Steve Meininger discusses the pros of public-private partnerships
Discover why many municipalities are using public-private partnerships (P3) and learn about two P3s Jacobs is a part of.
On December 15, 2017, CH2M HILL Companies Ltd. (CH2M) became part of Jacobs Engineering Group Inc. (Jacobs). CH2M is now a wholly owned direct subsidiary of Jacobs.
Steve Meininger, Senior Vice President and Global Managing Director of CH2M’s Operations Management Services division, talks about how public-private partnerships (P3) work and discusses two P3s CH2M is a part of. At the recent Public-Private Partnership Conference & Expo in Dallas, Texas, Steve participated in a panel discussion on “Winning P3 Formulas for Water Infrastructure Projects.”
Many municipalities are using public-private partnerships to manage costs, drive performance-based improvement and get the most out of public investment.
A P3 is a contractual arrangement between a public agency (either federal, state or local) and an entity from the private sector. Through the partnership, the skills of each side are leveraged to deliver a service or facility for public use. Each party shares in the potential risks and rewards to deliver the final product.
The model can be an efficient way of managing risk while driving innovation and efficiency. For example, CH2M uses an approach known as design-build-operate (DBO) to drive efficiency and manage risk for Seattle Public Utilities (SPU) in Washington.
CH2M and SPU formed a public-private partnership in 2004 to create the Cedar Water Treatment Facility, located southeast of Seattle, which provides up to 180 million gallons of water per day from the Cedar River and Lake Youngs to serve about two-thirds of Seattle and surrounding regional clients. The facility has been managed under the DBO model for 16 years.
One of the practices that drives the most success in a DBO model – or any P3 contract – is aligning risk to the party who has the best ability to control it. In the CH2M-SPU partnership, SPU retains risk for changes in influent and effluent water quality and demand because SPU is in a better position to influence these two areas. If influent quality is outside of U.S. EPA requirements, SPU can fix it by evaluating influent sources and reservoir management. And if city demand for water increases, SPU can influence demand via conservation efforts.
Once CH2M is given influent specifications and effluent requirements, the company would like some latitude to determine the best way to meet overall project objectives without SPU dictating the technology or approach allowing CH2M greater flexibility resulting in more innovation and efficiency.
In Seattle, this flexible approach resulted in the Cedar River Watershed being one of only six major drinking water systems in the country (at that time) that didn’t require a filtration step in the treatment process. The system uses an innovative ozone, UV and chlorine treatment system with two existing 78-inch diameter pipelines as the ozone chambers. CH2M guarantees the water quality.
From a risk standpoint, some additional advantages of DBOs include:
- Guaranteed financial performance over an extended time period.
- Cost savings from bundling a larger amount of work with an extended contract term.
- Incentives for the private partner for exceeding performance guarantees in the operations phase.
- Expedited implementation time through a single procurement process rather than separate procurements for design, construction and operations.
- Single point of accountability for the public partner – no worries about who’s liable for a design or construction issue that could impact operating costs or performance.
In addition to reducing SPU’s risk through all three phases of the project, the model has saved tens of millions of dollars.
By maximizing resources and efficiency, a team of nine can operate the 180-mgd Cedar Water Treatment Facility, providing 24/7 operation.
The industry is continually trying to drive more efficient operations, and the private sector offers one way to help bring forth ideas from companies that manage many facilities and can share best practices.
As a private-sector partner, it’s important to continue driving innovation and efficiency and never become complacent. CH2M handles all the public and private utilities in the community of The Villages, Florida, including 12 water treatment systems, four wastewater treatment plants, collections and distribution systems, meter reading and residential and commercial sanitation services.
Here are some of the improved efficiencies and asset management benefits CH2M has implemented in The Villages’ systems during our P3 partnership:
- Modelled The Villages’ wastewater treatment systems using CH2M’s process optimization model and identified ways to reduce electrical and chemical usage by changing the summer month operating approach.
- Used CH2M proprietary optimization software to help with efficiency in routing resources and people throughout the community.
- Implemented handheld technology for field staff, allowing real-time communication with the maintenance manager and scheduling system.
- Deployed mobile maintenance and tool trailers to help lessen the need to return to the central maintenance facility to get parts and specialized tools.
- Began using a remote-controlled inspection device, allowing for online wet well inspections of the irrigation pump stations.
More and more public agencies are looking to public-private partnerships for innovation and cost savings, and it’s our mission to deliver. Through P3 partnerships that are mutually beneficial to both sides, we’re focused on our unique ability to showcase CH2M’s diverse capabilities to find innovative solutions for our partners.
Find out more about public-private partnerships at the National Council for Public-Private Partnerships.