COMMENTARYDesign-Build-OperateAlternative Project Delivery Method Increasing in PopularityBy Mark StraussInvestment for infrastructure has become a hot topic in theUnited States — it is widely acknowledged among opinionleaders, pundits, journalists and government and utility industryexperts. Municipalities are scrambling for funding to supportmuch-needed projects and chief among these issues, butoften less discussed, is water. Although the concern is receivingincreased attention at the federal, state and municipal levels,funding in this sector pales in comparison to the actual need.Communities across America face huge obstacles as theystruggle to provide reliable water in the face of aging infrastructure,growing demand and increasing complexity of water management.Indeed, the Obama administration has noted the criticalneed for increased investments in U.S. infrastructure, of whichwater is expected to play an essential role.While there are many public-private partnerships used in awide variety of programs and projects, including the designbuild-operate(DBO) approach.Explaining DBOThe DBO model is one solution expected to gain significanttraction over the next few years, whereby private-sector water companiesassist in the design, construction and operation of publiclyowned water facilities with the goal of creating efficiencies — namely,faster and more cost-efficient project delivery.DBOs are increasing in popularity because in comparison totraditional project delivery methods, the process of integratingthree functions into one project allows more to be accomplished.The DBO approach also creates the simplicity of the city dealingwith one entity throughout the life of the project, thereby removingthe complexities of dealing with multiple entities.In the typical DBO approach, a private-sector company competesfor an integrated single contract of a facility. Title to thefacility remains with the public sector unless the project is adesign-build-operate-transfer or design-build-own-operateproject. The DBO method of contracting is contrary to theseparated and sequential approach ordinarily used in theUnited States by both the public and private sectors.A simple design-build approach creates a single point ofresponsibility for design and construction and can speed projectcompletion by facilitating the overlap of the design andconstruction phases of the project. However, combining allthree phases into a DBO approach maintains the continuity ofprivate-sector involvement and can facilitate private-sectorfinancing of public projects supported by user fees generatedduring the operations phase.When financing is added to the project, it is secured by eitherthe public entity, in which case it becomes a DBO with publicfinancing, or the private-sector company, when the arrangementthen becomes a design-build-finance-operate (DBFO). Nomatter how the project is financed, the public entity retainsownership and ultimate control. Once completed, the DBO orDBFO contractor guarantees performance and assumes theresponsibilities of operations and maintenance.The benefits DBOs offer public-sector owners of water systemsmake for very compelling reasons to consider adoptingthis efficient, flexible and integrated approach to projectdelivery — whether building a new facility or upgrading anexisting one:Lower Costs: When design, construction and operation arehandled together from the outset, there are more opportunitiesfor efficiency. Research shows DBO projectsare delivered at or below the owner’sbudget almost twice as often as traditionaldesign-bid-build (DBB) delivery methods.And cost savings don’t end when the Straussconstruction phase is complete — decisions made during theplanning process continue to gather rewards during operation.Faster Schedules: Time is money, and both can be saved whenmany aspects of project planning, design, construction and procurementare done at the same time by the same team. All teammembers collaborate to help ensure an “operator-friendly”design and efficient construction process. The project timeframecan be shorter because all team members are involved from thestart, with no “down time” usually associated with the transitionof a project from one phase to the next in a more traditional DBBarrangement.Lower Risks: In DBOs, control of the facility remains in thehands of the owner while responsibility for performance andcompliance are with the DBO partner. Both the owner and DBOpartner can manage risk and liability through performance guarantees,insurance, the development of maximum total projectcost guarantees early on, and the implementation of qualityassurance and control processes. And with the DBO partner servingas the single point of contact, management of the project bythe owner is made easier.Need for DBOsCommunities are faced with investing vast amounts ofmoney, resources and expertise to renew their water systems.Even with the willingness to spend the money and access tocapital, many communities lack the in-depth experience todesign and/or implement such a plan on their own. The needfor partnerships in providing safe, dependable water toAmerican communities is increasing.From a business standpoint, public-private partnerships area promising area for stable growth in the water utility sector:over 90 percent of partnership contracts are renewed annually.A source at the National Association of <strong>Water</strong> Companies isquoted in <strong>Water</strong> Policy Report: “There are clear signs thatmunicipal leaders are enormously satisfied with the results ofthese contracts.”For example, in Fillmore, Calif., building upon its currentsuccessful partnership with the private sector to operate andmaintain the city’s existing wastewater treatment facility, thecity decided to partner again and on a much broader scalewith the private sector to design, build and operate the city’snew wastewater recycling facility.The U.S. Environmental Protection Agency estimates thatreplacing and repairing our nation’s aging water infrastructurewill cost about $335 billion over the next 20 years.Another $300 billion to $400 billion is needed for wastewaterinfrastructure. With 85 percent of the nation’s water andwastewater infrastructure serviced by the public sector, municipalitiesas well as state and local governments will bear thebrunt of these costs. The solution is clear: Innovation, efficiencyand value must define water and wastewater projects intoday’s economy to help ensure this critical work is done.Mark Strauss is Senior Vice President of Corporate Strategy andBusiness Development for American <strong>Water</strong>.42 <strong>Water</strong> <strong>Utility</strong> <strong>Infrastructure</strong> <strong>Management</strong>November/December 2010
Handbook of <strong>Water</strong> and Wastewater Treatment Plant OperationsThis in demand handbook is a comprehensive operator’s resource manual providing state-of-the-artinformation in an easy-to-understand format.Some topics include:• <strong>Water</strong>/Wastewater treatment information, data and new trends• Operational material and safety and health information• Process control procedures and problem-solving techniques• Numerous sample problem-solving practice sets & more!Author: Frank R. Spellman | 752 pages/softbound | Price: $132.00*Municipal Stormwater <strong>Management</strong> 2nd EditionThis best-selling resource, known as the “stormwater bible,” has been expanded and is a standalone desktop resource for the stormwater manager, designer, or planner.Some updates include:• New material on complying with the NPDES program for Phase II and in stormwater quality programs• Metric versions of many of the equations, charts and design monographs• The latest information on Best <strong>Management</strong> Practices (BMPs)• New concepts in stormwater utilities and master planningThe APWA recommends this resource to help with preparation for the Certified StormwaterManager examination.Author: Thomas N. Dedo & Andrew J. Reese | 1141 pages/hardbound | Price: $216.00*Private Partnerships for Public NeedsThis CD-ROM explains the ways in which public works agencies can potentially benefit from thesepartnerships and what resources are available.After completing this program, participants will be better able to:• Describe some of the basic PPP models used for transportation and other public works projects• Explain what an Availability Payment Program is and how it could be utilized• Recognize the potential advantages and limitations of PPPsPublisher: APWA | CD-ROM | Price: $69.00*Municipal Stormwater Self Audit: A How-to GuideTo ensure compliance with their municipal stormwater permit requirements, EPA and somestates have been conducting audits. How can you prepare? Conduct your own audit.This How-to Guide addresses:• Why EPA conducts municipal stormwater audits and what they look for• Lessons learned from past EPA audits• How and why you should conduct a self-audit• Tools to use during your self auditPublisher: APWA | CD-ROM | Price: $69.00**Shipping and handling not included.Selling price subject to change without notice.
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