efficiently through a change order. Finding the correct balance of risk sharing may be the least cost way to do business, but MSD will need to recognize that change orders aren’t all due to mistakes or oversights, sometimes they are a valid outcome of risk sharing. MSD staff opinion is that this will be difficult to accomplish and most MSD PM’s would rather stick to the strict General Conditions than explain a change order to the Board. MSD staff and Contractors will also have to understand the new rules of risk sharing through information sharing programs for this change in approach to have a positive cost impact. A detailed review of MSD construction document terms and conditions is included as Attachment A.

3.4 Supplier Diversity Program Contractors report that implementation of the MSD Supplier Diversity program increases costs to MSD in a variety of ways. The program is run differently than others in the area including the Louisville Water Company, which has similar goals, but recognizes bidder’s documented “good faith efforts” to use minority and women‐owned businesses. MSD’s participation goals of Woman Business Enterprise and Minority Business Enterprise are treated as requirements not goals. The goals are fixed across all projects and do not vary for the type of construction to be completed or the availability of subcontractors to do that type of construction. The goals also apply to individual change orders no matter how the original bid was structured. An example would be a Prime contractor constructing all the concrete structures with a diversity subconsultant completing electrical work in the original bid. If a change order was for concrete, the Prime would now have to include a diversity subcontractor in some


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role for that change order even though the work does not align with the work scope for any of the current diversity subcontractors. This leads to two main actions that increase prices. First, contractors report they often have to select diversity subcontractors at a higher price than non‐diversity subcontractors during the bidding process. Second, contractors report that bids and change orders may include “make‐work” tasks for diversity subconsultants in order to meet diversity program percentage requirements.

The supplier diversity program does allow contractors to submit a waiver with justification for a lower goal. However, contractors believe these will be rejected by MSD, based on past experience. This again points to the program being a requirement instead of a goal.

One other issue that contractors brought up is that MSD requires all subcontractor documentation with the bid submittal. This requires contractors to not accept quotes close to bid time (when the best deals are offered) since diversity subcontractor bids need to be signed. This constrains competition at bid time. Other agencies ask for documentation within 24 hours of bid opening. This has a smaller impact on price but is something that would make bidding easier for contractors.

3.5 Other There are other items that cause price increases.

MSD has a policy to only pay 92% of the value of stored material payments and takes retention on top of that. Standard practice in the industry is to pay 100% of the value of stored materials, minus retainage. Contractors build the cost of money for this into their bids.

Restriction on work hours with the typically tight construction phase schedules makes it difficult for contractors to complete projects without fear of incurring liquidated damages. This adds costs to cover this risk in the bids.

MSD has some equipment types that they prefer and do not want to accept “or equal” equipment. This leads to increased costs as suppliers know they are providing a sole source price for the projects. This is an issue of ease of maintenance, spare parts inventory, etc. MSD may choose to continue this practice as a matter of policy, but should recognize the construction cost impacts of standardizing on a very limited range of vendors.

MSD does not typically pre‐qualify or debar poor performing contractors, design engineers and supplier diversity companies. This can lead to poor designs or constructed projects that lead to increased costs for rework.

Recent MSD storage basin construction contracts bid items are lump sum. Bid schedules do not provide unit prices for items not easily quantified from the bid documents. This means that contractors are bidding lump sum items trying to guess what is included. They will again include contingency to cover that uncertainty. MSD also does not include allowances in bids for unknown/undefined items. This leads to subjective costs of project unknowns like temporary pumping and flow diversion at a higher price to MSD than if the bid schedule was structured differently.


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Section 4 ‐ Recommendations and Observations The following recommendations have been identified for further development in Phase 2 of this study.

4.1 Project Management 4.1.1 ‐ Develop and complete “Project Management 101” training for all MSD PMs and develop a

PM toolset to standardize approaches to cost, scope, and change management. Focus on the roles and responsibilities of MSD PMs and CMs under different delivery approaches. Include dispute resolution, change management, and decision making best practices as part of the training.

4.1.2 ‐ Develop a Capital Improvement Program master schedule and integrate with budget tracking tools particularly to manage IOAP Consent Decree projects. Use milestone tracking to improve the record of completing designs on schedule so adequate time is reserved for construction.

4.1.3 ‐ Consider the roles and responsibilities of MSD project managers and construction inspectors on different sizes, complexity and types of projects (line work versus complex process/mechanical) and assess workload based on required activities. Staff projects adequately to increase the speed of decisions and shorten the payment cycle that impacts the contractor’s cash flow and thus increases the “MSD factor” in bidding.

4.1.4 ‐ Consider “cradle to commissioning” project management to avoid rework and scope changes due to project hand‐offs.

4.1.5 ‐ Expand Design Services During Construction contracts to include the Engineer of Record in a greater role during construction – attend progress meetings, etc. to improve the speed of decisions and facilitate inspections and certifications required by KBC.

4.1.6 ‐ Consider outside construction management assistance for complex projects that stretch MSD’s available resources. Develop consistent change order process and time for decisions. Review MSD change order approval policies to help speed up CO approvals.

4.1.7 ‐ Review the methods to procure, assess skills, and assign construction inspectors to provide adequate inspection coverage from staff qualified for the type of project being constructed.

4.1.8 ‐ Review which Capital Improvement Program projects could be completed as Design Build to accelerate schedule and have price certainty earlier in project schedule (at 60% design instead of at bid opening) and to accelerate construction.

4.2 Project Bidding 4.2.1 ‐ Provide broader geographic advertising of large, complex projects that could interest

contractors outside the Kentuckian region.

4.2.2 ‐ Develop a plan for advance notice informing the local construction market of upcoming bid opportunities (12 month time frame).

4.2.3 ‐ Review increasing/varying bidding time to a duration more applicable for the type of project i.e. more complex project longer bid duration and standardize the project bidding schedule.


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4.2.4 ‐ Develop a comprehensive bidding schedule for MSD construction projects, and coordinate the bidding schedule with other Owners in the area (LWC, Louisville Metro, LG&E, KTC etc.) to reduce the number of bid calendar conflicts.

4.2.5 ‐ Revise bid requirements to be more industry‐standard in regards to bid submittal requirements and bid bonds. For example, MSD typical bid bond is 7.5% instead of the more traditional 5%. While this does have an “up front” cost to a bidder, it also puts more at risk in the event of a forfeited bid bond. This may sway a bidder to re‐consider bidding.

4.2.6 ‐ Develop a short‐term outreach program for the construction community (after management and policy changes are implemented) to re‐brand MSD with respect to the issues addressed in this report.

4.3 Risk Management 4.3.1 ‐ Review MSD’s risk management approach relative to construction contracts. Adopt

industry‐standard contract documents (e.g. Engineers Joint Construction Documents Committee) used by peer utilities in Kentucky. Modify the standard documents through the use of “Special Conditions” where MSD’s interests are better represented with contract language changes. Recognize that MSD’s current strict assignment of project risks results in low change orders but higher bid prices. This includes risks of hidden or unforeseen conditions, weather, and other interferences outside the contractor’s control.

4.3.2 ‐ Review current standardized schedule of liquidated damages and consider an industry best practices approach to establishing project specific LDs, including proportional assessment of Consent Decree stipulated penalties based on cause. Some MSD projects have a “schedule” for LD’s based upon project value. This is not considered best practice in the construction industry. If this approach is challenged it may appear to be an arbitrary penalty instead of actual damages to an Owner. MSD should do their best to quantify the actual damages and establish a reasonable LD value rather than a scheduled amount.

4.3.3 ‐ Develop optimized risk sharing strategies to lower overall construction costs. Note this will result in an increased level of change orders. Prior to making any changes in this regard MSD will need to clearly communicate expectations relative to risk and change management, as staff are reluctant to bring forward changes, regardless of the business case for doing so.

4.4 Cost Management 4.4.1 ‐ Institute regular management reviews of all active projects to allow proactive adjustments

as projects move through the development cycle. Track and proactively manage scope, cost, and schedule relative to the original project concepts and budget developed during planning. Conduct reviews of scope, cost, and schedule at specific design milestones as part of a structured change management process. Coordinate with planning and design staff on what the increased cost to projects to meet community concerns – covering Combined Sewer Overflow basins, placing basins underground instead of above grade, work hours, etc.

4.4.2 ‐ Complete Value Engineering or value review workshops on projects where size, complexity, or risk indicate potential benefits. Engage independent value specialists to do formal Value Engineering studies or less formal value review workshops on major projects. Complete the workshops early in design to achieve the highest leverage on project costs.


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4.5 Performance Measurement 4.5.1 ‐ Identify performance metrics that “flow down” from overall CIP implementation metrics, to

project‐specific metrics, to project manager metrics, to staff and inspector metrics.

4.5.2 ‐ Display CIP and project metrics on a “dashboard” accessible to all staff. Project manager, staff and inspector metrics should be updated at least quarterly and be accessible to individuals and their supervisor.

4.5.3 ‐ To the extent practical, update CIP and project metrics real time, with live links to a comprehensive project management toolset. Update PM and staff metrics at least quarterly, and review at defined project milestones.

Supplier Diversity Observations Cost impacts of the Supplier Diversity program can be documented through analysis of bids

rejected due to Supplier Diversity issues. Several recent bids have been delayed or awarded to the second lowest bidder due to Supplier Diversity issues.

If changes to the Supplier Diversity program are being considered, it may be advisable to consider consistency with supplier diversity approaches of other utilities in Kentuckiana and elsewhere that could provide examples of other approaches that have been successful in achieving similar goals. As a first step, MSD may want to commission a comprehensive disparity study to establish areas of focus for a revised program.

Summary MSD has recently seen bid prices rising particularly when compared to the favorable bids they were receiving during the slow construction market of 2008 ‐ 2012. There are many reasons why this is happening. Some of these are outside the control of MSD, such as scarcity in specific items due to existing alternate projects, for example, the Ohio Bridges Projects. This gap in resources/materials should stabilize as projects come to completion in mid‐2016. Other reasons can be mitigated by MSD changing policies by extending the time to bid, expanding contractor outreach to attract more contractors, and monitoring the local construction market so that MSD is not bidding against other large projects at the same time. In addition, MSD can review other policies and procedures, adopt a more equitable risk management approach, provide additional resources to construction projects, and consider modifying implementation of its Supplier Diversity program to again become an owner of choice for contractors to work for.

MSD is in a time of great change, and looking to complete more complex projects with staff that is competent, but often lacking the experience needed to drive projects and bring about new opportunities. MSD could take a “step back” and review what changes will enhance the agency to carry it into the future. Louisville MSD has the opportunity to become a national model for running an efficient, environmentally sustainable utility providing outstanding service to its customers ‐‐‐truly best in class.


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Attachment A – Bidding Requirements and Contract Forms Review

T E C H N I C A L M E M O R A N D U M

MARCH 1, 2016 1

Attachment A Bidding Requirements and Contract Forms Review PREPARED FOR: Louisville and Jefferson County

Metropolitan Sewer District

COPY TO: Nick Winnike/CIN Gary Swanson/DEN Richard Pyle/SDO file

PREPARED BY: Jim Gagnon/CIN

DATE: March 1, 2016

PROJECT NUMBER: 663806

REVISION NO.: 1.0

Purpose and Scope The purpose of this memo is to summarize the observations of a review of the Louisville and Jefferson County Metropolitan Sewer District (MSD) bidding requirements and contract forms. The review was performed as part of Phase 1 effort of the Construction Cost Escalation Risks Review, currently being performed by CH2M HILL Engineers, Inc. (CH2M).

The bidding documents were reviewed for cost and inefficiency drivers, especially for requirements that may be particularly onerous towards bidders and contractors and having the potential to unduly drive up bid pricing. The documents were also compared against MSD peer agencies in Kentucky to determine if the requirements identified above were unique to MSD and if the documents differed significantly from the requirements of similar regional agencies.

Approach The reviewed MSD bidding requirements and contract forms were taken from the bidding documents for the Morris Forman Water Quality Treatment Center (MFWQTC) Headworks Modifications. The bidding documents indicate an initial bid date of May 14, 2015 (note that, according to the website www.msdbids.com, this bid date was revised to May 20, 2015). In addition, a review of the Division 01 specifications of the Bells Lane Wet Weather treatment Facility (2014) was performed. Because of the recent date of the documents, they are presumed to reflect MSD’s current bidding requirements and contract forms, although these documents may have been tailored specifically to the needs of the projects.

The MSD documents were compared against similar bid documents and contract documents prepared for regional peer agencies. Specifically, the following documents were used:

Louisville Water Company (LWC), Minor Lane Booster Pumping Station (bid opening date November 18, 2009). Construction cost $2.9 Million.

Northern Kentucky Water District (NKWD), Fort Thomas Treatment Plant (FTTP) Advanced Treatment (conformed documents dated April 14, 2010). Construction cost $24.1 Million.

ATTACHMENT A BIDDING REQUIREMENTS AND CONTRACT FORMS REVIEW

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Sanitation District No. 1 of Northern Kentucky (SD1), Lakeview Pump Station Pump Replacement (bid opening date February 22, 2012). Construction cost $6.7 Million.

Sanitation District No. 1 of Northern Kentucky (SD1), Narrows Road Diversion Pump Station (bid opening date October 8, 2010). Construction cost $8.9 Million.

Each of the above projects used the Engineers Joint Contract Documents Committee (EJCDC) Standard General Conditions of the Construction Contract, issued and published jointly by the National Society of Professional Engineers, the American Council of Engineering Companies, and the American Society of Civil Engineers. Each project then included supplemental conditions that documented any modifications to the Standard General Conditions.

Key Findings The following observations are provided for information and further consideration in Phase 2 of the Construction Cost Escalation Risks Review. The following is not an exhaustive list of items that may be influencing costs. No attempt was made to determine the relative impact of each item on construction costs.

Bid Security. Item 5 in 004 – MFWQTC Headworks Information For Bidders (hereinafter IFB) identifies the minimum bid security to accompany any proposal as 7.5% of the total bid. Although this requirement is higher than the 5% requirement that is typical in the industry, it is not unusual compared to the other bid documents that reviewed:

LWC – 5% (Instructions to Bidder, Article P.2)

NKWD – 10% (Instructions to Bidder, Article 8)

SD1 – 10% (Instructions to Bidder, Article 10)

Schedule of Values in Bid Form. Table 1 in 008 – MFWQTC Headworks Bid Form (hereinafter Bid Form) is essentially a Schedule of Values. The table title is “Costs Distributed Among Various Construction Divisions/Categories”, and requires a bid price to be indicated for each specification division (1 through 44) that is applicable to the project, and the instructions indicate the total of these bid prices must equal the total bid amount. This is an area of potential bidding errors and is a burden on bidders trying to wrap up the best possible price in the final hours before bid submittal. None of the peer agencies require such a table in their bid forms, but like MSD, all the agencies require submittal of a schedule of values after award of the contract. Although not specifically stated, this table could be interpreted as a de facto Schedule of Values that may conflict with the contractor’s actual Schedule of Values, which Article 7 of the Contract requires to be submitted for review and approval after the effective date of the contract.

MBE/WBE Program. MSD and LWC appear to have substantially similar program participation goals. MSD states goals (in 000 – MFWQTC Headworks – Invitation to Bid, et. al.) of 15% to certified MBEs and 6% to certified WBEs (for a total of 21%). The LWC Instructions to Bidders requires a good faith effort to expend 15% with certified MBEs and 5% with certified WBEs (for a total of 20%). The bid documents of both agencies indicate that waivers to these requirements may be requested; however, MSD requires waiver requests to be submitted for approval at least 6 days prior to the bid. LWC allows submission of Good Faith Effort forms with the bid. MSD’s approach essentially forces compliance with the stated goals; otherwise, if no waiver is granted, a bidder could find itself “non‐responsive” potentially less than 6 days before the bid due date.

There were no MBE/WBE participation goals stated in the NKWD or SD1 bid documents.

Buy American Policy. Article 21 of the IFB names MSD’s Buy American Policy. That policy is applicable whether or not federal funds are used per Section 215 of the Clean Water Act. MSD’s peer agencies did not require Buy American compliance outside of the federal requirements.


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Maintenance Bond. Article 23 of the IFB requires a Maintenance Bond from the successful bidder. MSD’s peer agencies do not require a maintenance bond. However, MSD’s Maintenance Bond appears only to cover settlement of backfill under paved surfaces, which reportedly is a long‐standing practice for MSD pipeline projects.

Insurance Limits. Appendix C in the IFB states the required insurance amounts. A comparison against LWC’s, NKWD’s, and SD1’s Supplementary Conditions shows that MSD’s requirements are in line with their peers.

Workers’ Compensation – The maximum limit is $500,000 for bodily injury by disease. LWC, NKWD, and SD1 all have maximum limits of $1,000,000.

Commercial General Liability – The maximum limit stated is $1,000,000, which matches the maximum limit for NKWD. SD1 requires $2,000,000, and LWC requires $10,000,000.

Comprehensive Automobile – The maximum limit stated is $1,000,000, which matches NKWD and SD1. LWC requires $2,000,000.

Umbrella Policy – The maximum limit stated is $2,000,000. The following maximum limits were stated for MSD’s peer agencies:

– LWC ‐ $10,000,000 – NKWD ‐ $4,000,000 – SD1 ‐ $1,000,000 for the Lakeview Pump Station and $5,000,000 for the Narrows Road Pump

Station

Builders Risk Insurance – The maximum limit stated is $2,000,000. LWC requires the maximum limit to be the total bid price, and NKWD and SD1 require the full replacement cost of the Work.

Reciprocal Resident Bidder Preference. Article 9 of the IFB states that MSD shall give preference to resident bidders of the Commonwealth against nonresident bidders registered in states that give preference to bidders from that state. LWC and NKWD both do not appear to have this requirement. SD1 stated this requirement for the Lakeview Pump Station (Instructions to Bidders, Article 22.08) but not for the Narrows Road Pump Station.

Pre‐Approved Sources. Article 1.1 in 005 – MFWQTC Headworks – Information Available to Bidders indicates a list of pre‐approved sources and suppliers that is maintained at this website. A review of this list shows multiple sources are available for a preponderance of items while only a few single sources are listed; however, there is added value to these pre‐approved sources (reflecting the fact that contractors do not need to submit shop drawings for them during construction) that may be reflected in the costs of these sources, as compared to sources that are not on this list. None of the other peer agencies appear to have such a pre‐approved source list.

Liquidated Damages. In Article 6.B of the Contract, MSD requirements for liquidated damages are indicated. Table 1 presents a comparison between the liquidated damages stated in the contract documents from several projects of MSD’s peer agencies and those liquidated damages that MSD’s contract would stipulate for similar dollar value projects.


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Table 1. Liquidated Damages Comparison of Liquidated Damages between MSD and Peer Agencies

Peer Agency and Project Project Construction Cost Peer Agency’s Liquidated Damages

MSD Liquidated Damages for Similar Dollar Value Project 1

LWC – Minor Lane Pump Station

$2.9M $1,743/day after Substantial Completion Date

$1,144/day after Final Completion Date

$600/day after Substantial Completion Date

$300/day after Final Completion Date

NKWD – FTTP Advanced Treatment

$24.1M $1,500/day after Substantial Completion Date

$1,000/day after Final Completion Date

$1,500/day after Substantial Completion Date


SD1 – Lakeview Pump Station and Narrows Road Pump Station

Lakeview PS: $6.7M

Narrows Rd PS: $8.9M

$1,000/day after Substantial Completion Date


$800/day after Substantial Completion Date


Notes:

1. From Article 6.B of the Contract for the MFWQTC Headworks Modifications.

The table illustrates that MSD’s stated liquidated damages are generally equal to or less than the amounts required by MSD’s peer agencies. However, MSD’s requirements for liquidated damages deviate from the requirements of its peer agencies in several aspects:

Schedule of Liquidated Damages –MSD provides a schedule of liquidated damages dollar values that depend on the original contract amount. Instead of using a table, MSD’s regional peer agencies state exact dollar amounts for the liquidated damages, apparently independent of the dollar value of the contract. MSD’s approach appears to be arbitrary and does not account for the actual estimated damages that MSD would incur, should there be a delay.

Withholding of Liquidated Damages – Article 6.B of the Contract states that if MSD “reasonably believes” that Substantial Completion will be inexcusably delayed, MSD may withhold an amount from the Contractor “then believed by MSD to be adequate to recover liquidated damages applicable to such delays.” Article 7.K grants MSD the same ability with regard to liquidated damages due when it “reasonably believes that final completion will be inexcusably delayed.” These articles essentially give MSD the right to withhold liquidated damages based on its estimate of a delay and instead of an actual delay. Article 6.B does state that if and when the Contractor overcomes the delay of substantial completion, MSD shall “promptly” release to the Contractor liquidated damages funds that have been withheld but are no longer applicable. Article 7.K states the same regarding liquidated damages withheld for final completion delays.

Neither LWC, NKWD, nor SD1 allow the Owner to withhold liquidated damages prior to an actual delay.

Withholding of Fines, etc. – Article 6.C of the Contract states that, in addition to liquidated damages resulting from an unexcused delay in achieving Substantial Completion, when MSD is required by an Authority Having Jurisdiction (AHJ) to pay “fines, charges, costs, reimbursement of funds, or similar costs” because of the delay, the Contractor is required to reimburse MSD for those fines, etc., with interest and any late charges. LWC, NKWD, and SD1 do not require this, and normally, if known


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ahead of time, such as for a consent decree project, these costs are part of the calculation of liquidated damages for an individual project.

Unit Price Work. Item 4 of the IFB states that determination of actual quantities and classifications on Unit Price Work will be made by MSD. Other agencies using the EJCDC General Conditions (Article 9.07) state that the Engineer makes these determinations and will review them with the contractor before rendering a decision. MSD’s statement in Item 4 of the IFB leaves no room for negotiation with the contractor, which can place upward pressure on construction unit costs, if the contractor believes he will not have an opportunity to discuss quantities and classifications.

Retainage. Retainage of amounts due to the Contractor is addressed in two distinct places in MSD’s contract documents.

Retainage is addressed in Article 7 of the Contract, and stipulates that 10% retainage will be withheld from each monthly pay request until 50% of the project is complete, after such time the retainage withheld will be 5% from each monthly pay request. Article 7.I states that upon substantial completion, MSD will pay up to 100% of the contract price less liquidated damages and less 200% of reasonable costs to complete the Work. LWC does essentially the same, reducing retainage to 200% of the estimated value of remaining work at substantial completion (General Conditions Article 14.02). NKWD retains 10% until final completion (Article 6 of the Agreement). SD1 retains 10% until substantial completion, then reduces retainage to 200% of the Engineer’s estimate of the value of work remaining (Article 6 of the Agreement). In this respect, MSD addresses retainage similarly to its peer agencies.

