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Concession Agreements The Focus Georgia Conference

Concession Agreements The Focus Georgia Conference. Thomas W. Pelnik III, P.E. Director, Innovative Project Delivery Division April 26, 2007. Overview. Concession Agreements and VDOT’s PPTA Program Program Status / Summary Past, Present and Future Concessions

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Concession Agreements The Focus Georgia Conference

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  1. Concession Agreements The Focus Georgia Conference Thomas W. Pelnik III, P.E.Director, Innovative Project Delivery DivisionApril 26, 2007

  2. Overview • Concession Agreements and VDOT’s PPTA Program • Program Status / Summary • Past, Present and Future • Concessions • A fundamentally different way of doing business

  3. PPTA Program Status • Summary of VDOT’s PPTA Portfolio • Value of All Projects ~ $6 Billion • Value of Completed Projects = $767 Million • Value of Active Projects + $5 Billion • Value of Active Proposals ~ $1.5 Billion

  4. VDOT Past and Present • Vast majority of VDOT work by design-bid-build • Interstate outsourcing by 2009 • Public-Private Partnerships cannot save us, but can help

  5. US Interstate Planning and Toll RoadsBureau of Public Roads, 1939

  6. US Interstate Planning and Toll RoadsBureau of Public Roads, 1939

  7. US Interstate Planning and Toll RoadsBureau of Public Roads, 1939

  8. Public-Private Transportation Act • PPTA §56-556 et. seq. • Policy • Encourage private investment • Opportunities • Brownfields • Greenfields • Potential Scope • DB • DBF • DBFOM • FOM • …

  9. Route 895 PPTA (2002)

  10. Route 895 PPTA (2002)

  11. Route 895, Richmond, VA • Four lane, limited access toll highway • ~ Nine miles • DBF Contract, PPTA, $346M 1998-2002 • FOM Concession Agreement, PPTA, 2006-2105 + $500 million transaction June 2006

  12. DB Contract Incentives / Risks • Design - construct - get out • Design • Constructability • Schedule • Inflation • QC/QA • Limited performance bond obligations • Limited warranty obligations • Lowest cost project delivery

  13. Concessions • Lowest cost program delivery • Parallel interests with Owner • DB a phase prior to O&M • Rewarded for managing life-cycle costs • Build quality at low cost, • Operate a well-maintained facility • Provide good customer service • Business deal must make sense, but successful relationship is essential

  14. Concessions • Not a sale of property • Commonwealth maintains ownership • Concession transfers rights for the use or control of the facility to the lease holder • Rights return to owner at end of term

  15. Looking Ahead • Continue to require pertinent standards • AASHTO • FHWA • VDOT • Consider opportunities for corridor management, and lessons learned from projects such as London M25 • Flexible framework accommodates change • Laws, policies and specifications • No free money

  16. Conclusions / Recommendations • You’ll get what you contract for • Direct your program • Communicate your objectives • Know the value of your assets • Know the costs of your operations • Fair procurement • Time is money • Each project is unique • It’s not easy

  17. VDOT’s PPTA Program http://www.virginiadot.org/business/ppta-default.asp

  18. Concession Agreements The Focus Georgia Conference Thomas W. Pelnik III, P.E.Director, Innovative Project Delivery DivisionApril 26, 2007

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