By: Lance Holman & Jim McGurk
The Coronavirus has caused over 180,000 deaths and over 5,850,000 infections in the US since January 2020. The US and much of the world is effectively in quarantine. The fear of spreading the virus and death has forced many Americans to leave their offices, work from home, and shelter in place. The retail, travel, and hospitality sectors have been devastated with malls closing, airlines shuttering flight schedules, and hotels closing. Overall, demand for goods and services is down nationwide.
Consequently, US Gross Domestic Product declined by 32.9% on an annualized basis, businesses laid off employees or went out of business.1 Unemployment spiked at 25% in April 2020 as many workers nationally were furloughed or laid off. The technology sector was a bright spot as many businesses, colleges, and schools scrambled to move online to continue operations.
Through it all, our federal, state, and local governments continued to deliver essential services to keep the economy afloat. The federal government responded with increasing the money supply, lowering interest rates, and providing loans and grants to businesses, individuals, and state and local governments to soften the impact of the economic shutdown. Many state and local governments experienced declining revenues and rising expenditures, which has forced them to tap into their reserves and postpone spending.
By May 2020, some states began to re-open their economies with a phased approach and asked its’ citizens to socially distance, wear masks, and get back to work. Gradually, American businesses began hiring back employees, ramping up production, and beginning the long road to economic recovery.
Meanwhile, water agencies are focused on providing safe, clean, and reliable drinking water to the American people. Many agencies are faced with aging infrastructure, rising populations, and new regulations to remove contaminants from the water supply.
New regulations are causing water systems throughout the nation to provide treatment for currently unregulated chemicals of concern. California and many states are in the process of setting standards for several of these unregulated chemicals.
Many of these man-made chemicals are known as PFAS/PFOA/PFOS or ”forever chemicals” and have unleashed a wave of persistent and toxic chemicals into the environment, food supply, dust and our drinking water. These substances continue to persist in the environment and in our bodies even after a partial phase-out of their production in the United States. These contaminants are often resistant to even the most advanced water treatment technologies.
As of 2018, at least 478 of the PFAS chemicals have been reported to the U.S. Environmental Protection Agency (EPA) as being used in U.S commerce.1 Other sources report that thousands of PFAS chemicals have been produced and used by various industries in both the United States and around the world.2 The most studied and pervasive chemical forms are perfluorooctanoic acid (PFOA) and perfluorooctane sulfonate (PFOS).3
Currently the most common soon-to-be regulated chemicals in groundwater include PFOA, PFAS, and 1,4 Dioxane. All of which will require treatment system technology investment and ongoing operational challenges, further straining resources and constraining budgets.
What has been the approach to completing capital projects across California? The following encapsulates the traditional project delivery methods. These methods have been employed for a variety of public and quasi-public capital projects and are presented in order of opined “best value” from lowest to highest:
Imagine an escalating project design-build delivery methodology that is phased, which we call progressive design-build (PDB). PDB uses a qualifications-based or a best value selection approach, whereby the Owner “progresses” towards a design and contract price with a team of professionals.
The Design-Build Institute of America (DBIA) endorses the use of design-build where it is applicable, but more experienced owners are preferring and perfecting the PDB methodology.
The most common concern with decision makers is price. However, selecting the right team and achieving the best outcome is the top priority with a PDB team.
According to Lisa B. Choplin, the P3 Project Director at Maryland State Highway Administration’s Innovative Contracting Division and former Deputy Executive Director of DBIA, “Since the design-build team is working collaboratively with the owner in PDB, risks can be identified and mitigated earlier in the design phase resulting in a price that reflects the actual cost to construct the project.”
A-C Electric Company’s PDB approach, along with its strategic partners have decades of experience and have fine-tuned a four-part project analysis approach called the “Four D’s”
Energy and personnel efficiencies can be achieved by automating infrastructure and instrumentation to improve performance and optimize resources.
PDB saves time! A PDB project can develop phased work packages and begin construction long before the balance of the project design is complete.
Water agencies can optimize their budgets by financing their infrastructure projects, and spread the loan payments over the project’s economic useful life and its ratepayers. Budgets should be allocated to multiple loan payments, as opposed to paying cash for a single project. For example, use 20% of the cash flow for project one, 20% for project two, and so on. Now, the water agency can enter into four or five projects simultaneously, as opposed to one, and have the capital to negotiate quickly, thus improving productivity outcomes.
Combining Progressive Design Build and Project Financing will enable municipal governments to improve outcomes and better control cost during periods of crisis and economic prosperity.
The EPA has mandated the lowering of PFAS contaminants in our water supply, which will require municipal governments to upgrade their plants and pipelines to meet regulatory hurdles and public demands.
Progressive Design Build and Project Financing are the key to locking in project cost, improving water supply quality, optimizing budgets, and increasing jobs. The coordinated approach will accelerate project delivery, lower cost, improve outcomes, and aid in getting America back to work.