Retainage has also been addressed by MSD in Section 01 29 00 (Payment Procedures). Although that section was not available for the MFWQTC Headworks project, that section from the Bells Lane Wet Weather Treatment Facility was reviewed. Paragraph 1.01 (Payment On Project‐Specific Stored Materials) states that material stored shall be paid at the rate of 92% of its value. Because the Contract takes precedence over the Specifications (Article 3.H of the Contract), this reduced rate of payment may be interpreted as being in addition to retainage. None of the peer agencies have this requirements on stored materials.

Role of the “Engineer”. The EJCDC Conditions of the Contract used by all the peer utilities specifically name the engineer of record (also referred to as the “licensed design professional” in various requirements of the Kentucky Building Code). The roles and responsibilities of the Engineer are called out in many places in the industry‐standard documents as noted in following sections. The 2013 Kentucky Building Code (KBC) also contains numerous requirements for inspections and certifications by the licensed design professional for projects that fall under the requirements of the KBC (typically vertical construction, but not line work). MSD’s Conditions of the Contract make no reference to the engineer of record, and all duties typically assigned to the Engineer are called out as the responsibility of MSD. While the contract language does not preclude MSD from assigning the appropriate responsibilities to the engineer of record, standard practice in the industry clearly defines the roles and responsibility of the Engineer, and the communication protocol between the Contractor, Owner, and Engineer. This helps document a standard approach to managing the Contract in accordance with code requirements and industry standards.

Review of Payment Requests. Article 7.D of the Contract stipulates that MSD shall review contractor payment requests and may review them against the work performed and shall approve in writing the amount “which, in the opinion of MSD, is properly owing to the Contractor.” The same article also states that payment shall be made within 30 days of written approval of the each payment request. This differs from peer agencies in three ways.

First, Article 14 of the EJCDC General Conditions used by the peer agencies state that the Engineer will review the payment requests. LWC and SD1 specifically name the design engineer (CH2M and HDR, respectively) as the Engineer. This means that the design engineer reviews the payment requests as an


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objective third party. NKWD adds language that splits the role of Engineer between the design engineer and NKWD, and payment request review would be in NKWD’s scope.

Second, Article 14.02.B of the EJCDC General Conditions used by the peer agencies state that the Engineer render a decision of the payment request under review within 10 days of receipt of the request. MSD is not required to provide written approval within any particular time frame.

Third, the stipulation to make payment within 30 days of written approval of each payment request is at the long end of what MSD’s peer agencies practice. LWC also states payment will be within 30 days (General Conditions Article 14.02.C.1); however, NKWD states payment will be within 25 days (Supplemental Conditions, Article 14.02.C.1), and SD1 states payment will be within 10 days (General Conditions Article 14.02.C.1).

Pay‐when‐Paid. Article 7.E of the Contract states that the contractor shall immediately pay all subcontractors when payment is received from MSD. None of MSD’s peer agencies place this requirement on the Contractor.

Refund of Amounts Paid. Article 7.G of the Contract states that MSD shall have the right to “demand the return of a portion or all of the amount previously paid to the Contractor” for a number of reasons, including quality and quantity of work performed, possible inexcusable delay in substantial or final completion, misuse of contract funds, claims against MSD, loss caused by the contractor, and failure to perform any obligation to MSD. None of MSD’s peer agencies place this requirement on the Contractor.

Substantial Completion. Article 7.I of the Contract states that when the contractor submits written notification of substantial completion, MSD will inspect the work to confirm substantial completion. The article also states that if MSD is required to repeat any inspections because it determined the work was not substantially complete, the contractor shall bear MSD’s costs of repeat inspections, which will be deducted by MSD from any payment. This differs from the EJCDC General Conditions of MSD’s peer agencies in three ways.

First, General Conditions Article 14.04.B of MSD’s peer agencies states that inspection for confirming substantial completion shall be done by the “Owner, Agency, Contractor, and Engineer.” MSD’s contract gives sole responsibility for inspection to MSD. In some cases the KBC requires inspections and certifications by the licensed design professional responsible for the project. While MSD’s contract language does not preclude that happening, clearly defining the Engineer’s role could be helpful in managing close‐out of the project in accordance with appropriate KBC requirements.

Second, General Conditions Article 14.04.B of MSD’s peer agencies states that inspection for confirming substantial completion shall occur “promptly” after the contractor submits written notification. In addition, General Conditions Article 14.04.C states specific deadlines for actions to be taken by the engineer and the owner once the engineer makes a decision whether substantial completion has been achieved. MSD’s contract does not establish any timeframe within which MSD, as the sole determiner of substantial completion, shall respond to the contractor’s request.

Third, the contract documents of MSD’s peer agencies do not assign any costs of repeat inspections on the contractor.

Notice of Claim. Article 13.B of the Contract states that the contractor shall submit written notice of a claim to MSD no later than 10 days after the event in question or the first appearance of the circumstance causing the claim. LWC also allows 10 days (General Conditions Article 10.05.B); however, NKWD (General Conditions Article 10.05.B) and SD1 (Supplemental Conditions Article 10.05.B) both allow 30 days for submitting written notice.

Unknown Conditions. Article 13.D of the Contract states that a claim for “increase in the Contract Price shall not be allowed for concealed or unknown conditions” encountered during performance of the


AUGUST 7, 2015 7

work. The article also states that the contractor’s “sole recourse” is appropriate adjustment of the substantial completion or final completion date. LWC (General Conditions Article 4.03.C) the states that the contract price and/or times “may be equitably adjusted.” SD1 and NKWD (General Conditions Article 4.03.C) state that the contract price and/or times “will be equitably adjusted.” Therefore MSD is the sole entity that shifts risks of unknown conditions to the contractor.

Submittal of Claim Documentation. Article 13.J of the Contract states that within 30 days of written notification of a claim, the contractor shall submit the formal written claim with supporting documentation. LWC (General Conditions Article 10.05.B) requires submittal of written claim documentation within 20 days of the event in question, unless the Engineer allows additional time, which is more stringent than MSD’s requirement. However, NKWD and SD1 (General Conditions Article 10.05.B) require submittal within 60 days of the event in question, unless the Engineer allows additional time.

Response to Claim. Articles 13.K and L of the Contract state that MSD has 30 days after receipt of a formal written claim to issue a formal written decision. In addition, if MSD does not respond within 30 days, the contractor may submit a separate written demand for decision, and if MSD does not issue a formal written decision within 10 days of the demand, the claim shall be assumed to be denied. This is a total of 40 days to assumption of claim denial.

This is a longer time period than allowed by MSD’s peer agencies. LWC and NKWD (General Conditions Article 10.05.D) state that if the engineer takes no action within 30 days of submittal of the written claim, the claim is denied. SD1 allows 31 days for the same (General Conditions Article 10.05.D).

Warranty Period. Article 16.D of the Contract states that the contractor’s warranty is obligated for a period of 12 months following final completion. LWC, NKWD, and SD1 (General Conditions Article 13.07.A) establish the warranty period as one year within the date of substantial completion, which is generally defined as the date when the Owner has beneficial use of the project. Although the MFWQTC Headworks Modifications bidding requirements and contract forms that were made available for this review did not state the dates of substantial and final completion, generally final completion is a number of days after substantial completion; therefore, the contractor’s warranty would be longer by this number of days than it would be for the peer agencies. The LWC, NKWD, and SD1 projects that were reviewed allowed a range of 30 to 60 days between substantial and final completions.

Suspension of Contractor’s Performance. Article 18.A of the Contract states that MSD may suspend the contractor’s performance, entirely or in part, for a cumulative period of up to 180 days. Article 18.B states that in the event of performance suspension, “through no fault of the Contractor,” MSD shall pay the contractor for demobilization and remobilization, protection of work in place, and storage of and insurance on materials and equipment purchased for the project. This differs from the EJCDC General Conditions of MSD’s peer agencies in two ways.

First, Article 15.01 of the General Conditions of MSD’s peer agencies state that suspension of performance may be no longer than 90 days.

Second, in the same article, LWC states that an adjustment to contract price and/or time directly attributable to the suspension may be granted. NKWD and SD1 state in the same article that an adjustment shall be granted. MSD’s Contract itemizes in Article 18.B of the Contract what costs may be claimed by the contract and does not automatically allow for a change in contract time, while MSD’s peer agencies do not limit the scope of the claim for change in contract price and/or time.

Project Records. Article 22 of the Contract states the contractor “shall maintain and protect” the record documents for no less than 5 years after final completion “or for any longer period of time as may be required by law or good construction practice.” LWC, NKWD, and SD1 (General Conditions Article 6.12) all direct the contractor to deliver the record documents to the engineer upon completion of the work.


8 AUGUST 7, 2015

Conclusions and Recommendations The key findings above identify a number of items and ways in which MSD’s bidding requirements and contract differ from the equivalent requirements of some of MSD’s regional peer agencies. The scope, scale, and cost impacts of these differences vary. Some, like the bid security value may have little effect on final bid price in a competitive market, while others, like the refusal to compensate the Contractor for costs or time associated with concealed or unknown conditions, will increase bid prices regardless of market conditions. No attempt was made at this time to assign a cost impact to any of the items identified in this memo.

Moving forward, in Phase 2 of the Construction Cost Escalation Risks Review, CH2M recommends that the issues identified herein be further analyzed and quantified and a specific implementation plan to reduce the cost impact of these issues be developed for MSD review and approval.


Attachment B - Consent Decree Mid-Point Review

FINAL REPORTLouisville and Jefferson County

Metropolitan Sewer District

Consent Decree Implementation Mid-Point Review

March 1, 2016

i

Table of Contents

Table of Contents

Executive Summary .............................................................................................................................................. ES-1

Background ................................................................................................................................................................ ES-1

Findings ....................................................................................................................................................................... ES-1

Recommendations .................................................................................................................................................. ES-4

Section 1 Introduction .................................................................................................................................... 1-1

1.1 Consent Decree Overview ...................................................................................................................................... 1-1

1.2 Project Objectives....................................................................................................................................................... 1-1

1.3 Review Process............................................................................................................................................................ 1-2

1.4 Report Structure ......................................................................................................................................................... 1-4

Section 2 Summary of Existing Program .................................................................................................. 2-1

2.1 Sanitary Sewer Discharge Plan ............................................................................................................................ 2-1

2.2 Long Term Control Plan .......................................................................................................................................... 2-1

2.3 Other Provisions of ACD .......................................................................................................................................... 2-2

2.4 IOAP Elements ............................................................................................................................................................. 2-3

2.4.1 Plan Summary.................................................................................................................................................. 2-3

2.4.2 SSDP ..................................................................................................................................................................... 2-4

2.4.3 LTCP ..................................................................................................................................................................... 2-5

2.5 IOAP Implementation Status ................................................................................................................................. 2-5

Section 3 Comparison to Other Wet Weather Programs in the U.S. ............................................... 3-1

3.1 Narrative Program Descriptions ......................................................................................................................... 3-1

3.1.1 Nashville Metro ............................................................................................................................................... 3-1

3.1.2 Knoxville Utilities Board ............................................................................................................................. 3-1

3.1.3 City of Columbia (SC) .................................................................................................................................... 3-2

3.1.4 Cincinnati MSD ................................................................................................................................................ 3-3

Section 4 Review Findings............................................................................................................................. 4-1

4.1 Organization of Findings ......................................................................................................................................... 4-1

4.2 Strengths ........................................................................................................................................................................ 4-1

4.3 Staff Concerns .............................................................................................................................................................. 4-4

4.4 Peer Review Comments ........................................................................................................................................... 4-5

Section 5 Recommendations ........................................................................................................................ 5-1

5.1 Staff Training ................................................................................................................................................................ 5-1

5.2 Staffing Levels .............................................................................................................................................................. 5-1

5.3 O&M Input During Construction/Commissioning ....................................................................................... 5-1

5.4 Succession Plan for ACD Compliance ................................................................................................................ 5-1

5.5 Market Pressure on Construction Costs ........................................................................................................... 5-2

5.6 Future Funding Needs Outside IOAP ................................................................................................................. 5-2

5.7 Schedule Pressure from Internal Processes ................................................................................................... 5-2

5.8 Document Management .......................................................................................................................................... 5-2

5.9 Project Management Discontinuity from Phase to Phase ........................................................................ 5-2

Table of Contents

ii

5.10 Project/Program Controls System ................................................................................................................... 5-3

5.11 Program Budget ....................................................................................................................................................... 5-3

5.12 Potential sizing issues may still emerge ........................................................................................................ 5-4

5.13 Public engagement (potentially) causing schedule & budget issues ................................................ 5-4

5.14 Post-construction compliance monitoring (PCCM) approach ............................................................. 5-4

5.15 Risk Management .................................................................................................................................................... 5-4

5.16 Schedule Management .......................................................................................................................................... 5-5

5.17 Cost Escalation .......................................................................................................................................................... 5-5

Section 6 Summary Scorecard ................................................................................................... 6-1

List of Tables

Table ES-1: Summary Scorecard of Peer Review Findings ............................................................................................... ES-2

Table ES-2: Revised Program Cost Projection ........................................................................................................................ ES-5

Table 1-1: Community Values for IOAP Analysis ...................................................................................................................... 1-2

Table 2-1: SSDP Project Status Summary .................................................................................................................................... 2-4

Table 2-2: LTCP Project Status Summary .................................................................................................................................... 2-5

Table 2-3: Program Budget (2008 dollars) ................................................................................................................................. 2-5

Table 2-4: Current Program Cost Projection at Completion vs. Budget ......................................................................... 2-6

Table 3-1: Comparison Summary for Similar Large Consent Decree-Driven Wet Weather Programs ............ 3-4

Table 5-1: Revised Program Cost Projection .............................................................................................................................. 5-3

Table 6-1: Summary Scorecard of Peer Review Findings ..................................................................................................... 6-1

Appendices

Appendix A Resumes

ES-1

Executive Summary

Background This report presents the results of a peer review conducted by CDM Smith for MSD’s wet weather

program implemented under the requirements of the Amended Consent Decree (Civil Action No. 3:08-

cv-00608-CRS; filed April 15, 2009). At this point in time, MSD’s program has been roughly 50%

completed, thus this project has been termed the “Louisville MSD Mid-Point Consent Decree Review”.

The CDM Smith peer review team conducted a two-phased approach to the peer review, consisting of a

Collaboration Phase and Independent Evaluation Phase. In the Collaboration Phase, the peer review

team collaborated with MSD and your program management consultant to develop an understanding of

activities and documents developed to date, and we developed an understanding of the approaches

which have been adopted in developing the program. We then engaged MSD staff and the program

management consultant in a “lessons learned” discussion in an intensive two-day series of onsite

interview meetings to assist us in our independent forward-looking analysis.

In the Independent Evaluation Phase we analyzed the results of the program review, and from that

developed a set of key findings that were organized into a “report card” (see below). This analysis

included elements of other Consent Decrees and lessons learned by other utilities. A series of

recommendations was developed to address each of the key findings. The results of both phases of the

peer review are documented in this report.

Findings The findings of the peer review team have been grouped into key program elements, summarized and

presented below in a “report card” format, with ratings assigned as traditional “letter grades” (A through

F; see definitions at bottom of table). These ratings reflect the peer review team’s assessment of MSD’s

program elements relative to industry norms and standards. The ratings take into account a) MSD’s

performance to date and b) the prospects for successfully addressing each key program element during

the remainder of the program. Comments that explain each rating are included, with the detailed

information that supports each comment provided in the full text descriptions of the team’s findings.

Executive Summary

ES-2

Table ES-1: Summary Scorecard of Peer Review Findings

Program Element

Peer Review Finding

ID

Rating (A – F)

Comments

Notes:

� Comments included below are intended to provide brief explanations of the assigned ratings. Detailed information thatsupports each comment is provided in the full text of Section 4 of the Mid-Point Consent Decree Review report.

� Ratings definitions:

A – Best of class

B – Typical of successful wet weather programs

C – Adequate; improvement could benefit program

D – Needs immediate attention

F – Urgent risk of failure (not used)

Program Approach & General Status

1. IOAP objectives and approach to overflowcontrol

S.2 A MSD has developed a plan with reasonable, achievable and affordable levels of CSO and SSO control. The mix of traditional (grey) and sustainable (green) infrastructure, balanced with an adaptive management approach to program implementation, is expected to both meet regulatory requirements and the needs of the community.

2. Adaptivemanagement ofprogram

S.3 A MSD’s program effectively incorporates adaptive management principles. This approach enables MSD to deliver to ratepayers the best solution, accounting for all factors, even if that solution may increase cost. MSD’s use of adaptive management includes a process to integrate green infrastructure in a manner that maximizes Triple Bottom Line benefits to the community while minimizing risk to MSD of missing CSO reduction targets.

3. Regulatorycompliance status

S.10 A MSD has dramatically improved its relationship with KDEP and U.S.EPA Region 4 in recent years. MSD is now respected by the regulatory agencies and able to effectively negotiate IOAP program compliance requirements with them as implementation proceeds.

4. Public outreach S.11 A MSD has developed and conducts highly effective outreach to the public including the use of a Wet Weather Team Stakeholder Group. Public input is solicited and incorporated into project implementation. There is broad public support for the program but some project specific opposition that pose schedule and budget risks.

5. Overall programcomparison tonational peercities/agencies

S.1 A- MSD’s program compares very favorably to similar programs elsewhere. MSD’s progress is well ahead of other programs in the area, including those of the other large Ohio River cities. Per capita cost of the program is well below typical per capita costs elsewhere, and is among the lowest in the area. This is due in part to the capital improvements that MSD completed prior to the Consent Decree.

Schedule

6. Schedulemanagement

SC.9 PR.5 PR.8

C+ All ACD deadlines have been met which has led to reduced stipulated penalties in some instances. However, no programmatic schedule tracking system is in place. Risk of future schedule issues is emerging.

7. Assessment of fines and penalties

S.5 A To-date MSD has not been assessed any stipulated penalties related to deadlines under the ACD. Early in the program MSD paid some smaller fines related to solids and floatable permit violations.

Financial

8. Program funding S.6 SC.7

A � MSD has developed a funding strategy that has received broad public support with relatively little opposition. Funding of theprogram appears to be secure well into the future. Moderaterate increases remain within the authority of the MSD Board toapprove which creates less uncertainty about program funding.Funding needs outside the IOAP could compete for limited funds in the future, but MSD is addressing this with facilities planning.

Executive Summary

ES-3

Program Element

Peer Review Finding

ID

Rating (A – F)

Comments

9. Cost control and adherence to budget

SC.5 PR.3 PR.4 PR.9

C Although MSD has generally done a good job managing program costs to date, cost issues have emerged recently with some projects. The following elements will contribute to the challenge of meeting the targeted $850M program cost projection:

� Current projection for total program cost is $56M higher than original estimate due to cost escalation from an improving economy, local construction market conditions, and scope changes related to facility sizing and public input;

� Existing contract language may be shifting excessive construction risk to contractors thereby increasing cost to accommodate risk;

� Potentially tight schedules for upcoming projects could impose additional cost;

� Contingency allowances used in original estimates are lower than current industry practice for project cost estimating.

Remaining projects should be re-estimated and rigorous cost control strategies implemented on the revised budgets.

Current Practices & Resources

10. MSD staffing to support program:

� Engineering and Management

� Operations

SC.1 SC.2 SC.4 SC.6

B+

C

MSD has excellent staff in place, but there are concerns about MSD’s ability to hire and retain key staff in the face of growing market pressures for those staff. There are also concerns about succession planning over the life of the program and lack of experience on large projects. Staffing levels may not be sufficient for some compliance needs, especially for skilled trades and professionals who are being lost to private industry. Complex facilities being added to collection system require sufficiently trained and experienced staff to operate and maintain properly.

11. Organizational structure

S.8 SC.3 PR.1

C

MSD’s organizational structure creates a series of management hand-offs, where projects are passed to different MSD managers, during the implementation process. The hand-offs create issues that would be avoided by retaining the same project manager throughout the planning-to-commissioning life of each project. Project management training will be needed.

12. Management of risks PR.7 C- While MSD has generally managed risk effectively to-date, the current process for risk management is relatively informal. Given the discontinuity in MSD project managers during the life of projects, the absence of formal risk management practices could become problematic for MSD in the future, as high-risk projects remain to be implemented.

13. Program controls and documentation of progress

PR.2 D Adequate program controls systems have not been in place. The following items are needed to support program-level decision making as well as controls related to scope, schedule and budget on projects:

� Documented policies and procedures for key controls functions, such as project cost and change management

� Program schedule regularly updated based on actual progress

� Project management information system

Given the cost and schedule concerns noted above, and the inherent risk in upcoming projects, the current approach poses a significant risk of failure.

Executive Summary

ES-4

Program Element

Peer Review Finding

ID

Rating (A – F)

Comments

14. Project documentmanagement

SC.8 B- MSD maintains good access to project documents, but could benefit from development and consistent application of document management systems.

15. Data collection and management

S.9 B+ MSD has established an excellent network of equipment for flow and rainfall monitoring to support the program and SCADA programming resources to support operations.

16. Monitoringperformance ofcompleted projects

S.4 S.7

PR.6

B MSD’s flow and rainfall monitoring program produces useful data for the post-construction compliance monitoring (PCCM) program. Most of the effort to-date has focused on statistical analysis of observed data. MSD plans to increasingly use the data for updating and re-calibrating the collection system model, which can better evaluate facility performance against targets.

Recommendations As a result of the peer review process, 36 specific recommendations were made, covering a wide range

of program elements. These recommendations are summarized below, with emphasis on what the peer

review team regards as the key recommendations.

MSD Organizational Structure and Assets

MSD has excellent resources with which to implement the program, most importantly, capable and

motivated staff. There are however, several aspects of the organization that should be addressed:

� Structure: As projects are implemented, the MSD organizational structure creates hand-offs of

projects from group to group, and to different individual project managers within those groups. It

is recommended that MSD modify its organizational structure to provide for start-to-finish

(planning to commissioning) ownership of each project by the same individual project manager.

� Staff: MSD needs better succession planning as it relates to key staff involved in ACD compliance.

By nature, Consent Decree-driven programs are long-term efforts, and it is essential that

knowledge of the initial ACD requirements, objectives and compliance strategies be passed from

generation to generation within the organization. It is also important that sufficient staff, with the

right skills, are engaged within the organization to accomplish its mission. Market pressures are

creating challenges to MSD in hiring and retaining staff, especially for some skilled positions, and

MSD needs to address staff hiring, retention and succession planning for these positions.

Additional focus on training these staff should also be considered. For example, project

management training to support the recommended change in the assignment of project managers

over the full life of projects.

� Other Assets: MSD should focus on development and implementation of rigorous project/

program controls systems. MSD has a very large program, which requires sophisticated tools to

properly track and manage. Although improvements are underway, the current program controls

systems are inadequate and impose significant risk of failure to the program going forward. MSD

also maintains a large network of flow and rainfall monitoring equipment, GIS, and computer

models (instream and collection system) which should be continuously updated (re-calibrated)

and maintained, and properly applied, to successfully support the essential facility design and

post-construction compliance monitoring activities.

Executive Summary

ES-5

Budget Management

MSD has done a good job managing the program budget to-date, but concerns are looming about the

budget going forward. Local construction market conditions and other factors have elevated the cost of

several projects. Also concerning from a cost perspective, public pressure has surfaced to increase the

use of sustainable technologies (green infrastructure), which increased the cost of one recent project.

These pressures from the public can be expected to only increase going forward, putting additional

pressure on MSD’s ability to adhere to the targeted and announced $850M program budget. Based on

information provided to CDM Smith for this review, the original projected program cost of $850M has

increased to $906M, based on the same escalation and contingency assumptions used to establish the

original cost projection (see Section 2 for additional details). CDM Smith recommends that those

contingency assumptions be revised (increased) to align with current industry practice. Using the

recommended contingency factors, a new projected program cost of $942M has been estimated (see

Section 5 for additional details). Table ES-2 below summarizes the components of both cost projections,

which include completed projects, committed project costs (bids have been received but construction is

not yet complete), and future project costs (still in the planning or design stage). The difference

between the two sets of costs is the revised cost projections apply the higher recommended contingency

allowances to the committed and future project costs.

Table ES-2: Revised Program Cost Projection

Project Status Current Cost Projection (1)

Revised Cost Projection

Completed Projects $247M $247M

Committed Costs (projects have bid) $251M $256M

Future Costs (projects have not bid) $408M $439M

Total Projected Program Cost $906M $942M

(1) From Table 2-4

It is recommended that MSD re-estimate the cost of the remaining projects, and aggressively manage

these project costs during implementation. MSD should also evaluate the manner in which construction

risks are assigned, as the current approach may shift excessive risk to the contractor, which may in turn

drive up costs (relative to a different risk allocation strategy).

Schedule Management

MSD has also done a good job completing projects on the defined program schedule, but going forward

MSD could be challenged to continue this good track record. The public pressure for increased use of

green infrastructure requires that projects be reviewed and revised, which can put significant pressure

on schedules. This pressure can be minimized with aggressive schedule management, allowing

sufficient time upfront to incorporate public input. The (current) lack of sophisticated program controls

systems also must be successfully addressed to avoid further challenges to program schedule

compliance. It is recommended that MSD carefully manage schedules, especially during the planning

and design phases, to avoid compressing the construction phases in order to meet completion deadlines,

as tight construction schedules will drive up costs.

Risk Management

MSD should develop and implement a formal risk management program, to identify the full set of risks

to the program and individual projects in the following areas: technical, fiscal, environmental/health &

safety, legal and management. While MSD’s program currently enjoys solid public support, fostered by a

Executive Summary

ES-6

strong public outreach effort, failure to properly plan for risks in these areas can create issues that

quickly erode that support. Missing water quality objectives, over-budget facilities, delays and fines,

aesthetic concerns, and resistance to rate increases are all common risks to public acceptance of wet

weather programs, and MSD needs to better integrate formal risk management practices into its

program.

1-1

Section 1

Introduction

1.1 Consent Decree Overview MSD entered into a Consent Decree with the U.S.EPA and the State of Kentucky on August 12, 2005, in

response to an enforcement action by U.S.EPA and KDEP for alleged Clean Water Act (CWA) violations

related to sewer overflows. The stated objective of the Consent Decree was to further the objectives of

the CWA; eliminate unauthorized discharges from MSD’s separate sewer system, combined sewer

system and water quality treatment centers (WQTCs); and to address discharges from MSD’s permitted

CSO outfall locations.

The 2005 Consent Decree was later amended to address alleged CWA violations related to WQTC

performance, recordkeeping and reporting. An amended Consent Decree (ACD) was entered into

federal court on April 15, 2009, in which the Commonwealth of Kentucky is the plaintiff, the U.S.

government is the plaintiff-intervener, and MSD is the defendant. The ACD supersedes the original

(2005) Consent Decree, and in addition to WQTC issues, requires MSD to address both CSO and SSO

discharges from its collection system.

The ACD incorporates by reference a number of documents previously developed by MSD, including the

Early Action Plan (which includes the Nine Minimum Controls for CSOs, CIP projects, CMOM self-

assessment, Sewer Overflow Response Protocol). The ACD also requires that new plans be developed by

MSD. Specifically two Discharge Abatement Plans are required – (1) a Sanitary Sewer Discharge Plan

(SSDP), and (2) a Long Term (CSO) Control Plan (LTCP). The ACD requirements for each of the two

plans are described below.

The ACD also specifically cites the appointment by MSD of a Director, and a Wet Weather Team

assembled by the Director, to address implementation issues for the wet weather program developed in

response to the ACD.

1.2 Project Objectives In December 2014, CDM Smith was retained to provide an independent review of progress to date in

implementing the ACD as well as recommendations for optimization of remaining projects and related

ACD compliance activities. The recommendations resulting from this review are intended to mitigate

the identified risks. The objectives of this review are summarized below:

� Provide a comprehensive and unbiased, third-party evaluation of MSD’s ACD compliance program

performance to-date on completed projects.

� Provide perspective on MSD’s program by comparison to other cities with similar agreements,

both regionally and nationally, with particular interest in EPA Region 4 cities.

� Provide recommendations for optimizing ACD efforts through 2024 based on lessons learned and

“value engineering” critique of remaining projects and submitted regulatory documents to

identify possibilities for overflow reduction and cost optimization on projects yet to be

constructed.

Section 1 • Introduction

1-2

� Provide recommendations on programmatic elements such as preventative maintenance,

monitoring, modeling and compliance reporting.

� Identify potential program risk elements and assist MSD in defining any additional risk mitigation

strategies that may be useful to the program. Risk categories include schedule, cost, system

performance, public acceptance, and organizational readiness to implement the capital projects

and to take ownership of new facilities.

1.3 Review Process The CDM Smith team conducted a two phased project approach consisting of a Collaboration Phase and

Independent Evaluation Phase. Each of these is briefly described below:

Collaboration Phase

Our team collaborated with MSD and your program management consultant (CH2M Hill, Inc.) to develop

an understanding of activities and documents developed to date, including:

� History of the Consent Decree process (leading up to the ACD).

� Consent Decree requirements (goals and objectives, deliverables, schedule).

� Guiding Documents – Long Term Control Plan, Nine Minimum Controls, CMOM, Sanitary Sewer

Discharge Plan, IOAP/Revised IOAP.

In addition, we developed an understanding of the approaches which have been adopted in developing

the program. Specifically:

� Demonstrative approach used in developing the CSO LTCP.

� Levels of service used to develop the SSDP.

� Cost-benefit approach to selection of solutions included in the IOAP.

� Other programs such as NMC, CMOM and SORP.

� Basis for developing the 2012 IOAP Modification.

The IOAP was developed using a values-based performance evaluation framework established by the

Wet Weather Team. A benefit-cost scoring methodology was developed and applied for selecting specific

project alternatives using eleven community values:

Table 1-1: Community Values for IOAP Analysis

Project-Specific Values Programmatic Values

� Asset protection

� Eco-friendly solutions

� Environmental enhancement

Public health enhancement

� Regulatory performance

� Customer satisfaction

� Economic vitality

� Education

� Environmental justice and equity

� Financial equity

� Financial stewardship

Our understanding of Louisville MSD’s IOAP and wet weather program is summarized in Section 2 of

this report. With this understanding, we engaged MSD staff and the program management consultant in


1-3

a “lessons learned” discussion to assist us in our independent “look forward” analysis. These discussions

included elements of other Consent Decrees and lessons learned by other utilities. This comparison to

other utilities is presented in Section 3 of this report.

Independent Evaluation Phases

This review of IOAP implementation activities to date focused on numerous issues, including but not

limited to:

� Adherence to Consent Decree specifics on deliverables and other activities

� Adherence to the schedule

� Actual versus initial project cost estimates

� Public outreach effectiveness

� Unanticipated events

� Regulatory interaction

� Documentation of progress

� Monitoring performance of completed projects

� Use of information to adjust future activities

� Fines/penalties related to ACD compliance

The findings of this review are presented in Section 4 of this report. The CDM Smith team built upon

the collaboration phase results to assess the remaining planned IOAP activities. The objective of this

portion of the study is to validate the values-based approach used to select remaining projects, and to

identify and evaluate opportunities to:

� Reduce costs

� Reduce community impacts

� Improve system performance

� Avoid additional regulatory scrutiny

� Avoid schedule related risks

� Enhance organizational implementation efforts

Based on the findings of the review, a set of recommendations was developed and presented in Section

5 of this report.


1-4

1.4 Report Structure This report has been organized into the following sections:

Section 2: Summary of Existing Program – summary of Louisville MSD’s program and status of

implementation.

Section 3: Comparisons to other Wet Weather Programs in the U.S. - provides summary of similar wet

weather Consent Decree driven programs in US EPA Region IV.

Section 4: Review Findings – description of the key findings organized by three categories including

Strengths, Staff Concerns and Peer Review Comments.

Section 5: Recommendations – recommendations for each of the Staff Concerns and Peer Review

Comments listed in Section 4.

Section 6: Summary Scorecard - The findings of the peer review team were grouped into key program

elements, summarized and are presented in a “report card” format, with ratings assigned as traditional

“letter grades” (A through F).

Appendix – Resumes of the individuals who comprised the peer review team for this review.

2-1

Section 2

Summary of Existing Program

2.1 Sanitary Sewer Discharge Plan The ACD requires that MSD develop a Sanitary Sewer Discharge Plan (SSDP) to address the

unauthorized discharge of flow from the sanitary sewer system. MSD was required to prepare and

submit first an interim and then a final SSDP to eliminate Unauthorized Discharges. The final SSDP was

required to show the locations of all known Unauthorized Discharges as well as to characterize them

(volume, frequency, cause, impacts), prioritize their elimination, and develop a plan for stakeholder

involvement. This was originally submitted on December 21, 2008, revised through negotiations with

regulatory agencies and submitted as final on June 19, 2009. The specific requirements are addressed in

Table ES.6 on pages 22-23 of the IOAP Volume 3.

MSD had previously submitted a Sanitary Sewer Overflow Plan (2006) and an interim SSDP (2007). The

ACD required MSD to submit the final SSDP to define the long-term SSO projects, address peak WQTC

capability and incorporate innovative solutions.

The final SSDP is required to include:

� Project schedules, milestones and deadlines, based on prioritization of the SSO locations;

� Evaluation of WQTC peak flow capacity for any plant impacted by the SSDP;

� For each SSO (Unauthorized Discharge) a map, physical description, frequency/volume data,

receiving water description, and any previous work to address it;

� Stakeholder involvement.

The ACD specifies that the implementation schedule for the SSDP is not to extend beyond December 31,

2024.

2.2 Long Term Control Plan The ACD requires that MSD develop a Long Term Control Plan (LTCP) to address combined sewer

overflows (CSOs) from the combined sewer system and comply with the U.S.EPA’s CSO Control Policy

(1994). MSD was required to prepare and submit first an interim and then a final LTCP. The interim

LTCP, approved February 27, 2007, demonstrated that MSD was actively working towards compliance

and described MSD’s plans to develop the final LTCP. The final LTCP was to include an analysis of each

CSO and its impacts, an evaluation on the benefit-cost analysis of alternatives, maximize the utilization

of the existing infrastructure, and develop a plan for public participation.

MSD had previously submitted an interim LTCP (2006), which updated prior draft LTCPs. The ACD

required MSD to submit the final LTCP to define remedial measures that achieve the objectives of either

the Demonstration or Presumptive approach requirements of the CSO Policy.

The final LTCP (2012 Modification approved in June 2014) is required to include:

Section 2 • Summary of Existing Program

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� Schedules, deadlines and timetables for compliance with the CSO Policy;

� Monitoring and modeling results;

� Wastewater treatment capacity evaluation and maximization of treatment at MSD’s WQTCs;

� Public participation;

� Prioritization of sensitive areas;

� Cost analysis;

� Operational plan revisions;

� Implementation schedules; and

� Post-construction compliance monitoring.

The ACD specifies that the implementation schedule for the LTCP is not to extend beyond December 31,

2020.

2.3 Other Provisions of ACD MSD was required to develop an Early Action Plan which consisted of the following:

� Nine Minimum Controls Compliance

� Capital Improvement Project List (projects completed prior to the final SSDP and LTCP)

� CMOM Programs Self-Assessment

� Sewer Overflow Response Protocol

The Jeffersontown WWTP has had capacity issues, and was specifically addressed in the ACD to

minimize bypassing at the plant. This included programs for process controls, evaluating facility

performance, a plan to obtain compliance with the KPDES permit, and provisions to allow for future

developments after KPDES compliance is achieved. Additional treatment plants were to be studied as

well, with restrictions on diverting flows to plants with insufficient capacity available, and some WWTPs

were to be completely eliminated (MSD later decided to eliminate the Jeffersontown WWTP and divert

approximately half of all flow to the Derek R. Guthrie WWTP and half to the Morris Forman WWTP). A

key component of this is a requirement to perform continuous flow monitoring, report bypassing, and

effluent sampling at the WWTPs.

MSD is required to provide quarterly reports to the Cabinet and EPA documenting its progress towards

compliance with the ACD. This includes detailing the projects and activities performed in that quarter,

the projects and activities anticipated for the next quarter, sampling results, and documentation of

bypassing at the WWTPs.

Other WWTP Issues

The ACD also requires MSD address a variety of WWTP issues, including:

� Bypassing of flow at the Jeffersontown WWTP;


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� Modifications needed at other plants that may be affected by the plan for the Jeffersontown

WWTP;

� Plans for elimination of specific satellite WWTPs in the MSD system; and

� Monitoring, recordkeeping and reporting at WWTPs.

These requirements are not included in this Mid-Point Review project.

Reporting

The ACD requires MSD to submit quarterly reports on ACD compliance status. These reports shall

include project descriptions, CSO/SSO reductions achieved, WWTP bypass data, upcoming project

activities, sampling and inspection results, and compliance status with implementation of the Early

Action Plan, SSDP, LTCP and WWTP provisions of the ACD. The ACD also requires MSD to submit annual

reports that summarize CMOM program implementation and performance evaluations.

Penalties

The ACD includes civil penalties for past alleged violations, supplemental environmental projects and

stipulated penalties for failure to comply with current ACD requirements and with future SSDP and

LTCP implementation schedules.

Force Majeure

The ACD includes force majeure provisions to protect MSD from unforeseeable events, which specifically

exclude cost increases, changes in economic conditions, and contractor/supplier failures to perform.

Dispute resolution

The ACD includes a provision for informal dispute resolution proceedings, which if unsuccessful, may be

followed by a judicial review process.

Modifications

The ACD specifically states (in the “Whereas” statements in the Introduction section) that the parties

“anticipate that this ACD will be further amended…” as MSD moves forward with their wet weather

program. However, the ACD does not include a section specifically describing situations that would

allow for modifications to the current decree, or re-opener provisions. Under the section with

Miscellaneous Provisions, there is a statement that allows for MSD to request that the ACD be modified if

there are any new EPA regulations or policies “governing Bypasses”. This is the only re-opener

provision in the ACD.

2.4 IOAP Elements 2.4.1 Plan Summary

The IOAP integrates the SSDP and LTCP into a unified plan with expected benefits of “(a) reductions in

peak levels of bacteria in the Ohio River and Beargrass Creek; and (b) a reduction in the amount of time

that average bacteria levels to exceed water quality standards.” ES pg1 of IOAP Vol.1 The current IOAP

is a modified version which was developed in 2012 and based on the lessons learned over the prior 4

years which allows MSD to both decrease the overflow volumes and increase the rate of achieving the

reductions without increasing the costs.


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For the CSO LTCP element of the IOAP, MSD opted for the Demonstrative Approach (as defined in the

U.S.EPA CSO Policy) and developed a plan which demonstrates that both Beargrass Creek and the Ohio

River would be in full compliance with current water quality standards if all background loads were

removed. MSD estimates that this plan will result in a 96% capture of wet weather combined sewage in

an average year, which exceeds the Presumptive Approach target of 85%. However, at some outfalls the

post-IOAP overflow frequency will be as high as 8 per year (average), which exceeds the Presumptive

Approach target of 4 per year. MSD's analysis has shown that the "knee of the curve" optimal point in

the level of control occurs at 8 per year, and there is no discernable water quality benefit achieved with

lower overflow frequencies. It should also be noted that these outfalls are balanced in the plan by a

similar number of outfalls at which post-IOAP overflow frequencies are reduced to zero in the average

year.

The SSDP element of the IOAP, together with other programs that address SSO discharges, will eliminate

unauthorized discharges from the sanitary sewer system. This is achieved by eliminating SSOs for

events that equal or exceed the 2-year design storm (an intense 3-hour “cloudburst” storm).

2.4.2 SSDP

The level of control for SSOs is, at a minimum, a 1.82 inch “cloudburst” storm (2-year, 3-hour event)

while some SSOs are designed to control 2.25-inch and 2.60 inch “cloudburst” storms. This should

eliminate the 145 SSO events which occur in an average year. Fifty-six projects make up the final SSDP.

The variety of project types is summarized in Table 2-1.

Table 2-1: SSDP Project Status Summary (all costs in 2008 dollars)

SSDP Project Type Total Completed Planned Planned

Completion Date

# of Completed

Projects

# of Planned Projects

Diversion $3,637,000 $1,352,000 $2,285,000 12/31/2022 3 2

Diversion & PS Elimination $207,000 $0 $207,000 12/31/2022 0 1

I/I Reduction $1,968,000 $1,968,000 $0 3/30/2012 8 0

Inline Storage $3,034,000 $0 $3,034,000 12/31/2023 0 5

Monitor $77,000 $77,000 $0 12/18/2012 1 0

New Interceptor / WQTC Elimination $20,397,000 $20,397,000 $0 2/16/2011 1 0

New Relief Sewer $3,434,000 $3,434,000 $0 4/19/2012 2 0

Offline Storage $15,644,000 $0 $15,644,000 12/31/2023 0 2

Offline Storage & Pipe Upgrades $50,070,500 $0 $50,070,500 12/31/2023 0 2

Pipe Rehab $57,000 $57,000 $0 12/14/2010 1 0

Pipe Upgrades $21,809,000 $16,439,000 $5,370,000 12/31/2024 2 6

Pipe Upgrades and I&I Reductions $827,000 $0 $827,000 12/31/2015 0 1

PS Elimination $320,000 $0 $320,000 12/31/2024 0 1

PS Upgrades $40,160,000 $1,092,000 $39,068,000 12/31/2024 2 7

Pump Station Elimination and New Interceptor $21,216,000 $21,216,000 $0 11/2/2012 1 0

Pump Station Replacement and Relocation $1,044,000 $1,044,000 $0 3/30/2012 1 0

Sewer Replacement $11,800,000 $11,800,000 $0 9/29/2010 1 0

Sewer Replacement and Sewer Rehabilitation $28,279,000 $0 $28,279,000 12/31/2023 0 1

Storage & Force Main Upgrades $7,558,000 $0 $7,558,000 12/31/2024 0 1

WQTC Upgrade $102,700,000 $102,700,000 $0 11/15/2012 1 0

Total $334,238,500 $181,576,000 $152,662,500 12/31/2024 24 29

* Sources: IOAP and Project WIN web GIS interface


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2.4.3 LTCP

Thirty-one projects make up the final LTCP. Most of the larger projects are storage basins, as indicated

in Table 2-2.

Table 2-2: LTCP Project Status Summary (all costs in 2008 dollars)

LTCP Project Type Total Completed Planned Planned

Completion Date

# of Completed

Projects

# of Planned Projects

Diversion, Inline Storage and Green Infrastructure $2,184,000 $0 $2,184,000 12/31/2018 0 1

Green Stormwater Infrastructure $896,000 $0 $896,000 12/31/2016 0 1

High Rate Treatment & Off-Line Storage $68,472,000 $0 $68,472,000 12/31/2016 0 1

In-Line & Off-Line Storage $ 53,069,000 $0 $53,069,000 12/31/2019 0 2

In-Line Storage $8,178,000 $150,000 $8,028,000 12/31/2019 1 3

In-line Storage & Green Infrastructure $50,000 $0 $50,000 12/31/2020 0 1

Off-Line Storage $195,768,000 $0 $195,768,000 12/31/2020 0 7

Offline Storage/Pump Station Upgrade $22,123,000 $0 $22,123,000 12/31/2015 0 1

Pump Station Modification $2,997,000 $2,372,000 $625,000 12/31/2014 4 1

Sewer Separation $4,177,000 $3,862,000 $315,000 12/12/2013 2 1

Structural Modifications & Green Infrastructure $488,000 $0 $488,000 12/31/2015 0 1

Upsize Pipe Conveyance $574,000 $0 $574,000 12/31/2015 0 1

Total $358,976,000 $6,384,000 $352,592,000 12/31/2020 7 21

* Sources: IOAP and Project WIN web GIS interface

2.5 IOAP Implementation Status Through June 2014, MSD has completed 30 projects with an additional 51 in progress or planned per the

IOAP and Project WIN web GIS (Projects). The structure of the program was to eliminate four areas with

persistent SSOs through 2012, eliminate several WWTPs through 2015, complete the CSO abatement by

2020, and then finish with completing the SSO abatement by 2024.

The budget numbers for the SSDP and LTCP taken from the May 2014 Revised IOAP in 2008 dollars are

shown below in Table 2-3.

Table 2-3: Program Budget (2008 dollars)

Program Element Budget

SSDP $337M

LTCP $338M

Sub Total (SSDP + LTCP) $675M

Annual Rehabilitation Allowance $45M

Green Infrastructure Allowance $40M

Total (SSDP + LTCP + Annual Rehab + GI) $760M


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The CDM Smith team reviewed available documentation to determine the basis of the program budget in

escalated dollars. One source that referred to the amount of the escalated program budget was the May

2014 Modified IOAP which states that “By estimates, the Consent Decree will cost $843M in capital

expenditures….”. Discussion with staff confirm that the $843M amount was rounded to $850M to

account for the conceptual level of the initial estimates which the CDM Smith team has determined is the

basis for implementation of the ACD, including annual rehabilitation and Green Infrastructure. A

comparison of the $850M budget number to project cost information provided to the CDM Smith team

for projects by category indicates that the total program cost is currently projected to be approximately

$906M, based on original escalation and contingency assumptions used to establish the project budget.

Table 2-4 provides a breakdown of these costs by category as of July 10, 2015. The 6.6 percent budget

overrun projection at the midpoint of a large, long-term capital program is commendable given the low

contingency amount used in the original budget.

Table 2-4: Current Program Cost Projection at Completion vs. Budget

Project Status Budget/Projection Percentage of Total

Completed Projects $247M 27%

Committed Costs (projects have bid) $251M 28%

Future Costs (projects have not bid) $408M 45%

Total $906M

2012 Modified IOAP Budget $850M

Difference $56M 6.6% (of original)

A brief commentary on these costs is provided below.

General Comments

� The total estimated program cost in the 2009 IOAP was essentially the same as the estimated total

program cost in the 2012 Modified IOAP ($850M).

� Actual costs and estimated costs for each category reportedly include engineering costs.

� Cost estimates were escalated at three percent per year to the midpoint of projected construction

period to develop the 2012 Modified IOAP total estimated cost. This escalation rate has been

sufficient to cover inflation to date, but may not be sufficient to cover potential future inflation

increases and other market-related escalation as the program continues.

� Original 2012 IOAP estimates included only a 10 percent contingency, which is low given the level

of project development used for cost estimating. Typically, a contingency of at least 20 percent is

used, based on the level of project development at the time the estimates were developed. This

level of contingency is consistent with recommendations provided by several professional

organizations, including the Association for the Advancement of Cost Engineering International

(AACEI).

� Since 2014, project bid prices have significantly exceeded estimates in some cases. This period

coincides with the start of construction on the Louisville-Southern Indiana Ohio River Bridges

Project.


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� Some large projects have become larger due to upsizing related to additional CSS and CSO flow

monitoring and hydraulic model refinements.

Completed Projects

� As of July 10, 2015, a total of $247M has been spent on completed projects.

� Several projects were completed significantly under original budget estimates (prior to initiation

of the bridges project).

Committed Costs

� Capital projects totaling $251M (including engineering) are currently under construction.

� These committed costs do not include any contingency and MSD staff are only considering change

orders that are absolutely necessary for each project. Typically, a contingency of up to 5 percent is

budgeted for change orders.

� The scope of several large projects has changed resulting in increased project costs; therefore,

comparison of committed costs to original budget is not meaningful. Examples include:

- Nightingale Pump Station Replacement and Storage – changed from retrofit to a new pump

station and added 7.7MG basin.

- Logan Street and Breckenridge Street Storage Basin was upsized from 11.83MG to 16.6MG

and other project components were added.

- The project changes were a result of hydraulic model refinements that are consistent with the

Demonstrative Approach to implementing the LTCP. These changes were negotiated with EPA

and the Kentucky DEP.

Future Costs

� Future capital costs escalated to the midpoint of construction, including engineering and a 10

percent contingency are estimated to be $408M (including engineering).

� The scope of several large projects has changed (as a result of the circumstances stated for the

cost category above); therefore, comparison of original cost estimate for these projects to the

current estimate is not meaningful. Examples include:

- I-64 and Grinstead Drive Storage Basin was upsized from 2.74MG to 8.5MG.

- Story Avenue and Main Street Storage Basin was upsized from 0.13MG wet well extension to

an 8.3MG basin.

- Southwestern Parkway Storage Basin was upsized from 5.08MG to 17.5MG.

- Lexington Road and Payne Street Storage Basin was upsized from 7.31MG to 13.7MG.


2-8

� MSD staff have recognized the importance of controlling the costs in this category, as reducing

this cost is the only remaining opportunity to reduce the overall program costs.

� There are several large, high risk projects in this category.

Summary

Market conditions and related economic factors, upsizing of several large storage projects and possibly

project related risks have resulted in an increase in the projected total program cost. In addition to

recent higher bid prices, there have been fewer bids on recent projects. These factors are a concern

related to the remaining currently estimated $408M in projects, representing 45% of the total program,

which have not yet bid. MSD staff recognize the need for aggressive project management and could

benefit from enhanced program and project management tools.

3-1

Section 3

Comparison to Other Wet Weather Programs in the

U.S.

3.1 Narrative Program Descriptions This section describes four wet weather overflow abatement programs that are under Consent Decree

compliance requirements similar to those of Louisville MSD. Table 3-1 at the end of this section

contains key summary information on each of these programs as compared to the MSD program, and

below are more detailed descriptions of each individual program.

3.1.1 Nashville Metro

Metro Water Services, owned by the Metropolitan Government of Nashville and Davidson County,

provides sanitary sewer, storm sewer, and drinking water services. Their original Consent Decree was

filed in March 2009, but was amended in August 2010 to allow additional time due to force majeure

following the severe May 2010 floods. Nashville has branded their effort as the Clean Water Nashville

Overflow Abatement Program (2011). Both CSOs and SSOs are included in the program and addressed

through the Long Term Control Plan (LTCP) and Corrective Action Plan/Engineering Report respectively

(CAP/ER). Both the LTCP and CAP/ER were to be developed within 2 ½ years and Metro will have 11

years to complete the program after the plans are approved (they are currently awaiting the official

approval). The total dollar value has been estimated at $1.0-1.5 billion.

Many of the projects are focused on sewer rehabilitation, sewer replacement, and equalization

facilities. SSO improvements are evaluated in a SWMM model using a 2-yr 24-hour dormant season

design storm with a peak intensity of 0.97 in/hr and a total volume of 3.15in. The CSO improvements

are designed based on overflow frequency during a Typical Year Simulation and maintaining water

quality standards. Metro has 8 remaining CSOs of which will be controlled or eliminated with a mix of

conveyance improvements and storage tanks. WWTP upgrades are also a component of the LTCP. The

plan, which follows the Demonstration approach, intends to limit water quality standard exceedance to

less than 1% of a Typical Year at Cleece Ferry and nearly 0 hours at their Riverfront Park (Cumberland

River).

Sewer billing is based on meter size and usage with different classes paying different rates (e.g. a 1”

residential meter would cost $26.05 with $4.74 for usage over 2 ccf while the same would be $1,091.79

and $3.26 respectively for a “Large Commercial” customer).

3.1.2 Knoxville Utilities Board

Owner - KUB provides water and wastewater services to the City of Knoxville, and is also a regional

provider of gas and electrical services. The wastewater treatment facilities were transferred from the

City of Knoxville to KUB in the late 1980’s.

KUB is governed by a seven member board appointed by the Mayor and confirmed by City Council. The

KUB board has full authority to determine wastewater rates.

Section 3 • Comparison to Other Wet Weather Programs in the U.S.

3-2

Retail wastewater services are provided to approximately 68,000 residential, commercial and industrial

customers. Wastewater treatment is provided by four wastewater treatment plants, (WWTP), the

largest being the 44 mgd Kuwahee WWTP. All four WWTPs are served by separate sanitary systems.

Program Objectives - KUB entered a Consent Decree (CD) with the U.S. Justice Department, Tennessee

Department of Environment and Conservation (TDEC) and the Tennessee Clean Water Network in 2005

to address wet weather issues. Specifically, sanitary sewer overflows and wet weather biological

treatment capacity are addressed by the CD. The estimated total cost of the program is $530 million.

Approximately $120 million of this amount is budgeted for WWTP improvements. Due to program

affordability concerns, KUB was successful in extending the original compliance deadline by 3 years to

2021.

Technical Strategy - The technical strategy focused on achieving implementation of:

� Collection system upgrades to contain a 5 year 24 hour design storm event and to meet gravity

system maximum surcharge criteria for a 2 year 24 hour design storm event.

� Biological wastewater treatment capacity for peak flows from a 2 year 24 hour design storm

event.

Collection system improvements consisted of gravity sewer replacement and rehabilitation, pump

station upgrades and provision of off-line storage facilities.

Two WWTPs are being upgraded using biologically enhanced high rate clarification to provide

secondary treatment for peak excess wet weather flows. For the KWWTP, approximately 10 mgd of

storage has also been provided to reduce peak flows.

Implementation Status - The specific corrective action plan collection system upgrades and

replacement projects, all pump station upgrades and all storage projects have been completed. KUB

continues to evaluate system performance and to implement a significant pipe and manhole

rehabilitation program.

The Fourth Creek WWTP has been upgraded with an 18 mgd high rate clarification (HRC) system which

enables a peak flow capacity of 36 mgd. The HRC system will be upgraded with a biological component

to enable full biological treatment of 36 mgd. Emergency generators have also been provided.

The KWWTP has been upgraded with sludge thickening, on-site storage enhancement and emergency

generators. The plant provides peak flow capacity of 120 mgd, but only 70 mgd receives biological

treatment. A 50 mgd biologically enhanced high rate clarification system is planned, which will enable

full biological treatment for up to 120 mgd.

3.1.3 City of Columbia (SC)

The City of Columbia, SC operates Columbia Wastewater through the Department of Utilities and

Engineering. Additionally, it operates Columbia Stormwater Management and Columbia Water Works

out of the same Department of Utilities and Engineering. Approximately half of the sewer and two-

thirds of the water meters are outside of the city (140,000 water meters and 60,000 sewer meters).

The City of Columbia is under a Consent Decree for SSOs to the Congaree River which was finalized on

April 24, 2014. The program has been branded as Clean Water 2020 and consists of training staff,

condition assessments, sewer replacements, equalization storage and pumping facilities, sewer


3-3

rehabilitations, pump station rehabilitations, and WWTP upgrades (a 60mgd facility). It is an adaptive

management approach, with the key documents required in the Consent Decree being O&M plans rather

than a prescriptive list of projects. Essential to this is the Continuing Sewer Assessment Program which

is used to identify and prioritize collection system projects as well as a Capacity Assurance Program. A

financial analysis is to be submitted to the EPA in late 2015.

The City of Columbia determined that grease and tree roots caused 70% of its SSOs, and in 2009

launched an educational campaign to keep grease out of the system. It has also assessed 15% of its

collection system since 2009 and completed projects to increase reliability and/or capacity at all five of

the major pump stations.

The typical residential customer pays $31.11 per month if they live in the City of Columbia or $52.87 if

they are outside, with an affordability of less than 1.5% of annual income inside the City of Columbia.

Usage per ccf is $3.13 for customers in the city and $5.32 for those outside (2013). As of Dec. 31, 2014,

their cash reserves were $118M with net revenue of $51M (before debt service) and a debt service of

approximately $29M. Wastewater CIPs have varied between $13M and $73M since 2008, with $80M

budgeted each year over the next five years. The total program cost is estimated at $750M.

3.1.4 Cincinnati MSD

The Metropolitan Sewer District of Greater Cincinnati (MSDGC) is owned by Hamilton County and

operated by the City of Cincinnati. Drinking water is provided by a jointly managed utility, Greater

Cincinnati Water Works (GCWW). Stormwater in the City of Cincinnati is managed and financed by the

Stormwater Management Utility which is also jointly managed along with MSDGC and GCWW.

Stormwater outside of the city is managed by the Hamilton County Storm Water District. MSDGC CSOs

discharge to the Ohio River and its tributaries, notably the Little Miami River and Mill Creek along which

are adjacent to the largest of MDSGC’s interceptors.

MSDGC has been under a Consent Decree since February 15, 2002 when an Interim Partial Consent

Decree was lodged for SSOs and a Capacity Assurance Program Plan (CAPP) was developed to address

SSOs. This Consent Decree did not cover CSOs and WWTP capacity limitations, which are addressed in

the subsequent Global Consent Decree which was finalized June 9, 2004. All SSOs are to be eliminated

except for one, SSO700, at which a chemically-enhanced high rate treatment facility has been built. The

deadline of February 28, 2022 for the CAPP was established by the Global Consent Decree. MSDGC has

branded its program Project Groundwork.

The Global Consent Decree requires the implementation of MSDGC’s CSO Long Term Control Plan

(LTCP). The implementation and financial schedule of the LTCP and the CAPP is the Final Wet Weather

Improvement Program. The LTCP must be substantially completed by February 28, 2022; an extension

of this deadline is possible if the costs to implement the LTCP and CAPP are expected to exceed $1.5

billion in 2006 dollars. A Post-Construction Monitoring Study is to be performed, following a Work Plan

approved by the US EPA/Ohio EPA/ORSANCO, to verify that the LTCP will result in compliance for CSOs.

Basement flooding from sanitary sewer backups are considered SSOs under the Global Consent Decree,

and a Water-in-Basement Program is also required to assist homeowners who have experienced

unauthorized SSOs in their basements. Phase 1 projects are required to reach Substantial Completion by

December 31, 2018 with the Phase 2 schedule due by June 30, 2017. Phase 2 is expected to cost $2.1

billion in 2006 dollars. Phase 1 consists of 115 construction projects and 62 design projects. Of these

projects, 96 have been constructed as of December 2014.


3-4

Initially a large, deep tunnel was the centerpiece project of the LTCP for Lower Mill Creek and had an

estimated cost of $414 million. This has since been replaced by a plan to create a mile long engineered

waterway where a natural channel once existed, green projects, and to separate runoff with anticipated

economic benefits to the neighborhood at a total cost of $244 million with an annual operating cost of

$800,000 (2012 dollars). This modification was approved in 2013 and will require a subsequent 3-year

study following the close of Phase 1.

The typical single family home pays a $57.11 monthly bill with wholesale sewer charges of $4.701-5.879

per ccf dependent upon usage. Additional surcharges (in $ per ccf per mg/L above limit) apply for

Suspended Solids ($0.002921, above 300mg/L), BOD ($0.004989, above 240mg/L), and NOD

($0.004369, TKN above 25mg/L).

MSDGC’s plan has some prescribed remedies for a presumptive approach, but the US EPA, Ohio EPA, and

ORSANCO have been flexible in allowing MSD to try some adaptive management and demonstrative

approaches (notably the Lick Run Project).

Table 3-1: Comparison Summary for Similar Large Consent Decree-Driven Wet Weather Programs

Program Element Louisville MSD Nashville Metro Knoxville Utilities

Board City of Columbia

(SC) MSD of Greater

Cincinnati

Service Population 700,000 659,923 183,270 (2013) 63,000 (accounts) 850,000

Median household income

$47,073 (2008) $45,037 (2010) $32,191 (2012) $47,436 $32,790 (2006)

Current sewer billing rate

$29.58 monthly (2008)

$4.74 ccf above 200 ft3. Meter changes from $7.62-$272.29 based on size.

$23.00 per month

$0.70 per ccf up to 2 ccf, $8.70 per ccf above 2 ccf

$3.13 in city, $5.32 outside

(2013)

$117.35 Quarterly (2014)

9-150 ccf at $5.87 per ccf

150+ ccf at $4.701

SSO facilities cost $336,776,500 (2008 dollars, 2012 IOAP)

$838 Million $530 Million $750 Million

CSO facilities cost $337,554,000 (2008 dollars, 2012 IOAP)

$256 Million N/A N/A $1.2 Billion Ph1

$3.2 Billion overall

Minimum level of control (SSO)

2-yr “Cloudburst” storm (1.82” in 3hrs)

2yr 24hr storm 2yr 24hr storm 2yr Storm

Level of control (CSO)

89% volumetric reduction in 2012 IOAP, 96% capture

Volume reduced by 47%, frequency reduced. Water Quality based.

N/A N/A 85%

Compliance schedule:

SSO

CSO

SSO elimination by 12/31/2024

11yrs to implement following US EPA approval

June 2021 Phase 1 to be completed by 12/31/18

Phase 2 is tbd

Current completion status

50% Awaiting US EPA approval to proceed.

$85 million spent on SSOs, $23 million spent on CSOs

Collection work complete, WWTP upgrades in progress

Year 1 of 12 81 of 109 Milestones have been completed for Phase I

4-1

Section 4

Review Findings

4.1 Organization of Findings The findings of the review have been organized into three categories: Strengths, Staff Concerns and

Peer Review Comments.

� Strengths – This section describes the aspects of the MSD program that are particularly positive

in the opinion of the Review Team, in many cases areas that distinguish the program from other

similar programs within U.S. EPA Region 4 and nationally.

� Staff Concerns – This section identifies those aspects of the MSD program about which MSD staff

have expressed concerns. These concerns were generally identified during the completion of

the MSD staff interviews during April 2015. Review team comments about each concern are

noted.

� Peer Review Comments – This section documents the key findings of the peer review team.

� Summary Scorecard – This section contains a listing of program elements and assigns a rating

based on their current status.

Recommendations based on the findings of this section are presented in Section 5.

4.2 Strengths Comparative Assessment of Louisville MSD Program (S.1) - MSD’s program compares favorably to

the other large cities in U.S.EPA’s Region 4, which are predominantly separate sewer systems, and to

the other large cities along the Ohio River (which, like Louisville, predominantly include large areas

with combined sewer systems). For example, in terms of actual project construction, MSD’s program

has advanced considerably ahead of the wet-weather programs in Cincinnati and Pittsburgh, which

have struggled with decisions about the appropriate system-wide balance between grey and green

infrastructure. MSD instead developed an adaptive management approach that has enabled it to

address green infrastructure opportunities on a project-specific basis while it continues to move

forward with project implementation.

On a cost basis, Louisville MSD’s program also compares favorably to those of other peer cities. MSD

has developed unit cost data (dollars per mile of sewer) for overflow abatement costs in other cities in

the area, including Atlanta, Cincinnati, St. Louis, Knoxville, Nashville and Indianapolis. These program

costs range from $400,000 to $1,800,000 per mile of sewer, while Louisville’s unit cost is less than

$300,000 per mile. And MSD’s program has received full regulatory approval, while several of those

other, more costly programs are continuing to negotiate with the regulatory agencies to obtain

approval.

While Louisville’s program compares favorably in terms of both construction progress and cost-

effectiveness, it also benefits from positive public perception. Although MSD has struggled to

overcome negative publicity associated with the state audit, these problems have been successfully

addressed and did not create negative public opinion of the wet-weather program. As a result, MSD

Section 4 • Review Findings

4-2

has been able to advance the program with relatively little resistance from the public, regulatory

agencies or elected local leadership. This has not been the case with other wet-weather programs in

the region.

Green Infrastructure (GI) Program (S.2) – The green infrastructure elements of the MSD program

have been well conceived. MSD has implemented an innovative reimbursement program for privately-

funded GI projects, in which the reimbursement amount is proportional to the CSO reduction benefit

achieved. This approach leverages MSD ratepayer funds to expand the implementation of GI by

shifting much of the costs (both capital and operating) and ownership of GI facilities to private

entities. The review team found that MSD works closely with the community to identify locations

where GI can be effective, and the levels at which it can be effective, and uses GI to reduce reliance on

traditional grey infrastructure for CSO control.

Adaptive Management (S.3) – MSD has developed the IOAP in a way that incorporates the concept of

adaptive management, in which flexibility is allowed to modify or “adapt” the specific elements of the

program during implementation. This flexibility to make adjustments as the program matures, to

incorporate new information and learning, will help MSD avoid being locked in to requirements and

approaches that experience may prove to not be in the best interest of the community MSD serves or

the waterbodies that it seeks to protect. Adaptive management may be particularly important in

allowing MSD to continue to work with the community to identify opportunities to expand the use of

GI in the program.

System Performance (S.4) – The performance of facilities constructed to-date is reported to meet or

exceed all performance expectations. Going forward, MSD will be implementing additional GI

facilities, which can introduce risk if actual runoff capture and disposal rates do not conform to design

estimates. However, any GI facility performance issues are unlikely to create overall system

performance issues for MSD, as only two projects require GI to achieve performance goals. In all other

cases GI will provide additional levels of control, and is not required for system performance goals to

be achieved.

Meeting deadlines (S.5) – MSD has to-date met all implementation deadlines included in the ACD.

Well-funded program (S.6) – Many large wet-weather programs suffer from funding challenges. In

MSD’s case, the need for funds has been well planned, and the use of a special billing line item to

generate user funding for the ACD implementation requirements has to-date generated sufficient

funds to support the program, with minimal resistance from local ratepayers.

Good Monitoring and Modeling Resources (S.7) – These resources have not always been a program

strength, as the original IOAP model calibration was insufficient to support accurate facility sizing.

MSD recognized these modeling issues and worked hard to expand their monitoring resources and re-

calibrated the models for the 2012 Modification of the IOAP. Earlier model problems were resolved

with this effort, and the model recalibration appears to be complete and successful. MSD now has a

reliable network of flow and rainfall monitoring equipment in place, providing good spatial coverage,

including the use of radar-rainfall technology to improve resolution for rainfall. These resources will

provide the data needed for ongoing system monitoring and future model re-calibration.

Organizational Issues Resolved (S.8) – Organizational issues identified in the state audit have

largely been addressed. This has enabled MSD to move forward effectively with IOAP implementation.


4-3

Looking forward, it is important to recognize that MSD’s organizational structure and interactions

between groups within that structure play a critical role in the ability to:

� Deliver projects cost-effectively and on schedule

� Negotiate with regulators

� Gain public trust

� Deal effectively with changes (staff, technology, public support, etc.)

� Manage risks

The MSD organization features an Engineering group and an Operations group. Engineering includes

both design and construction responsibilities which cover most capital project implementation

responsibilities. Upon completion of project construction, new and upgraded facilities become the

responsibility of the Operations group. While many issues have indeed been resolved, the way in

which project management responsibilities are assigned under this organizational structure may not

be best for MSD, and a recommendation for change is presented in Section 5.

In-house SCADA Programming (S.9) – MSD is relatively unique in maintaining the resources in-

house to perform programming of PLCs for its controllable facilities, in support of system operations.

These resources enable MSD to make adjustments to the operation of these facilities quickly and

easily, without the need to arrange for outside programmers to come in and get up-to-speed on MSD’s

SCADA systems.

EPA/State Relationships (S.10) – Several MSD managers commented on the improved regulator

relationships that have been developed over the past several years. As evidenced by the Kentucky

Division of Water and EPA agreements to amend the Consent Decree, and more recent revisions to

storage project sizing, these relationships are benefitting MSD and its customers. The adaptive

management approach, which depends on these relationships, appears to be successful in helping

MSD achieve the best value for the costs incurred. Maintaining these relationships is critical for the

remainder of the Consent Decree implementation period, as well as the post-implementation period.

Public Outreach (S.11) – MSD initiated an aggressive public outreach program related to CD issues in

2007 and continues to focus on effective public communication. Key features of the public outreach

program include, but are not limited to:

� Project WIN Webpage – includes links to extensive CD-related information, notices, project

information, meeting summaries, and other information. In addition, a public input section

provides information and commenting capability for specific projects.

� Public Outreach Materials – variety of materials in various formats

� Public Meetings – general CD related meetings and project-specific meetings

� Wet Weather Advisory Team – meets regularly to guide decision-making on a variety of issues,

including alternative CD compliance approaches


4-4

Based on our review, MSD’s public outreach program is considered a strength and MSD should be

commended for their continuing efforts to achieve consensus and public support for the CD

compliance efforts.

4.3 Staff Concerns

Staff Training (SC.1) – There are concerns that staff training is inconsistent and/or outdated in some

areas, including safety (especially electrical hazards), sewer overflow response (SORP), and ACD

compliance requirements. These issues could impose risk of safety events and inconsistent response

or information collection.

Staffing Levels (SC.2) – Staff expressed concern that current staffing levels are inadequate in

consideration of the new assets being constructed and put into operation. Staffing levels and skills

may not be sufficient for some compliance needs, especially for skilled trades and professionals who

are being lost to private industry. This could impose risk of decreased system performance, loss of

institutional knowledge and decreased ability for succession planning.

O&M Input During Construction/Commissioning (SC.3) – Organizational readiness for new

facilities was identified as a concern by staff. Historically, Operations has had minimal opportunities

for project involvement with Engineering during planning, design and construction phases. While this

has reportedly improved recently, additional attention is needed to improve the project

implementation process. Processes should be implemented to make the Operations group a “project

stakeholder” during the planning process and the stakeholder roles should continue to be ramped up

through the project commissioning phase. It is critical that the Operations group be prepared for

staffing, operating and maintaining new facilities long before the commissioning process starts.

Succession Plan for ACD Compliance (SC.4) – The number of MSD staff who were involved with the

negotiation of the ACD and understand the objectives, requirements and compliance strategies

associated with this document, grows ever smaller. Staff feel that there is a need to develop and

implement a plan to identify staff who can develop these understandings and put them in positions to

succeed those who currently fill these roles.

Market Pressure on Construction Costs (SC.5) – Recent project bids have been higher than the

project cost estimates. There is a concern that local construction activity on the bridge project, other

similar CD projects in the region, and increased regional construction activity related to improving

economic conditions are putting pressure on local construction capacity, resulting in higher costs.

Higher costs are likely also due to the result of the complexity and risk of recent projects. Additional

risk management efforts should be used to minimize or reallocate contractor risks. Examples include

conducting more thorough geotechnical evaluations, starting projects earlier to provide longer

construction durations, and using alternate delivery methods.

Market Pressure on MSD Staff Hiring/Retention (SC.6) – Staff have observed that the market for

staff in general is tight, and for some skilled worker positions the market is particularly competitive

for staff. These market pressures make it difficult to both hire and retain staff. Without sufficient staff

it will be difficult for MSD to plan, design, construct and operate the increasingly large MSD asset base,

including existing assets and new facilities that will be implemented under the IOAP.

Future Funding Needs Outside IOAP (SC.7) – While the IOAP program funding is solid, MSD will

increasingly require additional funding to support a variety of forthcoming needs. These needs

include upgrades and improvements to the Morris Forman WWTP, flood control throughout the


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service area, pipe rehabilitation for MSD’s large sewer network, and other needs, some of which may

currently be unforeseen. A recently initiated facilities planning process should address this concern.

Document Management (SC.8) – MSD is currently using a combination of tools for document

management including a “MSD Projects Share Point” site developed several years earlier which is used

by some staff as well as Bentley’s eB Information Manager. Staff also stores working documents and

some project specific documents on local drives or on MSD servers which creates multiple locations

for information.

Schedule Pressure from Internal Processes (SC.9) – Capital project implementation requires

compliance with several MSD processes that present potential project delays. Recent MSD

transparency initiatives, the change in Board Meeting frequency from two to one per month,

compliance with the supplier diversity requirements and other aspects of project implementation

present potential schedule problems. Design consultant selection with sufficient time to obtain firm

MBE/WBE proposals, time required for proposal reviews and interviews, Board package preparation,

and similar processes related to award of construction contracts require careful consideration in

developing project implementation schedules.

4.4 Peer Review Comments PM discontinuity from Phase to Phase (PR.1) – MSD’s current organizational structure requires

that the project manager for each project changes as the project moves from planning to design to

construction and commissioning. While this organizational structure may be beneficial from other

perspectives, the loss of continuity in project “ownership” that it creates is detrimental to IOAP

program implementation. With each hand-off of the project, there is inevitably a loss of knowledge, as

the new PM must get up-to-speed and will invariably miss details and nuances of the objectives of the

project. This is not only inefficient, but introduces risk to MSD.

Project/Program Controls System (PR.2) – MSD is currently developing an Enterprise Project

Management Tool which is intended to be the primary mechanism for controlling, managing and

reporting on the status of all Capital Improvement Projects (including IOAP) as well as for managing

IT projects. Programming for the tool started in the fall of 2014 and is based on a Microsoft Project

Server platform which utilizes both Microsoft Project (financials and schedule) and Microsoft Share

Point (dashboards and document management). There is a critical need for a system to assist with

managing MSD’s Capital Improvement Projects and this initiative should address that need, although

the recent loss of key staff could impact timely completion of this system. The selection of Microsoft

products is a cost-effective solution and is more likely to be adopted by staff who are familiar with the

Microsoft Office products. However, it was not clear which processes the new system will be

configured to support. In other words, there appears to be a lack of written policies and procedures

for controls functions such as establishing baseline schedule and budget, providing periodic updates

to project status, project change management, etc. that will drive the system configuration. Further,

training of the staff on the policies and procedures will be needed to support use of the system.

Program Budget (PR.3) – As noted in Section 2, the Program is currently projected to be competed at

a final cost $56M over the escalated cost projection of $850M. The estimate of remaining work is

$408M, meaning that this work would need to come in approximately 14% under budget in order to

maintain the $850M total budget. MSD utilizes a Project Cost Tool to develop conceptual-level

Opinion of Probable Construction Cost (OPCC) for program projects. The estimate for all future

projects are based on this Project Cost Tool unless updates are provided by Engineering during the


4-6

design phase. The amount of contingency in this budget is a concern to the review team, given recent

bid results.

Potential sizing issues may still emerge (PR.4) – Although the models have been re-calibrated and

have been determined to be more reliable, not all risk associated with facilities sizing has been

eliminated. Model calibration is a potential issue at each facility location, and past success does not

eliminate the concern that localized calibration errors may lead to over- or under-design of specific

facilities. It will be important to confirm local calibration agreement for each major facility before

finalizing sizing.

Public engagement (potentially) causing schedule & budget issues (PR.5) – MSD has an excellent

public engagement process and resources, and MSD has successfully engaged the public on many

projects implemented to-date. However, experience both locally and elsewhere has shown that the

public often seeks ever-increasing levels of sustainable features, often demanding greater use of green

infrastructure. This situation arose with the I-64 & Grinstead Drive Storage Basin, and while MSD is

still on track to complete the project by the 2020 completion date in the 2012 IOAP schedule, the

estimated cost has increased significantly. MSD may find that in other cases, especially where earlier

completion dates are shown in the IOAP schedule, meeting both budget and schedule may not be

possible if public demands for changes to the proposed projects are to be accommodated as a result of

public engagement during program implementation.

Post-construction compliance monitoring (PCCM) approach (PR.6) – PCCM is critically important

to all wet-weather programs, as the results of the PCCM effort determine whether or not regulatory

compliance is achieved. PCCM is particularly important to MSD, because of the adaptive management

aspect of the IOAP, as PCCM results inform the adaptive process. PCCM is an ongoing effort, and MSD

leadership recognizes the importance of PCCM to the continued success of their program. While it is

too early to evaluate the actual effectiveness of the program in achieving water quality benefits, as CSO

projects are put in place in the next few years, MSD’s PCCM program should provide a useful

assessment of actual water quality benefits. It will be important to continue to implement a model-

based approach to this assessment.

Risk Management (PR.7) – The proactive management of project risk is an activity that MSD staff

informally perform during the project delivery process. While this approach will permit mitigation of

some project risk, the number of handoffs that occurs between planning, engineering and construction

can impede the communication of project risks throughout the project delivery process. The informal

risk management process also is dependent upon the approach and rigor used by individual staff

members and therefore cannot be consistently relied upon to mitigate project risks. Lastly, the

management of risk by individual project staff does not allow for the identification of risks that are

common to multiple projects and would be more effectively managed at a Program level.

Schedule Management (PR.8) – The quarterly and annual Consent Decree reports contain the

following information pertaining to Program schedule:

� Comparison of the 2009 IOAP to 2012 IOAP modification (static not updated through the

current reporting periods)

� CMOM Activity Schedule showing the status of tasks updated through the current report period

� List of project completion milestones for the current fiscal year including any future year

projects that were completed early.


4-7

The CDM Smith team found that even though schedule information is provided to regulators in the

reports, there is no comprehensive approach to schedule management with regard to individual

projects or program milestones. It is important to note that there are a total of six SSD and three LTCP

projects that have completion dates of December 31, 2015. Schedule management is therefore an

important issue for currently active projects.

Cost Escalation (PR.9) – The program budget numbers are provided in escalated dollars and,

according to staff interviews, assumed an annual increase due to inflation of 3%. The program has

more than $400M to incur over another 9 years of work and therefore the impact to program budget

due to escalation can still be can be one of the largest single program cost line items.


4-8

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5-1

Section 5

Recommendations

The following recommendations have been developed through the peer review process.

5.1 Staff Training � Review employee safety training program and update materials if determined to be outdated.

� Provide SORP and ACD compliance requirement training to MSD staff working on the program.

� Develop and implement protocols for staff training needs as staff move into new positions and

as new staff are hired from sources outside the MSD organization.

� Improve project manager training and provide for professional project management

certification. Align project management training with the recommended change in the

assignment of project managers over the full life of projects (see Project Management

Discontinuity from Phase to Phase; below).

5.2 Staffing Levels � Develop staffing needs for skilled trades (count and level of experience) and compare to current

available staff to confirm whether staffing levels are appropriate with consideration of the

operations and maintenance resource needs associated with new assets.

� Consider performing labor rate and compensation studies for skilled positions in areas where

market pressures appear to be leading to poor staff retention and difficulty in hiring. Develop

staffing plan for the project delivery staff and compare to currently available staff.

� Maintain staffing plan and list of open positions in order to track deviation from minimum staff

levels needed to support project delivery workload.

5.3 O&M Input During Construction/Commissioning Processes should be implemented to make the Operations group a “project stakeholder” during the

planning process and the stakeholder roles should continue to be ramped up through the project

commissioning phase. It is critical that the Operations group be prepared for staffing, operating and

maintaining new facilities long before the commissioning process starts. (See related

recommendation for development of project delivery procedures under Project/Program Controls

System in this Section).

5.4 Succession Plan for ACD Compliance Identify key MSD staff that possess detailed knowledge of ACD objectives, requirements and

compliance strategies and develop succession plan for those individuals. This succession plan should

consider cross-training opportunities and job-shadowing for individuals who will have the potential to

take on increased responsibilities in the future.

Section 5 • Recommendations

5-2

5.5 Market Pressure on Construction Costs Implement additional risk management efforts to minimize or reallocate contractor risks, including

conducting more thorough geotechnical evaluations, starting projects earlier to provide longer

construction durations, and using alternate delivery methods (if appropriate).

5.6 Future Funding Needs Outside IOAP � Develop tool for forecasting program cash flow and encumbrance requirements to support

decision making as it pertains to allocation of limited MSD funds.

� Facility planning for other aspects of MSD’s responsibilities, including flood control, sewer

system rehabilitation/replacement, etc. should address these future funding needs which could

compete for financial resources with the IOAP.

5.7 Schedule Pressure from Internal Processes The program implementation schedule is addressed further later in this Section. However, it is

recommended that detailed project implementation schedules with provisions for potential delays be

used for all remaining projects. Consideration should be given to missing a scheduled Board meeting,

re-bidding a project, sufficient construction time and other schedule influences. In addition,

consideration must be given to extended construction schedules resulting from contractor

performance issues and/or change orders. Note that compressing the construction schedule is not a

recommended approach, as this can result in additional costs that bidders are forced to include in

their bids.

5.8 Document Management Develop a written policy that requires storage of official (as opposed to working documents) project

documents in a single location which will allow compliance with ACD records retention requirements.

5.9 Project Management Discontinuity from Phase to Phase � It is recommended that MSD modify its organizational structure to create single project

management “owners” throughout the life of projects, with project managers assigned to

projects that remain with the project from initial planning, through design and construction, to

commissioning. If this is not possible, the following two recommendations could be

implemented to mitigate the negative effects of project management discontinuity from phase

to phase.

- Incorporate the use of a “Project Charter” which summarizes the scope, schedule, budget

and risk elements of each project as design is initiated. This document will reference key

documents used in the planning process such as model output, conceptual estimates,

vendor quotes and other backup materials that may be needed during the design phase.

- Incorporate the use of a “Construction Transition Memorandum” and mandatory meeting at

the time a construction contract is awarded. This memorandum and meeting will facilitate

the transition from Engineering to Construction and is recommended to include unique

project requirements (e.g. deviations from standard specification or special testing during

construction), project team member names and contact information, risk registry or


5-3

management plan, communication plan, location of latest or conformed contract

documents, etc.

5.10 Project/Program Controls System � Develop written project management procedures and train project delivery staff on those

procedures before completing configuration of the system.

� Develop a standard cost breakdown structure and process for updating actual costs from MSD’s

enterprise accounting system before completion configuration of the system.

� Develop a set of key performance indicators (KPI’s) and thresholds that will be used to populate

project dashboards to quantify and measure success.

� Engage support resources that have done design/implementation of capital project delivery

that can assist MSD in not only implementing and configuring new software tools, but also on

the organizational change management challenges that accompany the use of new procedures,

tools and technology.

� Develop rollout plan with training sessions that are realistic in terms of uptake of the new

procedures and software by staff who continue to manage existing projects.

5.11 Program Budget As discussed in Section 2.5, additional contingencies should be applied to remaining program costs.

Adding a 3 percent contingency to uncompleted work ($171M) on projects that have bid, and

increasing the contingency on future projects (except Rowan Storage Basin which has recently re-

estimated with a 20 percent contingency) to 20 percent, results in a revised program cost projection

of $942M as summarized in Table 5.1.

Table 5-1: Revised Program Cost Projection

Project Status Current Cost Projection (1)

Revised Cost Projection

Completed Projects $247M $247M

Committed Costs (projects have bid) $251M $256M

Future Costs (projects have not bid) $408M $439M

Total Projected Program Cost $906M $942M

(1) From Table 2-4

Other recommendations include:

� Of the approximately $408M in remaining project costs, a total of approximately 50 percent is

related to seven LTCP projects which are all either in-line or off-line storage. The current

estimates for these projects were based on the conceptual level costing tool. The costing tool

should be updated using the best available information from the design teams and/or a bottom

up estimate that takes into account recent bids for similar projects.

� Apply updated costing tool to re-estimate the expected cost of the remaining projects, and

aggressively manage these project costs during implementation to meet budget.


5-4

� Develop and implement robust change management procedures that require review of updated

OPCCs developed during design and justification for increase in approved project budgets.

5.12 Potential Facility Sizing Issues May Still Emerge Confirm model calibration for each of the remaining storage facilities prior to starting design and for

facilities currently in design prior to final sizing. Focus re-calibration on model parameters to which

accuracy of the model to predict flow volumes are most sensitive for the storm events that control

storage facility sizing. If additional use of green infrastructure, to replace or reduce storage, is

considered, model re-calibration should also focus on the ability of the model to accurately simulate

green infrastructure performance over the relevant range of storm events.

5.13 Public Engagement (Potentially) Causing Schedule & Budget Issues

� As noted above, roughly one-half of the remaining project costs are for seven LTCP storage

projects, thus changes driven by public input (for example, to incorporate green infrastructure

in lieu of storage, or to reduce it) could have a significant impact on overall program schedule

and budget. MSD should incorporate the public engagement activities into the program

schedule to quantify the impacts of delay in those activities to the program milestones.

� Apply change management procedures (refer to recommendation under Program Budget) to

vet alternatives that are generated through public engagement in order to track budget impacts

of those decisions.

� Identify projects with the highest likelihood of public demand for green infrastructure and

begin public outreach early to provide largest possible schedule flexibility to accommodate

changes in project scope within schedule.

5.14 Post-construction Compliance Monitoring (PCCM) Approach Implement an approach to PCCM for wet-weather facilities that continues to use a model-based

approach to assessing performance, with the monitoring data used primarily for re-calibration of the

models, updated to include the facilities, and the models are then used to demonstrate compliance

with facility performance objectives. MSD retains full control of the models, but outsources analysis of

monitoring data to others (University of Louisville). The specific processes used for analyzing the

data, re-calibrating the models, and simulating post-construction facility performance should be

reviewed in detail and confirmed to be appropriate for MSD’s use going forward. This is

recommended due to the critically important nature of the PCCM approach to evaluating compliance

at both project-specific and overall program levels.

5.15 Risk Management � Develop project and program risk management framework and implement as part of the capital

project delivery process.

� Incorporate a “lessons learned” element into the project closeout processes.


5-5

5.16 Schedule Management � Perform detailed analysis of project schedules for near-term projects (i.e. those with fiscal year

2016 and 2017 milestones) to identify short-term schedule issues. If any projects are forecast

to miss their milestones, prepare recovery schedules and/or initiate discussion with regulators

about additional time for those projects.

� Develop schedule management procedures defining roles/responsibilities for staff within the

Planning, Engineering and Construction groups to develop and maintain project schedules

during the project delivery life cycle.

� Develop a master program schedule that contains key milestone information from project

schedules to support Consent Decree reporting, management decisions, resources, and staffing.

5.17 Cost Escalation � Track bid prices and contract changes through established contract update procedures and

track actual verses planned program cash flow. Revise program project load or sequence as

necessary to maintain the projected level of spending. Develop a standard index that will allow

identification of whether there is deviation from assumed 3 percent.

� Consider cost-variance tracking so the project manager can manage costs as the project goes

from IOAP through construction. This provides opportunities for Value Engineering.


5-6


6-1

Section 6

Summary Scorecard

The findings of the peer review team have been grouped into key program elements, summarized and

presented below in a “report card” format, with ratings assigned as traditional “letter grades” (A

through F; see definitions at bottom of table). These ratings reflect the peer review team’s assessment

of MSD’s program elements relative to industry standards. The ratings take into account a) MSD’s

performance to date and b) the prospects for successfully addressing each key program element

during the remainder of the program. Comments that explain each rating are included, with the

detailed information that supports each comment provided above in the full text descriptions of the

team’s findings.

Table 6-1: Summary Scorecard of Peer Review Findings

Program Element

Peer Review Finding

ID

Rating (A – F)

Comments

Notes:

� Comments included below are intended to provide brief explanations of the assigned ratings. Detailed information that supports each comment is provided in the full text of Section 4 of the Mid-Point Consent Decree Review report.

� Ratings definitions:

A – Best of class

B – Typical of successful wet weather programs

C – Adequate; improvement could benefit program

D – Needs immediate attention

F – Urgent risk of failure (not used)

Program Approach & General Status

1. IOAP objectives and approach to overflow control

S.2 A MSD has developed a plan with reasonable, achievable and affordable levels of CSO and SSO control. The mix of traditional (grey) and sustainable (green) infrastructure, balanced with an adaptive management approach to program implementation, is expected to both meet regulatory requirements and the needs of the community.

2. Adaptive management of program

S.3 A MSD’s program effectively incorporates adaptive management principles. This approach enables MSD to deliver to ratepayers the best solution, accounting for all factors, even if that solution may increase cost. MSD’s use of adaptive management includes a process to integrate green infrastructure in a manner that maximizes Triple Bottom Line benefits to the community while minimizing risk to MSD of missing CSO reduction targets.

3. Regulatory compliance status

S.10 A MSD has dramatically improved its relationship with KDEP and U.S.EPA Region 4 in recent years. MSD is now respected by the regulatory agencies and able to effectively negotiate IOAP program compliance requirements with them as implementation proceeds.

4. Public outreach S.11 A MSD has developed and conducts highly effective outreach to the public including the use of a Wet Weather Team Stakeholder Group. Public input is solicited and incorporated into project implementation. There is broad public support for the program but some project specific opposition that pose schedule and budget risks.

Section 6 • Summary Scorecard

6-2

Program Element

Peer Review Finding

ID

Rating (A – F)

Comments

5. Overall program comparison to national peer cities/agencies

S.1 A- MSD’s program compares very favorably to similar programs elsewhere. MSD’s progress is well ahead of other programs in the area, including those of the other large Ohio River cities. Per capita cost of the program is well below typical per capita costs elsewhere, and is among the lowest in the area. This is due in part to the capital improvements that MSD completed prior to the Consent Decree.

Schedule

6. Schedule management SC.9 PR.5 PR.8

C+ All ACD deadlines have been met which has led to reduced stipulated penalties in some instances. However, no programmatic schedule tracking system is in place. Risk of future schedule issues is emerging.

7. Assessment of fines and penalties

S.5 A To-date MSD has not been assessed any stipulated penalties related to deadlines under the ACD. Early in the program MSD paid some smaller fines related to solids and floatable permit violations.

Financial

8. Program funding S.6 SC.7

A � MSD has developed a funding strategy that has received broad public support with relatively little opposition. Funding of the program appears to be secure well into the future. Moderate rate increases remain within the authority of the MSD Board to approve which creates less uncertainty about program funding. Funding needs outside the IOAP could compete for limited funds in the future, but MSD is addressing this with facilities planning.

9. Cost control and adherence to budget

SC.5 PR.3 PR.4 PR.9

C Although MSD has generally done a good job managing program costs to date, cost issues have emerged recently with some projects. The following elements will contribute to the challenge of meeting the targeted $850M program cost projection:

� Current projection for total program cost is $56M higher than original estimate due to cost escalation from an improving economy, local construction market conditions, and scope changes related to facility sizing and public input;

� Existing contract language may be shifting excessive construction risk to contractors thereby increasing cost to accommodate risk;

� Potentially tight schedules for upcoming projects could impose additional cost;

� Contingency allowances used in original estimates are lower than current industry practice for project cost estimating.

Remaining projects should be re-estimated and rigorous cost control strategies implemented on the revised budgets.

Current Practices & Resources

10. MSD staffing to support program:

�

� Engineering and Management

� Operations

SC.1 SC.2 SC.4 SC.6

B+

C

MSD has excellent staff in place, but there are concerns about MSD’s ability to hire and retain key staff in the face of growing market pressures for those staff. There are also concerns about succession planning over the life of the program and lack of experience on large projects. Staffing levels may not be sufficient for some compliance needs, especially for skilled trades and professionals who are being lost to private industry. Complex facilities being added to collection system require sufficiently trained and experienced staff to operate and maintain properly.


6-3

Program Element

Peer Review Finding

ID

Rating (A – F)

Comments

11. Organizational structure

S.8 SC.3 PR.1

C

MSD’s organizational structure creates a series of management hand-offs, where projects are passed to different MSD managers, during the implementation process. The hand-offs create issues that would be avoided by retaining the same project manager throughout the planning-to-commissioning life of each project. Project management training will be needed.

12. Management of risks PR.7 C- While MSD has generally managed risk effectively to-date, the current process for risk management is relatively informal. Given the discontinuity in MSD project managers during the life of projects, the absence of formal risk management practices could become problematic for MSD in the future, as high-risk projects remain to be implemented.

13. Program controls and documentation of progress

PR.2 D Adequate program controls systems have not been in place. The following items are needed to support program-level decision making as well as controls related to scope, schedule and budget on projects:

� Documented policies and procedures for key controls functions, such as project cost and change management

� Program schedule regularly updated based on actual progress

� Project management information system

Given the cost and schedule concerns noted above, and the inherent risk in upcoming projects, the current approach poses a significant risk of failure.

14. Project document management

SC.8 B- MSD maintains good access to project documents, but could benefit from development and consistent application of document management systems.

15. Data collection and management

S.9 B+ MSD has established an excellent network of equipment for flow and rainfall monitoring to support the program and SCADA programming resources to support operations.

16. Monitoring performance of completed projects

S.4 S.7

PR.6

B MSD’s flow and rainfall monitoring program produces useful data for the post-construction compliance monitoring (PCCM) program. Most of the effort to-date has focused on statistical analysis of observed data. MSD plans to increasingly use the data for updating and re-calibrating the collection system model, which can better evaluate facility performance against targets.


6-4


A-1

Appendix A

Resumes

Edward H. Burgess, P.E., D.WRE Senior Vice President

Mr. Burgess has more than 30 years of engineering experience in the analysis, planning and design of urban water resources systems, including extensive application of computer modeling techniques to simulate combined sewer overflows (CSOs), sewer system hydraulics, stormwater management facilities, open channel hydraulics, and in-stream water quality. Mr. Burgess has also served the University of Cincinnati as an adjunct professor, where he taught the use of computerized mathematical modeling techniques in water resources.

Mr. Burgess is one of CDM Smith’s technical leaders in urban water resources. His leadership in this area has produced significant enhancements to the U.S. Environmental Protection Agency’s (EPA) Stormwater Management Model (SWMM), including SWMM 5, the latest version of the most widely used urban stormwater model, development of the Sanitary Sewer Overflow Analysis and Planning (SSOAP) Toolbox software for sanitary sewer system analysis, and MikeSWMM, the state-of-the-art SWMM user interface software developed in cooperation with the Danish Hydraulic Institute (DHI). Other SWMM enhancements developed under Mr. Burgess’ direction include the development of parallel processor support in EXTRAN to achieve significant runtime reductions and solution switching routines in EXTRAN to enable its use for long-term continuous simulations. Mr. Burgess has authored more than 40 technical papers, book chapters, and other publications in the water resources field.

Mr. Burgess typically serves CDM Smith’s clients as project manager or technical director for large water resources projects. In some cases, he also serves as task manager for especially challenging tasks on large projects, such as the application of real-time controls

to sewer systems or complex computer modeling tasks. Some of these projects include development of a stormwater management plan and CSO for Springfield, Ohio; stormwater management plan for Mason Ohio; a CSO operational plan and long-term control strategy for Indianapolis, Indiana; a master plan for stormwater/wastewater improvements and CSO control in Cincinnati and Hamilton County, Ohio;

CSO planning studies in Philadelphia and Pittsburgh, Pennsylvania and Wheeling, West Virginia; real-time sewer system controls in Philadelphia, Pennsylvania and Milwaukee, Wisconsin; stormwater management master plans for communities in the Dayton, Ohio area; preliminary design of wastewater equalization storage facilities for Montgomery County, Ohio; and computer modeling and design for regional wastewater collection systems and water transmission and distribution systems in Arizona and Ohio. His project experience has included the innovative application of geographic information systems (GIS) and database management systems to the modeling planning, mapping, and management of water resources systems.

Mr. Burgess’s background in computer modeling spans a broad range of water resources systems and includes application of the EPA SWMM model (including SWMM5, and various

Education

M.S. – Civil Engineering, University of Cincinnati, 1998

B.E. – Environmental & Water Resources Engineering, Vanderbilt University, 1980

Registration

Professional Engineer: Arizona (1986) and Ohio

Honors/Awards

Diplomate, Water Resources Engineer (D.WRE), American Academy of Water Resources Engineers, 2009

Experience Highlights

Over 30 years experience

National CSO program experience

Extensive sewer modeling experience

Edward H. Burgess, P.E., D.WRE

blocks of previous SWMM versions), the U.S. Army Corps of Engineers (USACE) STORM model, DHI’s MOUSE model, Wallingford’s InfoWorks model, the EPA WASP model, the Sewer CAT model for real-time control simulation, the University of Kentucky’s KYPIPE modeUSACE HEC-2 model for water surface profile computation, and numerous others.

Stormwater and Combined Sewer Overflow

Technical Advisor, CSO Long-Term Control Plan, Gary, Indiana. For the Gary Sanitary District, Mr. Burgess is serving as technical advisor for the development of the long-term control plan to reduce CSO discharges into the Grand Calumet and Little Calumet Rivers. Plan development is being supported by water quality modeling (bacteria) of the two receiving streams, instream sampling, collection system modeling, financial capability assessment and control technology evaluation.

Technical Advisor, CSO Long-Term Control Plan, Quincy, Illinois. For the City of Quincy, Mr. Burgess is serving as technical advisor for the development of the long-term control plan to reduce CSO discharges into the Mississippi River and local tributary receiving streams.

Technical Director, CSO Long-Term Control Plan, Albany, New York. For the Albany area, Mr. Burgess is serving as technical director for the development of the regional plan to reduce CSO discharges into the Hudson River at the Albany Pool. This plan is being developed for a regional consortium of communities coordinated through the Capital District Regional Planning Commission. Plan development is being supported by water quality modeling (dissolved oxygen and bacteria) of the upper Hudson River between the Mohawk River confluence and Poughkeepsie, instream and outfall sampling, collection system modeling, financial capability assessment and control technology evaluation.

Technical Director, Sewer System Modeling Support, Cincinnati, Ohio. For the Metropolitan Sewer District of Greater Cincinnati (MSDGC), Mr. Burgess serves as technical director for specialized modifications to and application of the detailed MSDGC sewer model for CSO and SSO analysis, planning and design.

Technical Advisor, CSO Compliance Support, Springfield, Ohio. For the City of Springfield, Mr. Burgess is serving as technical advisor for the negotiation of CSO control requirements with the State of Ohio.

Technical Director, CSO Long-Term Control Plan, Paducah, Kentucky. For the Paducah area, Mr. Burgess is serving as technical director for the development of the regional plan to reduce CSO discharges into the Tennessee/Ohio Rivers and several smaller tributaries. This plan is being developed for the regional sewer service agency, and includes an instream and outfall sampling program, detailed collection system modeling, financial capability assessment and evaluation of CSO control technologies.

Project Director, Green Infrastructure Plan for CSO Control, Cincinnati, Ohio. For the Metropolitan Sewer District of Greater Cincinnati (MSDGC), Mr. Burgess is serving as project director for the plan to reduce CSO discharge at a key outfall (CSO 125) with the use of green infrastructure. Controls being evaluated include stream separation (removal from the combined sewer system), bio-retention basins, porous pavement, curb extensions, and other green infrastructure approaches to stormwater management.


Project Director, Livingston/James Sewer System Inflow/Infiltration Remediation Project, Columbus, Ohio. Mr. Burgess is serving as project director for this project for the City of Columbus. The purpose of the project is to conduct a detailed study of the sanitary collection system to identify locations of sewerage overflows out of manholes, sanitary reliefs, sewerage system surcharging, sewerage backup into basements, and to identify the causes of these occurrences. Mr. Burgess is leading the CDM Smith team, working with the Division of Sewerage and Drainage (DOSD), which will recommend cost effective improvements to the sanitary collection system to mitigate and/or eliminate sanitary sewer surcharges and consequent overflows at manholes, structures, and water in basement occurrences for a selected performance targets.

Project Manager, Sewer System Capacity Model Update 2006 Project, Columbus, Ohio. Mr. Burgess is serving as project manager for this project. As part of the City of Columbus Division of Sewerage and Drainage’s (DOSD) efforts to comply with two consent orders that address the capacity of its separate and combined collection systems and wastewater treatment plants, the city retained CDM Smith to update the city’s sewer system capacity model (SSCM) to year 2006 development and flow conditions. In performing this update, CDM Smith will assist the city in migrating the SSCM into an updated modeling software environment, evaluate the suitability of the SSCM to support the city's ongoing sewer system planning and plan implementation efforts, update and improve the calibration of the model, and initiate various model applications (including evaluation of real-time system control). Flow monitoring, rainfall metering, radar-rainfall data processing, and other field investigations of sewer system configuration and condition will be performed (by subconsultants) to support the model update process. Project deliverables include updated model datasets, source data, technical memoranda, reports and on-site training sessions.

Project Manager, System-Wide CSO and Sanitary Sewer Overflow (SSO) Model Development, Cincinnati, Ohio. For the Metropolitan Sewer District of Greater Cincinnati (MSDGC), Mr. Burgess served as the project manager for the detailed sewer model developed and exhaustively calibrated to support CSO and SSO analysis, planning and design. This three-year project produced a 45,000-node wastewater collection model, which simulates flow from the 78-sqare-mile area and its 220 overflow locations in Hamilton County, Ohio.

Project Manager, Floatables Control Study, Cleveland, Ohio. For the Northeast Ohio Regional Sewer District (NEORSD) serving the greater Cleveland area, Mr. Burgess managed a CSO Floatables Control Study to develop both short-term and long-term plans to address the impacts of CSO floatables on Lake Erie and the lower Cuyahoga River. The project produced a successful set of CSO netting trap facilities that are currently in services throughout the NEORSD services area, and led to an expansion of this technology at additional sites currently under design.

Project Manager, CSO and Stormwater Management Plan, Springfield, Ohio. Mr. Burgess served as project manager for the CSO and stormwater management plan for the City of Springfield, Ohio. This project involves developing feasible, cost-effective solutions to the city’s extensive stormwater management problems, many of which occur within its large combined sewer area. This project also included the development of a series of three documents addressing CSO system performance and impacts, required under the city’s


National Pollutant Discharge Elimination System (NPDES) permit. Under Mr. Burgess’ direction, all three documents were submitted within tight permit-defined schedules and approved by Ohio EPA.

Project Manager, Stormwater Program Master Plan, Mason, Ohio. The City of Mason, Ohio, one of the fastest growing cities in the state, is experiencing significant stormwater management problems. Mr. Burgess served as project manager to assist the city in developing a comprehensive stormwater management program. This included an evaluation of stormwater program resource needs, solution to high-priority stormwater flooding problems, and an assessment of program funding alternatives.

Project Manager, Drainage Area Master Plans, Hamilton County, Ohio. Mr. Burgess was the project manager for the South Mill Creek and Muddy Creek drainage area master plans for the stormwater/wastewater-integrated management (SWIM) master plan for Cincinnati and Hamilton County, Ohio. This three-year project includes extensive computer modeling of the existing sewer systems to support planning for stormwater control, CSO reduction, and wastewater conveyance improvements in this urban area of 900,000.

Project Manager, Comprehensive Stormwater Management Master Plan, Centerville, Ohio. For the City of Centerville, Ohio, Mr. Burgess was the project manager for the comprehensive stormwater management master plan. This project included a number of diverse components, including computer modeling of the storm sewer and open drainageway systems and development of a Design Criteria Manual for stormwater management.

Project Manager, Stormwater Management Study, West Carrollton, Ohio. Mr. Burgess was the project manager for the stormwater management study for the City of West Carrollton, Ohio. This project included preparation of a detailed computer model of the Owl Creek Basin near West Carrollton and extensive modeling of the drainageways in this area to support the development of a master plan for flood control improvements along Owl Creek and the Primrose Tributary.

Project Manager, Hydrologic and Hydraulic Modeling Study, Cincinnati, Ohio. For the U.S. Army Corps of Engineers, Mr. Burgess was the project manager for the Duck Creek hydrologic and hydraulic modeling study. This project included preparation of detailed hydrologic and hydraulic simulations of the Duck Creek watershed and its major drainageways in Cincinnati, Ohio. Mr. Burgess was the task manager for stormwater modeling and combined sewer outfall control planning tasks for the Duck Creek drainage area master plan for the SWIM master plan.

Project Manager, CSO Control Program, Indianapolis, Indiana. In Indianapolis, Indiana, Mr. Burgess managed a long-term CSO control program for an area of over 40 square miles. This multi-year project included extensive computer modeling of the existing combined sewer system to support planning for CSO reduction for the city’s combined sewer area, development of a CSO Operation Plan for implementation of the Nine Minimum Controls, a CSO control strategy and Long-Term CSO Control Plan. Project elements included field data collection, flow and water quality monitoring, facility planning, regulatory interaction, and public participation program development.

Technical Director, Interceptor Sewer and CSO Modeling, Philadelphia, Pennsylvania. For the City of Philadelphia, Pennsylvania, Mr. Burgess is the technical director for


interceptor sewer and CSO modeling. This project includes extensive modeling of the interceptor sewers, complex regulator structures, and combined trunk sewers using SWMM/RUNOFF, SWMM/TRANSPORT, SWMM/EXTRAN, and STORM. The modeling will be used to characterize and optimize the hydraulic performance of the system of regulators and interceptors, to determine the CSO characteristics at the 175 overflow points in Philadelphia’s combined sewer system, and to support operational and long-term CSO control planning.

Technical Director, CSO Program, Pittsburgh, Pennsylvania. Mr. Burgess was the technical director for interceptor sewer and CSO modeling for Phase I and Phase II of the CSO program for Allegheny County Sanitary Authority in Pittsburgh, Pennsylvania. Phase I includes technical direction and oversight for modeling the combined sewer system in the greater Pittsburgh area, with over 280 overflow locations and a complex system of tunnels and vortex drop shafts which collects combined flows from over 80 communities. Phase II included extension of the interceptor sewer model developed under Phase I, as well as refinement and calibration of the hydrologic and hydraulic models of the system of combined sewers, interceptors, gate structures, and tunnels.

Technical Advisor, CSO Discharge Minimization, Wheeling, West Virginia. For the City of Wheeling, West Virginia, Mr. Burgess was the technical advisor for interceptor sewer and CSO modeling for the conceptual plan for analysis and minimization of CSO discharges. This work included technical direction and oversight for modeling the combined sewer system in the city, with 219 overflow locations into the Ohio River, Wheeling Creek, and other streams in the Wheeling area.

Design Hydrologist, Regional Stormwater Detention Facility Design, Tucson, Arizona. Mr. Burgess was the design hydrologist for preliminary and final design of the Kolb Road regional stormwater detention facility. The 100-acre detention basin, which included complex outlet control structures, an upstream levee system, and inlet spillways, provides stormwater runoff control for a large urban area near Tucson, Arizona. Mr. Burgess’ responsibilities included hydraulic modeling, using HEC-2, and preliminary design of the inlet and outlet structures.

Design Hydrologist, Stormwater Control Facilities, Pima County, Arizona. Mr. Burgess was also the design hydrologist for various stormwater control facilities for public transportation and private land development projects in Tucson and Pima County, Arizona.

Project Manager, SWMM5 Redevelopment Project. CDM Smith, in a Cooperative Research and Development Agreement (CRADA) with EPA, is working jointly with EPA’s National Risk Management Research Laboratory to produce an updated version of EPA's well-known Storm Water Management Model (SWMM), widely used throughout the world for analysis of quantity and quality problems related to stormwater runoff, combined sewers and CSO, sanitary sewers, and other drainage systems in urban areas.

Technical Advisor, Implementation of the Nine Minimum CSO Controls, Portland, Oregon. For the City of Portland (Oregon), Mr. Burgess served as technical advisor to the city’s documentation of their CSO Program implementation of minimum technology-based controls for CSO impact mitigation.

Technical Advisor, Real-Time Control Strategy Improvement Plan, Milwaukee, Wisconsin. For the Milwaukee Metropolitan Sewerage District (MMSD), Mr. Burgess


served as a technical advisor for the study to develop and evaluate alternative operational strategies for MMSD’s Inline Storage System (ISS, or “deep tunnel,” for control of CSO and SSO discharges). This study developed an innovative artificial neural network-based approach to improved tunnel operation.

Wastewater

Project Manager, Trunk Sewer System and Wastewater Pumping Design Study, Hamilton County, Ohio. Mr. Burgess was the project manager for the Taylor Creek trunk sewer system and wastewater pumping design study. This project involved the preliminary design of an 18-mile system of trunk sewers up to 60 inches in diameter and pumping facilities to provide wastewater collection for the 19,000-acre Taylor Creek drainage area in Hamilton County, Ohio. He developed a planning model for this project to establish trunk sewer sizing, which incorporated the Cincinnati sewer design criteria.

Project Manager, I/I Analysis and Remedial Action Study, Florence, Kentucky. For Florence, Kentucky, Mr. Burgess was the project manager for the infiltration/inflow (I/I) analysis and remedial action study. This project included conducting a flow monitoring program for the 500-acre study area, computer analysis of the flow monitoring data, computer modeling of the existing sewer system and development of a corrective action plan for I/I control.

Design Engineer, Wastewater Collection Master Plan, Rancho Visto, Arizona. Mr. Burgess was the design engineer for the master plan for wastewater collection at Rancho Visto, Arizona. This project included a preliminary design for an extensive trunk sewer system to serve a large planned community near Tucson.

Project Engineer, Design of Pump Station and Force Mains, Tucson, Arizona. Mr. Burgess was the project engineer for Peppertree Ranch pump station and force mains near Tucson, Arizona. The project involved preliminary design for pumping facilities, including odor control and hydraulic transient control systems for the 16-mgd pump station and parallel 18- and 24-inch force mains.

Professional Activities Member, American Society of Civil Engineers

Member, Water Environment Federation

Member, Sigma Xi, The Scientific Research Society

Member, American Water Works Association

Member, Ohio Water Pollution Control Association

Michael S. Krabacher, P.E. BCEE Principal Environmental Engineer

Mr. Krabacher has 19 years of experience with water resources and environmental projects, including, sanitary sewer overflow (SSO) and combined sewer overflow (CSO) facility planning, hydraulic/hydrologic analysis and water/wastewater facility design. He has significant experience in the area of program management specifically with the following program related services: project controls, design management, construction management, procurement, document control, contracting, organizational development, procedure development and risk management.

Program Management Program Controls Manager, Program Management Services – Year 1, Metro Water Services Department, Nashville, Tennessee. Mr. Krabacher served as program controls manager during the program development and start-up phase for the $1.5 billion Clean Water Nashville Overflow Abatement Program. In this role, Mr. Krabacher was responsible for the critical task of establishing a state-of-the-art program management information system (PMIS) for managing project delivery processes and proactively controlling execution against scope, schedule, and budget goals. The PMIS (Oracle Primavera Unifer®) provides a collaboration platform across all organizations, including designers and contractors, as well as communication to the Nashville community and stakeholders.

Mr. Krabacher prepared a Master Program Budget & Schedule report that described the steps taken to develop the program budget and schedule utilizing the list of projects and cost estimates provided in the Corrective Action Plan/Engineering Report (CAP/ER) and Long Term Control Plan (LTCP). The report addressed:

Approach for establishing the total project cost for each Program project including assumptions associated with the direct and indirect construction costs, development of the rehabilitation unit costs, and the allocation of project development costs (e.g. cost associated with administration, design, construction management)

Approach for establishing a comprehensive schedule of projects to be constructed including a description of the standard phases of projects, assumed durations of each phase, and the sequence of work

Establishment of a standard work breakdown structure (WBS) and resource codes that would facilitate management and tracking of Program performance

Mr. Krabacher interviewed Metro Water Services (MWS) personnel and documented MWS’s existing business processes as part of a report summarizing the clients “As Is” practices. The “As Is” report was the basis for issuing recommendations to improve coordination between the Program Management Team and other MWS support groups in the form of a “Gap Analysis” report.



Cincinnati CD Program Management

Nashville CD Program Management

Education

M.S./MSc - Project Management, Northwestern University, 2002

B.S./BSc. - Civil Engineering, University of Cincinnati, 1994

Registration

Professional Engineer: Ohio (1999), and Kentucky

Honors/Awards

Board Certified Environmental Engineer (BCEE) American Academy of Environmental Engineers

Michael S. Krabacher, P.E. BCEE

Mr. Krabacher was responsible for the development of standard policies and procedures related to program and project controls. These policies and procedures were incorporated into a Program Management Plan (PMP) document that included procedures but also guidelines and references that contained additional detail. Below is a listing of the program and project controls related sections of the PMP developed by Mr. Krabacher:

Procedures: Actual Cost Update, Change Justification, Claim Review, Construction Contract Change, Contract Initiation and Update, Controlled Document Revision, Funding Update, Invoice Review, Lessons Learned, Master Schedule Update and Schedule Review

Guidelines: Document Control Guidelines, Estimating Guidelines and Procurement Guidelines

References: Master Program Budget & Schedule, PMIS User Manual and Program Risk Management Plan

Program Controls Manager, Program Management Services - Year 2, Metro Water Services Department, Nashville, Tennessee. Mr. Krabacher served as the program controls manager leading a team that was responsible for; master program schedule, planning and design phase schedules, designer invoices, change management, document control quality assurance, procurement coordination, permit tracking, real estate tracking, lessons learned and program risk management. Mr. Krabacher served as the primary point of contact between the Metro Water Services Accounting and managed the interface with Metro Procurement, providing regular schedule updates on up-coming and on-going procurements.

Mr. Krabacher supported other members of the Program Management team by providing monthly program assessment reports, cash flow analysis, look-ahead schedules, information required for funding and capital budget planning. Mr. Krabacher was also responsible for maintaining the Program Management Information System (PMIS) on behalf of the Program Management Team including new business processes and generating standard reports. The PMIS (Oracle Primavera Unifer®) was also utilized by the Construction Management Consultant team as primary tool for managing contactors requests for information, submittals, daily reports, field authorizations, change orders and pay applications.

Task Leader, Corrective Action Plan and Engineering Report (CAP ER), Metro Water Services Department, Nashville, Tennessee. Mr. Krabacher led the development of a cash-loaded master program schedule for Metro Water Services $1.5 billion Consent Decree driven wet weather improvement plan. The master program schedule integrated the CAPER (separate sewer system) projects with the LTCP (combined sewer system) projects into a single program plan. Mr. Krabacher developed a standard approach to representing projects in the master schedule as well as the basis for assigning phases durations. He worked with the project planning and modeling teams to build in hydraulic dependences and client preferences into the program schedule logic. Mr. Krabacher also developed an approach to representing project soft costs and escalation which, when incorporated into the master program schedule, provided Metro Water Services with a tool for examining the impacts of project sequencing on the program cash flow.


Task Leader, Project Management Manual Development, Metropolitan District Commission, (MDC), Hartford, Connecticut. Mr. Krabacher led the development of the construction section of MDC’s Project Management Manual (PMM). The manual contains standard processes and procedures which all Metropolitan District Commission (MDC) staff follows in order to ensure the consistency, quality, and timeliness of all actions taken by personnel toward implementing the program. The Project Management Manual developed by Mr. Krabacher is a three-part set of documents that describe the processes, activities, and procedures necessary to efficiently execute MDC’s capital projects (i.e. Clean Water Project and Capital Improvement Program).

Enterprise Manager, Risk Management Staff Supplementation Services, Metropolitan Sewer District of Greater Cincinnati (MSDGC), Ohio. Mr. Krabacher served as enterprise manager for MSDGC’s wet weather capital improvement program, Project Groundwork. In this role, Mr. Krabacher was responsible for coordinating the efforts of both the planning and design/construction work within two MSDGC divisions, developing and analyzing program cash flow reports, schedule analysis, capital investment planning, project-level reporting, program-level reporting and quarterly reports to regulators.

Deputy Program Manager, Phase 3 Program Management Services, Metropolitan Sewer District of Greater Cincinnati (MSDGC), Ohio. Mr. Krabacher served as deputy program manager (functional title is risk manager) for the Program Management Consultant (PMC) team. In addition to his role as risk manager, Mr. Krabacher was responsible for tracking costs, managing the PMC team, assisting with report production, managing five subcontractors (including three that are small business enterprises) and assisting in the direction of the efforts of 33 full time PMC staff.

Based on the Risk Management Plan developed in Phase 1 and the procedures developed in Phase 2, Mr. Krabacher was responsible for leading risk management at the program level. This includes assisting with the identification of program-level risks, developing risk response actions/priorities, recommending the assignment of risks to the Program Steering Committee, escalating risks (if necessary), and reviewing risks and status of resolution actions as part of monthly program-level risk management status reports. He was also responsible for monitoring and reporting on the implementation of project-level risk management plans.

Deputy Program Management Consultant, Phase 2 Program Management Services, Cincinnati, Ohio. Mr. Krabacher served as deputy program manager for a $4.8 million, 24-month effort that continued the consulting tasks needed to implement the WWIP that were recommended or not addressed in Phase I. In his role as deputy, Mr. Krabacher was responsible for tracking costs and earned value, managing the PMC team, assisting with report production, managing six subcontractors (including three that were small business enterprises) and assisting in the direction of the efforts of eight full time PMC staff. Mr. Krabacher also performed duties related to the following deliverables associated with the $1.99 billion Wet Weather Improvement Plan (WWIP) to be implemented by MSDGC’s Wastewater Engineering Division:

Design and Construction Contract Preparation Support: Mr. Krabacher assisted with the preparation of several deliverables whose purpose was to streamline MSDGC’s procurement function while improving consistency in the approaches and contracting vehicles utilized. Mr. Krabacher reviewed existing RFP and task order templates, existing


Master Service Agreement contracts, and other engineering services related contracts/selection criteria. Based on this review, he assisted the team in developing standard contract templates and manuals for construction ID/IQ contracts, pre-purchase and pre-selection of long-lead items, and professional engineering service contracts for planning and design of complex project bundles.

Process Improvement Support: Mr. Krabacher led the development of project-level procedures and the adaptation of the previous program-level procedures to a revised program management model. These new project procedures and revised program procedures were incorporated into a comprehensive Master Program Management Plan (MPMP) document that was used by staff involved with the capital project delivery. Mr. Krabacher led the development of project-level procedures for:

Startup, Commissioning and Turnover - Examples include: Commissioning Procedure, Contract Closeout Procedure and Project Closeout Procedure

Program Controls - Examples include: Review of Vendor Schedule Procedure, Master Program Schedule Update Process, Master Program Budget Update

Pre-Construction - Examples include: Initial Submittal Review Procedure, Preconstruction Meeting, Notice to Proceed Procedure

Construction - Examples include: Inspectors Daily Report Procedure, Contractor Submittal Review Procedure, Request for Information Procedure

Construction Quality Assurance - Examples include: Construction Field Testing Procedure and Construction, Notice of Deficiency Procedure

Quality Management - Example include: Design Review Procedure, Design Quality Control Plan Review Process, Technical Review Committee Selection Procedure

Quality Monitoring - Examples include: Lessons Learned Procedure and Procedure Maintenance Process

Risk Management Procedures: Mr. Krabacher developed procedures and templates for the execution of the Risk Management Plan that was developed in Phase 1. The Risk Management Procedure established the roles/ responsibilities for staff involved in risk management at MSD, outlined the relationship between project-level risk and program-level risks, created protocols for escalation of unresolved program risks, provided guidelines for the evaluation and assignment of risks, and included a template for monthly risk reports. The close ties between risk management and issue management led to Mr. Krabacher developing a project-level Issue Management Procedure. This procedure also established roles/responsibilities and protocols for managing issues (defined as point or matter in question that has immediate potential for adversely affecting project schedule, cost or quality) identified at the project level.

Monitoring Program Plan: Mr. Krabacher led the development of a flow and water quality monitoring program to support implementation of MSD’s Wet Weather Improvement Plan. Planning and implementation of post-construction monitoring was specifically required in the Global Consent Decree (GCD), although the specific elements of that monitoring were left to MSD to define subject to review, negotiation and approval with EPA. Mr. Krabacher led MSD through the bulleted items below which summarize the basic process used in the


evaluation of existing monitoring programs and development of the Monitoring Program Plan.

Evaluate “As-Is” monitoring activities that MSD and other agencies currently conduct.

Summarize the “To Be” monitoring requirements that have been established in the Consent Decree.

Analyze the gap between the current activities (“As-Is”) and the requirements of the Consent Decree (“To Be”) and issue recommendations to close the gap.

Prepare a Draft Program Monitoring Plan that develops specifics for implementing the recommendations.

Deputy Program Management Consultant, Phase 1 Program Management Services, Cincinnati, Ohio. For the MSDGC, Mr. Krabacher served as deputy program manager for a $3.1 million, 11-month effort that assessed both the reasonableness of the Wet Weather Improvement Plan that MSDGC had been developing for years, and the identified gaps in the staffing and the management capabilities of their organization needed to implement the WWIP. In this role, Mr. Krabacher was responsible for tracking costs and earned value, managing the PMC team, assisting with report production, managing five subcontractors (including four that are small business enterprises) and assisting in directing the efforts of eight full time PMC staff. Mr. Krabacher also performed duties related to the following deliverables associated with the $1.99 billion WWIP to be implemented by MSDGC’s Wastewater Engineering Division:

Risk Management Plan: Mr. Krabacher led the development of a risk register that outlined environmental, fiscal, legal, management and technical risks to the program, their estimated consequences and maximum foreseeable loss. From this risk register, Mr. Krabacher developed a management strategy that recommended MSDGC either transfer, manage, insure or develop a contingency for each of the identified risks.

Master Program Management Plan (MPMP): Mr. Krabacher led the development of a manual that included processes and procedures needed for program implementation by the Wastewater Engineering Division (WWE). The MPMP included program-level procedures and processes needed to successfully track and manage the $1.99 billion WWIP.

Gap Analysis Report: Mr. Krabacher assisted with writing a comprehensive report that included recommendations for closing the gap between MSDGC’s current project delivery processes and those required for WWIP implementation. This report addressed all major branches within WWE (Planning, Program & Project Management, Construction); procurement; contracting; interface with other MSDGC’s divisions; and interface with City departments. The report also outlined the structure of a new Program Services branch responsible for monitoring and tracking the program through the Master Program Schedule and Budget and assisting with items such as contract administration, design and construction quality, risk management, permitting, ROW acquisition and training.

Master Program Schedule: Mr. Krabacher reviewed the scope, schedule and budget for many of the projects recommended in the WWIP for the purposes of developing the Master


Program Schedule. Review included such items as the project real estate impacts, permitting issues, risks, construction cost and construction duration.

Existing Management Processes and Organization: Mr. Krabacher assisted with interviewing WWE personnel and developing flow charts outlining the steps in MSDGC’s existing project delivery system.

CIP Development Process: Mr. Krabacher reviewed and evaluated MSDGC’s existing CIP prioritization process and recommended improvements for prioritizing future capital projects.

Program Funding Sources: Mr. Krabacher assisted in the finalization of a report that recommended MSDGC pursue state, local and Federal funding for the WWIP.

Water Resources Project Manager, Plan of Study for CSO Assessment, Quincy, Illinois. As project manager, Mr. Krabacher led the preparation of a Combined Sewer Overflow (CSO) Plan of Study (POS) for the City of Quincy (population 40,000). The POS centered on the application of a sewer system model that would allow the city to determine if they are in compliance with the new permit requirements. He was responsible for developing an approach for representing CSO regulators, outfalls, and interceptor sewers in the system model; gathering data that would allow detailed event-based simulation of storage inflow/outflow during and following wet weather; planning for continuous simulations using long-term precipitation records to evaluate the average annual CSO characteristics and future CSO planning functions; and developing a water quality monitoring plan that included a combination of continuous monitoring and sampling sites located both upstream and downstream of CSO outfall locations to determine their impact on the receiving waters. The plan allows for a total of two dry-weather and two wet-weather surveys to provide background levels of pollutions and to determine the impact of CSO events on receiving water quality, respectively.

Prior to CDM Smith Project Manager, As-Needed Collection System Modeling, Sanitation District No. 1 of Northern Kentucky. Mr. Krabacher managed a master services agreement for collection system modeling (Hydro Works software) for the Sanitation District No. 1 of Northern Kentucky. Under the master services agreement, several modeling task orders were completed using the collection system model to evaluate proposed improvements. Those improvements included evaluating the effectiveness of a parallel 18-inch-diameter inverted siphon to relieve upstream flooding in a separate sewer area and evaluating a new 24-inch diameter sewer line that would transfer flow to an adjacent watershed for the purpose of relieving an existing pump station. Another task order involved long term modeling using historical rainfall records to generate hydraulic loadings from CSOs and sanitary sewer overflows (SSOs) within the Banklick Creek watershed for use in a watershed water quality model.

Development and Operation, Sanitary Sewer Facilities Plan. Mr. Krabacher helped develop and operate XP-SWMM hydraulic model to represent the separate sewer lines and pump stations in a three county area. He developed dry and wet weather inflow hydrographs based on land use areas and soil types and the results of rainfall and sewer monitoring data. Model construction included such hydraulic features as pump stations,


flow diversions, detention basins, and gravity lines feeding force mains. The overall project involved six interfaced models encompassing more than 2,000 manholes and approximately 70 miles of pipes.

Professional Activities Member, American Society of Civil Engineers

Member, Construction Management Association of America

Publications Krabacher, M. “CSO Modeling Using RUNOFF and TRANSPORT Modules of XP-SWMM,” Water Resources Planning and Management Conference, Tempe, Arizona, June 6-9, 1999.

Bernard F. Maloy, P.E., BCEE Vice President

Mr. Maloy has over 30 years of consulting experience in environmental engineering including evaluation, planning, and design of municipal water and wastewater conveyance, pumping, and treatment facilities, storm and sanitary sewer design, hydraulic and hydrologic modeling studies, and other water resource and environmental engineering projects. He has been in responsible charge of major planning, evaluation, design, and construction projects for municipal clients in Indiana, Kentucky, Minnesota, Tennessee, North Carolina, and Louisiana.

Project Manager, Water Facilities Plan, Louisville, Kentucky. Mr. Maloy managed the development of a comprehensive 20-year facilities plan (2011-2030) and $1.2 billion capital improvements plan for the Louisville Water Company. The existing facilities provide treatment, transmission and distribution of up to 240 mgd of drinking water to Louisville and other regional customers.

Project Manager, Energy and Operations Efficiency Study, Johnson City, Tennessee. Mr. Maloy managed a study to evaluate energy and operational savings and associated capital project payback periods for two wastewater treatment plants. A condition assessment and criticality analysis was also completed. The results were used to develop a prioritized capital improvements plan.

Project Manager, Wet-Weather Wastewater Treatment Facility Upgrade, Knoxville, Tennessee. Mr. Maloy is managing design and construction services for a series of projects that will expand secondary treatment capacity from 70 to 120 mgd. The 50-mgd expansion features an innovative biologically enhanced high rate clarification process. He is also technical advisor on a project expanding an 18-mgd wastewater treatment plant (WWTP)

to 34 mgd using the same process.

Task Leader/Technical Reviewer, Nashville MWS Corrective Action Plan/Engineering Report, Nashville, Tennessee. Mr. Maloy is a technical advisor to the CDM Smith team that is developing a comprehensive capital improvements plan to address wet-weather issues related to the separate sanitary system.

Recently, he led a joint effort to develop conceptual planning alternatives and cost estimates to increase wet-weather treatment capacity at the Central WWTP.

Project Manager, Champlin-Anoka-Brooklyn Park/Elm Creek Interceptor Facilities Plan, Minneapolis – St. Paul, Minnesota. Mr. Maloy managed development of wastewater conveyance facilities plan to serve the northwest portion of the MCES service area. Planning period peak flows are projected to exceed 60 mgd. Consideration is being given to large trunk sewers, tunnels, pumping systems, a new Mississippi River crossing and regional treatment facilities.

Education

M.S. - Environmental and Resource Engineering, State University of New York, College of Environmental Science and Forestry at Syracuse University, 1978

B.S. – Forest Engineering, State University of New York, College of Environmental Science and Forestry at Syracuse University, 1974

Registration

Professional Engineer: Kentucky and Tennessee

Honors/Awards

Board Certified Environmental Engineer (BCEE) – American Academy of Environmental Engineers



Wet Weather CD programs in Knoxville, Nashville, Lexington

Bernard F. Maloy, P.E., BCEE

Project Manager, Minneapolis –Hopkins Lift Station and Force Main, St. Paul, Minnesota. Mr. Maloy managed facility planning and design services related to reconstruction of a 10-mgd pump station and 25,000 feet of 24- and 30-inch forcemain.

Project Manager, Wet Weather Capacity Assessment and Remedial Measures Plan, Lexington, Kentucky. Mr. Maloy managed development of a system-wide hydraulic model to evaluate wet weather conveyance and treatment capacity. The project is required by an EPA consent decree to mitigate sanitary sewer overflows (SSOs). He is currently managing CDM Smith’s role in developing a system-wide remedial measures plan.

Project Manager, Various Wastewater Projects, Knoxville Utilities Board. For the Knoxville Utilities Board, Mr. Maloy has directly managed or served as officer-in-charge of a variety of projects including preparation of sanitary sewer and wastewater treatment plant (WWTP) facility plans, design of a major relief sewer and wastewater treatment facility upgrade projects, and development of a hydraulic water distribution system model. Mr. Maloy recently assisted KUB with negotiation of a Consent Decree with U.S.EPA to address sanitary sewer overflows (SSOs) and wastewater treatment violations. He led the development of a $530 million corrective action plan featuring extensive sewer rehabilitation, storage and trunk sewer replacement that is currently being implemented. He managed a comprehensive performance evaluation and composite correction plan for three WWTPs (48 mgd, 10 mgd and 5 mgd) to address wet weather flows. He also managed development of a wastewater collection system capacity assurance plan and provided assistance with CMOM program implementation.

Project Engineer, Competitive Utility Operations Projects, Multiple Locations. Mr. Maloy assisted the Indianapolis Department of Public Works procure and negotiate a contract for operations and maintenance services for its two 125-mgd WWTPs. He also assisted the city with evaluating the contractor’s proposed maintenance management system and has developed procedures to conduct maintenance and operations audits to assess contract compliance. Mr. Maloy also assisted Indianapolis with procurement of an operations and maintenance contract for their wastewater and stormwater collection systems. In addition, he assisted the Charlotte-Mecklenburg Utility Department in North Carolina with procurement of an operations and maintenance contract for a WWTP and a water treatment plant (WTP). Mr. Maloy is currently managing a competitive utility evaluation project involving wastewater treatment and collection facilities for Baton Rouge, Louisiana.

Project Manager, Various WWTPs, Louisville, Kentucky. Mr. Maloy was project manager for numerous design and construction projects at Louisville, Kentucky's 105-mgd Morris Forman WWTP which features high purity oxygen activated sludge. Completed projects include construction of Zimpro system modifications, installation of gravity belt thickeners, installation of sludge dewatering centrifuges and chemical feed equipment, and construction of a new 42-ton-per-day cryogenic oxygen plant which was designed under Mr. Maloy’s supervision. He managed the design of modifications to the 340-mgd final effluent pump station which included wetwell modifications, rehabilitation of four 2,000-horsepower pumps, installation of variable frequency drives, and a dechlorination system. He also directed the development of revised local limits for industrial dischargers to four WWTPs ranging in size from 3 mgd to 105 mgd.

Bernard F. Maloy, P.E., BCEE

Technical Advisor, Stormwater-Wastewater Master Plan, Ohio. Mr. Maloy served as technical advisor for review of recommendations being developed as part of the Stormwater-Wastewater Integrated Management Master Plan for Cincinnati and Hamilton County, Ohio. Project involvement included responsibility for evaluating five WWTPs to determine modifications necessary to optimize wet-weather treatment capacity.

Professional Activities Member, Water Environment Federation

Member, American Water Works Association

S. Wayne Miles, P.E., BCEE Senior Vice President

Mr. Miles is experienced in the development and implementation of water and wastewater infrastructure improvement and rehabilitation programs. He leads CDM Smith’s infrastructure services group in the Southeast, and he has assisted over 50 communities in 15 states in identifying priorities, developing budgets, and justifying the need for infrastructure upgrades and renewal. He has expertise in the selection of pipeline condition assessment technologies, the application of hydraulic and hydrologic modeling tools, the development of sewer improvements plans, and the design of a variety of rehabilitation approaches.

Compliance and Technical Support Manager, Clean Water 2020 Program, Columbia SC. Mr. Miles is providing broad technical support service for the Columbia SC Clean Water 2020 Program, which is aimed at improving performance of the city’s sanitary sewer system to reduce sanitary sewer overflows (SSOs). Mr. Miles is overseeing the development and implementation of the city’s continuing sewer assessment program (CSAP), the infrastructure rehabilitation program (IRP), and is providing technical review and direction for the ongoing sewer system hydraulic model project. Mr. Miles also provided technical support and was actively engaged in the city’s consent decree negotiations with EPA and the South Carolina Department of Health and Environmental Compliance (DHEC), which were completed in late 2013. The program implementation costs are estimated to be approximately $750 million with key implementation milestones beginning in 2014.

Technical Director, Asset Management Plan Development for Water Distribution and Wastewater Collection System, City of Raleigh NC. Mr. Miles has led the development of an asset management plan to help the City of Raleigh NC better plan for a sustainable water distribution and wastewater collection infrastructure. The plan includes processes for prioritizing water and wastewater assets for condition assessment and

rehabilitation/replacement based on risk analysis using condition (probability of failure) and criticality (consequence of failure) related factors. The plan also included analyses of predicted water and wastewater pipe failure rates using the KANEW model, which supported an increase in Raleigh’s capital improvements budget for rehabilitation and replacement. Raleigh is currently in the implementation phase of the first phase of water and

sewer condition assessments in high risk areas, and CDM Smith has been selected to conduct these condition assessments using a range of technologies including zoom cameras, focused electrode leak location, acoustic assessments, and traditional CCTV for gravity sewers, and electromagnetic evaluations and acoustic leak detection methods for water transmission mains.

Technical Director, Corrective Action Plan/Engineering Report (CAP/ER) Development, Nashville, Tennessee. Mr. Miles is the technical director for CDM Smith’s current project to develop the CAP/ER for Nashville Metropolitan Water Services (MWS) as required under a consent order with the U.S. EPA. Under this project, CDM Smith is developing, calibrating, and applying a computer model of the MWS sanitary sewer system

Education

M.E. – Environmental Engineering, University of Florida, 1988

B.S. – Environmental Engineering, University of Florida, 1986

Registration

Professional Engineer: North Carolina (1991) and Georgia

Honors/Awards

Board Certified Environmental Engineer (BCEE), American Academy of Environmental Engineers, 2003



Wet Weather CD programs in Knoxville, Nashville, Memphis, Lexington, Columbia

S. Wayne Miles, P.E., BCEE

to support development of the CAP/ER. The project has included analysis of data from a comprehensive network of flow monitors to support development and calibration of the wastewater flow model, including the use of radar-rainfall data to more accurately assess infiltration and inflow (I/I) responses to rainfall. CDM Smith is applying the system models to diagnose system performance issues and evaluate alternative system improvements, including sewer rehabilitation to reduce I/I, system capacity improvements (relief sewers, pump station upgrades) and system flow equalization storage. CDM Smith is performing long-term continuous simulations of multiple years of rainfall records as a means of assessment the performance of improvement alternatives in various operating conditions. The resulting plan will be a phased program of recommended system improvements aimed at controlling sanitary sewer overflows (SSOs) to within the performance criteria established to comply with the consent order.

Technical Director, Sanitary Sewer System Capital Improvements and Rehabilitation Planning, Orange Water and Sewer Authority (OWASA), North Carolina. The Orange Water and Sewer Authority (OWASA) required an update of their capital improvements plan (CIP) and wished to integrate this with a new method of prioritizing their system rehabilitation needs. CDM Smith assisted through the development and application of a calibrated sanitary sewer system model using InfoWorks and the development of a prioritization method and Access-based data management tool. The resulting plan blended the best combination of system capacity upgrades required to meet growth and development needs with a continuously updated risk-based rehabilitation prioritization scheme based on system condition (probability of failure) and criticality (consequence of failure) ratings of each system asset. The final plan included individual, detailed project sheets for the 10-year CIP with cost estimates and phasing recommendations.

Technical Director, Sewer Condition Assessment and Rehabilitation Plan Development, Wilmington, North Carolina. Under this project, Mr. Miles identified high-risk portions of the city’s wastewater collection system and conducted field investigations in these areas. The project included investigations of PCCP and ductile iron wastewater force mains and development of rehabilitation program recommendations. CDM Smith has performed design of several phases of sewer rehabilitation design, which includes rehabilitation of the downtown wastewater collection, water distribution, and portions of the stormwater collection systems. This work was coordinated with streetscape improvements also designed by CDM Smith along Front Street in the city’s core downtown business and entertainment center.

Project Director, Sanitary Sewer Capacity Assurance, Master Planning, and Rehabilitation Program, Knoxville, Tennessee, Ongoing. Mr. Miles has directed CDM Smith’s development of a sanitary sewer facility and rehabilitation plan for the Knoxville Utilities Board (KUB) sanitary sewer system. KUB has been experiencing sewer performance problems, particularly during winter, wet-weather conditions, and has been issued a consent decree mandating system improvements. To diagnose the system problems and develop a plan to improve sewer performance, KUB retained CDM Smith to develop a hydraulic model of their trunk sewer system. Scenarios with various levels of sewer rehabilitation were simulated to determine the trade-offs between infiltration/inflow (I/I) reduction as compared to construction of increased sewer capacity, flow equalization storage, and other system improvements. CDM Smith assisted KUB with design and construction services for a pilot sewer rehabilitation project to document the benefits and


costs of I/I reduction to guide further implementation of the rehabilitation program. The pilot project compared the I/I reduction from two similar areas, containing approximately 10,000 linear feet of sewer that was rehabilitated. CDM Smith continues to assist KUB with the planning and management of their ongoing consent order compliance program, including ongoing modeling analyses, management of system flow monitoring, and setting priorities for ongoing sewer rehabilitation.

Technical Director, Sanitary Sewer Consent Decree Compliance Evaluation, Baton Rouge/East Baton Rouge Parish, Louisiana. Mr. Miles directed an evaluation that CDM Smith conducted for the city/parish to consider alternative sewer improvements programs to comply with the terms of a consent decree issued by the state and EPA Region VI. CDM Smith’s evaluation concluded that the city/parish should direct significantly more focus on comprehensive rehabilitation of the sewer collection system to reduce infiltration and inflow (I/I) as well as reduce operation and maintenance costs. This approach was predicted to reduce the capital costs of the compliance program by $200 million while providing a higher level of service to the local customers. CDM Smith assisted the city/parish in re-negotiating the terms of their consent decree with the Louisiana DEQ, EPA Region VI, and the Department of Justice (DOJ). While final reviews are pending, initial comments from EPA and DOJ were that they were in favor of the City/Parish implementing the proposed changes.

Technical Director, Capital Wastewater Collection System Rehabilitation and Replacement Program, Orange County. Under this project, Mr. Miles was the technical director for developing a rehabilitation program framework that included a method of setting priorities based on condition and criticality factors as determined from existing information. CDM Smith developed recommendations for technologies, approaches, and program management structures for the county to move forward with a more aggressive wastewater collection system, pump station, and force main rehabilitation program.

Project Manager, Sewer Rehabilitation Design and Construction Services, Raleigh, North Carolina. Mr. Miles has assisted the City in the development and implementation of their sewer rehabilitation program. The program has included five design/construction phases. The program has included rehabilitation of over 60,000 feet of sewer using pipe-bursting, open-cut replacement, and jack and bore methods. CDM Smith has applied a unique approach to design of this project, which is similar to a design-build concept but uses a traditional bid approach. CCTV inspection is done by the contractor who submits tapes to CDM Smith in a manner similar to a shop drawing submittal. CDM Smith reviews the tape, completes the design, and returns the approved rehabilitation plans to the contractor within a two-week period. This approach saves cost because CCTV is only done once and the schedule is reduced because the study phase is eliminated.

Project Manager, Sewer Master Plan and Rehabilitation Program, Charlotte- Mecklenburg Utility Department (CMUD), Charlotte, North Carolina. As the project manager for a sewer facility master plan for the Charlotte-Mecklenburg Utility Department (CMUD), Mr. Miles was responsible for the hydraulic modeling (using SWMM EXTRAN), analysis, and evaluation of system improvements for a system containing approximately 3,000 miles of sanitary sewer pipe. A phased plan of system improvements was developed to address both wet-weather system overflows and future growth needs in the system. Mr. Miles oversaw a pilot sanitary sewer evaluation survey (SSES) and sewer rehabilitation


project for CMUD. Mr. Miles continued to provide engineering support and technical oversight of CDM Smith’s sewer rehabilitation work for CMUD, which included eight projects totaling over 250,000 linear feet of sewer rehabilitation. These projects have included a full range of rehabilitation techniques, including cured-in-place lining, fold-and-formed lining, pipe-bursting, slip-lining, and open-cut replacement.

Project Manager, Sanitary Sewer System Evaluation, Fayetteville, North Carolina. Mr. Miles managed the development of a sanitary sewer maintenance and rehabilitation plan for the Public Works Commission. This project was prompted by new state and federal CMOM standards for controlling sanitary sewer overflows. For this project, CDM Smith performed a detailed assessment of PWC’s existing program, including line item budget information, equipment and labor resources, and performance efficiency. Benchmarking comparisons with a number of similar Carolinas utilities were used to establish performance goals for PWC. This resulted in recommendations for reallocation of staffing and resources as well as the establishment of performance goals for PWC preventive maintenance crews.

Project Manager, Sewer Rehabilitation Design, Goldsboro, North Carolina. Mr. Miles served as project director for the rehabilitation of 48,000 feet of sewer in downtown Goldsboro. CDM Smith performed preliminary design, detailed design, bidding, and provided construction services for 48,000 feet of sewer in two areas of the Big Ditch drainage basin. The project includes a combination of fold-and-formed lining and pipe bursting of 8- to 12-inch vitrified clay sewers. These sub-basins are located in the older sections of Goldsboro and were identified in a previous I/I study as the top priority basins.

Project Director, Sewer Rehabilitation Design, Greensboro, North Carolina. CDM Smith performed a flow monitoring study of the Muddy Branch wastewater collection system. Mr. Miles served as the CDM Smith project director for this work. This study included the collection and analysis of flow monitoring data in order to calculate the volume of rain entering the wastewater collection system per linear foot of sewer. This calculated volume was used to prioritize areas for sewer rehabilitation. CDM Smith performed pre-design and design services for 25,000 feet of collector sewer in two of the areas in the Muddy Branch system identified as a top contributors to RDII infiltration. The rehabilitation design will be comprehensive in that it includes replacement of the laterals to the property line, installation of cleanouts, and repair and restoration of manholes. CDM Smith also designed rehabilitation of approximately 10,000 ft of 30- to 36-inch diameter interceptor sewer using cured-in-place lining. This project included reconstruction of several siphons that had been ongoing maintenance problems for the City.

Project Advisor, Sanitary Sewer Improvements and Rehabilitation Program, Monroe, Louisiana. Mr. Miles has been a technical advisor for CDM Smith’s work during the development and implementation of an improvements program required for compliance with an EPA consent order. CDM Smith was brought in by Monroe to assist with development of the improvements plan, negotiation of the consent order, and for program management of the ongoing improvements and rehabilitation plan. Ongoing efforts have included upgrades to a number of pump stations as well as cured-in-place lining and pipe-bursting of portions of the collection system where I/I reduction and capacity improvements were required.


Project Manager, Sewer Rehabilitation, Greenville, South Carolina. Mr. Miles managed a project to assist seven sewer subdistricts to develop and implement a sewer rehabilitation program. He has provided technical direction during the design of two phases of sewer rehabilitation for the City, which consists of over 100,000 feet of cured-in-place liner. CDM Smith performed a post-rehabilitation analysis following the first phase of rehabilitation, which documented infiltration and inflow reductions of 85 percent. This analysis was based on a statistical analysis method comparing recorded infiltration flows before and after rehabilitation from the rehabilitation areas as well as an adjacent control area, which received no rehabilitation. This approach accounted for variation in I/I because of differences in rainfall patterns, groundwater levels, and antecedent moisture conditions.

Project Manager, Sanitary Sewer Operation and Maintenance Program, Spartanburg, South Carolina. Mr. Miles was project manager for CDM Smith’s assessment of the sanitary sewer operation and maintenance program. Faced with increased regulatory requirements, the city initiated an evaluation of the performance and efficiency of their maintenance program. In addition, the city asked CDM Smith to perform a review of key issues associated with the potential transfer of ownership and/or maintenance responsibilities to an adjacent regional sewer authority. CDM Smith’s evaluation provided a basis for the city to rate the performance and efficiency of their internal crews and to provide a basis for entering potential negotiations with the regional authority.

Technical Director, Peak Flow Management Study, Miami-Dade County, Florida. Mr. Miles was the technical director for a peak flow management study that CDM Smith conducted for the Miami-Dade Water and Sewer Department under subcontract to another consultant in Florida. For this project, CDM Smith analyzed extensive flow monitoring data collected from throughout the system to determine infiltration and inflow characteristics for approximately 1,000 pump station service areas. CDM Smith used this information to evaluate pump station suitability for conveying peak wet-weather flows into the regional force main system. Recommendations were made to direct future and ongoing improvements related to sewer rehabilitation, pump station upgrades, and increased storage within the Miami-Dade system to meet system overflow control goals.

Technical Reviewer, Lake Arrowhead Raw Water Transmission Line Condition Assessment Project, Wichita Falls, Texas. Under this project Mr. Miles helped to plan field condition assessments and surge analysis of this well water transmission main, which has had a history of failures. Under this project, CDM Smith is applying remote field eddy current technology to identify pipe segments with broken pre-stressing wires, which indicates potential risk of future failure. CDM Smith is recommending methods and priorities for rehabilitating these locations to control future risk of failure.

Project Director, Infiltration/Inflow Analysis, Orange County, California. Mr. Miles provided technical direction for the infiltration/inflow analysis and hydraulic modeling tasks of a sanitary sewer study that CDM Smith performed for the County Sanitation Districts of Orange County, California. This project evaluated alternative means of managing peak wet-weather flows due to infiltration/inflow through the Districts’ ocean outfall, which was damaged due to high flows during an exceptional rainfall event. The Sanitation District provides wastewater service to nine major areas in southern California, which together forms the third largest wastewater management system in the western United States.


Project Director and Technical Reviewer, Sewer System Evaluation and Sewer Rehabilitation Design, Luquillo, Puerto Rico. Mr. Miles has provided technical direction and oversight of CDM Smith’s ongoing sewer system evaluation and rehabilitation project for the City of Luquillo, Puerto Rico. Mr. Miles assisted in the development and implementation of a system evaluation, which consisted of flow monitoring, manhole inspections, smoke testing, dye testing, and television inspections of the system. CDM Smith analyzed the results of these investigations to develop a system improvements program, which consisted of sewer rehabilitation, relief sewers, and pump station upgrades. Mr. Miles provided technical review of CDM Smith’s design phase of this improvements program, which was performed in conjunction with a local engineering firm.

Technical Reviewer, Sanitary Sewer Evaluations and Rehabilitation Design, Columbus and Zanesville, Ohio. Mr. Miles has provided technical review and direction for CDM Smith’s ongoing sewer system evaluation and sewer rehabilitation design projects. These projects required the development and implementation of evaluation studies, including flow monitoring and specific system field investigations. CDM Smith assisted with implementation of the recommended system improvement programs, which included sewer rehabilitation and capacity upgrades to address sanitary sewer overflow (SSO) problems.

Technical Reviewer, Pilot Sewer Rehabilitation Project, Houston, Texas. Mr. Miles provided technical review and input during CDM Smith’s design and implementation of a pilot sewer rehabilitation project. The goal of the pilot project was to compare various system analysis procedures and methods of setting priorities for expenditure of the city’s large sewer rehabilitation budget. The effectiveness of the approaches in meeting multiple objectives was evaluated, including reducing I/I, restoring system integrity, and reducing maintenance costs.

Project Manager, Sanitary Sewer Overflow, Nationwide. Mr. Miles was project manager for a CDM Smith project to assist the Environmental Protection Agency (EPA) in evaluating the nationwide impacts of different sanitary sewer overflow (SSO) control policies. Under subcontract to another consultant, CDM Smith performed continuous simulation modeling using the Storage Treatment Overflow Runoff Model (STORM) to support the study. STORM was used to develop relationships between overflow frequency and treatment capacity, system storage, and infiltration/inflow rates for different geographical regions of the country. The results of this modeling were used by CDM Smith along with an optimization algorithm to develop a method of predicting system improvements costs for individual communities to meet various SSO control policies. The algorithm produced results that compared favorably to results from detailed facility plan studies for several case study communities.

Technical Director, Hydraulic Evaluation, Columbus, Georgia. Mr. Miles was technical director of a hydraulic evaluation of a large-diameter river interceptor for the Columbus Water Works. For this study, CDM Smith used SWMM EXTRAN to determine system hydraulic capacities, hydraulic bottlenecks, and system overflow locations under alternative operating scenarios. CDM Smith also performed a test comparison of the HYDRA sewer model to SWMM EXTRAN for hydraulic system analysis.

Project Engineer, Sanitary Sewer Project, Raleigh, North Carolina. For a CDM Smith management project to oversee construction of 18 miles of sewer ranging from 18 to 54 inches in diameter along the Neuse River, Mr. Miles coordinated correspondence, shop


drawings, payment requests, and progress meetings with seven separate contractors on this project, which totaled over $17 million in construction costs. The project, which lasted over two years, also involved construction of a 30-mgd wastewater pump station designed by CDM Smith.

Project Coordinator, Watershed Protection Guidance Manual. Mr. Miles was a co-author of a watershed protection guidance manual under a CDM Smith project with the American Water Works Association Research Foundation (AWWARF). For this project, he authored report sections describing watershed protection programs for the states of North Carolina and South Carolina.

Project Director, Water System Improvements Program, Kinston, North Carolina. Mr. Miles was the project director for the planning and design, and construction services of a water system improvements program for the Neuse Regional Water and Sewer Authority. The authority consists of eight member utilities serving over 100,000 customers in eastern North Carolina. The project includes over $140 million in system improvements, including a new 15-mgd surface water treatment plant and 71 miles of transmission system improvements. The project has received over $40 million in grants and approximately $100 million in low-interest loans.

Project Director, Water and Sewer (CMOM) and Sewer Rehabilitation Program Evaluation, Raleigh, North Carolina. Mr. Miles was project director for CDM Smith’s evaluation of the water and sewer operation and maintenance program. This evaluation included conducting a Capacity, Management, Operations, and Maintenance (CMOM) audit of the city’s sanitary sewer program as well as a comparable audit of the city’s water distribution program. Faced with increased regulatory requirements, the city initiated an evaluation of the performance and efficiency of their maintenance program without any regulatory requirements to do so. CDM Smith’s evaluation provided a basis for the city to rate the performance and efficiency of their internal crews and to provide a basis for increasing maintenance and rehabilitation resources.

Professional Activities and Awards NC AWWA-WEA Program Committee (2013 – ongoing)

WEF National Collection System Committee, Specialty Conference Committee (2009-2013)

WEF National Collection System Committee, Strategic Planning Committee Member (2009-2012)

WEF National Collection System Committee, Steering Committee Member (2008-2009)

Task Force Chair for rewrite of WEF Manual of Practice No. 7, Wastewater Collection Systems Management (2008-2009)

North Carolina AWWA-WEA Board of Directors, Treasurer, 2006-2008

Awarded 2004 NC AWWA/WEA Red Ebert Award for contributions to collection and distribution system operations and maintenance

NC AWWA/WEA Disaster Preparedness Committee (Chair in 2004)

North Carolina AWWA/WEA Collection and Distribution Committee (created the new committee and Chaired 1996-2000)


Water Environment Federation (National SSO Work Group, Collection System Committee)

American Public Works Association (Past President of Water Resources Division for North Carolina state chapter)

National Water Environment Federation Collection System Committee Task Force Chair

Publications Miles, Wayne, Aaron Brower, and Meredith Fotta Miller. “Pay Now or Pay More Later: Building a Better Business Case for Funding Sewer Rehabilitation Using Return on Investment Analyses.” Proceedings of the WEF Utility Management Conference, Savannah, GA, March 2014 (publication pending).

Water Environment Federation, User-Fee-Funded Stormwater Programs. Chapter 7.6, “Case Studies – Raleigh NC.” WEF Special Publication, 2013.

Miles, Wayne, Terry McCue, and James Carolan. “Defending Rehabilitation and Replacement (R&R) Budgets Using KANEW Analyses.” Proceedings of the WEF Collection System Conference, Sacramento, CA, June 2013.

Miles, S.W. “Knoxville Utilities – Consent Order Compliance Program” presented at WEFTEC Workshop 107 -- When Good Water’s Gone Bad: Prevention and Control of Sanitary Sewer Overflows, Los Angeles, CA, 2011.

Miles, S.W., F. Styers, J. Flechtner, C. Bowling, C. Nesbit, M. Sloop. “Overcoming Challenges While Rehabilitating a Corroded Aerial Sewer in a Tidal Marsh.” Proceedings of the WEF Collection System Conference, Phoenix Arizona, June 2010.

Water Environment Federation, Manual of Practice FD-6, Existing Sewer Evaluation and Rehabilitation; Chapter 7, “Effectiveness of Sewer Rehabilitation,” 2009.

Water Environment Federation, Manual of Practice 7, Wastewater Collection System Management; Chapter 1, “Introduction,” 2009.

Miles, S.W. “The Ins and Outs of Pressure Pipe Condition Assessment: Case Studies from North Carolina and Across the United States.” Presented at the Georgia Association of Water Professionals, Fall Conference, Athens, Georgia, November, 2007.

Miles, S.W. “A Case Study in Setting Pipeline Rehabilitation Priorities Using Condition and Criticality Criteria.” Presented at the North American Society for Trenchless Technology (NASTT) NO-DIG 2007 Conference; San Diego, California, April 2007.

Miles, Wayne, “One-on-One with Wayne Miles,” Trenchless Technologies (pp24-26), June 2006.

Miles, S.W. “Documenting I/I Reduction: Four Successful Case Studies.” Presented at the North American Society for Trenchless Technology (NASTT) NO-DIG 2006 Conference; Nashville, Tennessee, March 2006.

Miles, S.W. “Robbing Peter to Pay Paul - Strategies to Plan and Fund Proactively.” Presented at Water Environment Federation Annual Technical Exhibition and Conference (WEFTEC), Washington, DC, November 2005.


Miles, S.W., J. Moyer, and J. Ridge. “Gaining Stakeholder Support for Sustainable Infrastructure Funding Levels,” presented at WEF Collection System Conference, Boston, Massachusetts, July 2005.

Miles, S.W., J. Moyer, and J. Ridge. “Rehabilitating the Benefit-Cost Model for Infrastructure Funding.” Presented at the North American Society for Trenchless Technology (NASTT) NO-DIG 2005 Conference; Orlando, Florida, April 2005.

Miles, S.W., J. Moyer, and J. Ridge. “Building a Better Business Case for Funding Sewer Rehabilitation.” Presented at WEF Collection System Conference, Milwaukee, Wisconsin, August 2004.

Matthews, R. and Wayne Miles. “Sewers Under Pressure: How Local Governments Can Stay Out of the Soup with the Regulators.” American City and County, March 2004.

Miles, S.W., and C. Nesbit. “Raleigh, N.C., Road to CMOM.” Published in Trenchless Technology, October 2003.

Moranta, Barbara, T. Gallimore, and S.W. Miles, and J. Hoynacki. “Improving Sewer System Performance Through Modeling and Sewer Rehabilitation.” Presented at the NC AWWA/WEA Annual Conference, Asheville, North Carolina, November 2001

Bonne, R.P., C. Parisher, S.W. Miles, and H.R. Derr. “Reclaimed Water Offsets Peak Potable Demands in Cary.” Presented at the NC AWWA/WEA Annual Conference, Charlotte, North Carolina, November 2000.

Miles, S.W., R. Davis, S. Talbert, and H.R. Derr. “Developing and Implementing a Maintenance and Rehabilitation Plan for Fayetteville PWC.” Presented at the NC AWWA/WEA Annual Conference, Charlotte, North Carolina, November 2000.

Miles, S.W., K.J. Shirley, R.E. Tarker, and J.L. Dorn. “How to Defensibly Document I/I Reduction: Two Carolinas Success Stories.” Presented at WEFTEC, New Orleans, Louisiana, October 1999.

Miles, S.W., R.D. Emory, W.O. Meads, and J.L. Dorn. “Planning for Sewer System Growth and Compliance.” Presented at the NC AWWA/WEA Annual Conference, Research Triangle Park, North Carolina, November 1998.

Dorn, J.L. and S.W. Miles. “Finding Least-Cost Alternatives for Controlling Sanitary Sewer Overflows (SSOs) Through Application of STORM and a Genetic Algorithm.” Proceedings of the ASCE Water Resources Planning and Management Conference, Houston, Texas, April 1997.

Miles, S.W., B.M. Gullet, and D.T. Zimmer. “Managing Old Sewers in the New South: Charlotte, North Carolina, Plans for Future Expansion.” Water Environment & Technology. April 1996.

Townsend, J.A. and S.W. Miles. “Charlotte’s Facility Plan to Mitigate Sanitary Sewer Overflows.” Proceedings of the EPA National Conference on Sanitary Sewer Overflows, Washington, D.C., April 1995.

Miles, S.W., J.A. Townsend, and A.E. Gallaher. “Sanitary Sewers: Modeling vs. Monitoring and the Benefits of Both.” Proceedings of the North Carolina AWWA/WPCA Conference, Asheville, North Carolina, November 1994.


Miles, S.W., K.D. Blayton, and A.M. Frazier. “Results of Charlotte’s Pilot Sanitary Sewer Rehabilitation Program.” Proceedings of the North Carolina AWWA/WPCA Conference, Research Triangle Park, North Carolina, November 1993.

Miles, S.W., C.R. Bristol, and A.L. Haynes. “Charlotte Maps New Wastewater Strategies With GIS.” Public Works, May 1991.

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MESSAGE TO STAFF Review... · the magnitude of the Consent Decree program and to minimize impacts...

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Transcript of MESSAGE TO STAFF Review... · the magnitude of the Consent Decree program and to minimize impacts...