CMAA Water Summit Executive Forum

1. CMAA Water SummitExecutive Forum Martin Dorward, P.E. AECOM

2. Agenda • It’s Tough Out There • Gotta Stay in the Game • Is There Light at the End of the (Water) Tunnel?

3. It’s Tough Out There • Water and WW infrastructure market shrank 2% in 2009 • Value of construction placed decreased by $0.7 billion (3.3%) • Recession causing project cancellations and delays • Housing crisis, lower population growth removing urgency • Lower Tax revenues • Meltdown of muni. bond market. Some recovery in 2009 due to ARRA ($6 B to SRFs)

4. It’s Tough Out There • 2010 continues slow pace and only 5-7 % growth, at best in 2011 • ARRA funded primarily smaller projects serviced by smaller AE firms • Many DB projects delayed or cancelled • Some switched to DBB as owners tried to drive local partic. and anticipated favorable pricing in DBB market

5. Gotta Stay in the Game What are utility owners looking for to help them through these tough times?

6. Gotta Stay in the Game What’s Changed for Utility Owner’s? • Development pressure has diminished • Stronger Focus on Operational Cost Reduction • Mandates driving CIP prioritization (Consent Decrees) • Other non-essential projects shelved, scaled back or deferred • Most are Enterprise/User Fee funded – why not spend? • Political sensitivity of spending on large projects when others are in budget austerity • Renewed Focus on Sustainability • Makes political sense – right thing to do • Increased Struggle to Retain Qualified Staff – Brain Drai

7. Gotta to Stay in the Game Feds trying to help? • Longer implementation on recent CDs • Akron 19 years • KCMO 25 years • 5 year extension in New Orleans • Proposed 5 to 15 year extension in Atlanta

8. Gotta Stay in the Game What are Utility Owner’s Looking For From AEs? • Empathy with economic situation and honest partnering to help achieve efficiency, low cost, lower risk solutions • Help Identifying and prioritizing CIP Spending…“what matters most” • Asset management techniques to understand risk, cost/benefit • Maximize existing infrastructure (condition and capacity) • Pgm. Mgt. Models that maximize internal staff utilization (blended staff) • Facilitates decision making and technology transfer • Keeping $ Local…project leveling and supply chain analysis • Small and local business development • Jobs creation initiatives • Boatload of cash - Funding Assistance • Grants, Loan assistance • PPPs

9. Gotta Stay in the Game AE Response • Focus on retaining key talent and growing bench • Provide flexibility in assignments and locations, train staff • Recruit talent as well as strategic acquisitions • Certification (CMAA, PMI) of Key staff • More productive marketing (client account/pursuit plans) • Strategic planning, not reacting • Investing in improved delivery processes and tools – ready for rebound

10. Just Gotta Stay in the Game How is Technology Emerging as a resource? • Technical Excellence is an expectation -- How can it save money? • Communication Technology to improve responsiveness • Electronic deliverables, on-line bidding • stakeholder communication • Looking to Green Solutions to reduce infrastructure needs and improved environmental aspect • Green roofs, rain gardens, permeable pavement • Anything to reduce operational costs • Energy audits and reductions, more effective leak detection techniques, SCADA to reduce operations labor • System optimization using hydraulic modeling, GIS, condition assessment tools to maximize capacity and serviceability • Increased interest in Project/CM Management tools (i.e. Contract Manager, Sharepoint, BIMs)

11. Is There Light at the end of the (Water) Tunnel? Water Investment Drivers are There • Fixed Water Supply and Growing Demand • Continued increases in per capita and industrial and agricultural demands • Sources Not Always in Balance with Uses • Migration from rural to urban areas • GA, Texas, OR, CO • Increasing Regulation • CWA and SDWA, Increased EPA enforcement (budget up 3% for water) • Aging Infrastructure • Much over 100 years old

12. Estimates of Reinvestment Needs Reflect the Scale of the Need • AWWA • $250 Billion - Pipelines Only (30 years) • Congressional Budget Office • $11.6 to $20.1 billion/year (Water) • $13.0 to $20.9 billion/year (Waste water) • EPA • $235 Billion - Water Infrastructure (20 years) • Water Infrastructure Network (WIN) • $24.0 billion/year (Water)

13. Is There Light at the end of the (Water) Tunnel? So What Can We Expect? • Hope that owners realize this is the “new normal” and start to move projects • 42% of utilities expect to upgrade facilities within the next 24 months* • Pent up demand for geographic movement could drive recovery • Projects on the shelf will drive CM market • PM has potential as aging workforce and downsizing will require assistance * Water and Wastes Digest survey, 12/09

14. Is There Light at the end of the (Water) Tunnel? Alternative Delivery • DB/DBO/CMAR market is ripe • ACOE embracing DB – ex. in New Orleans outfall canals ($800) • DOI ($400) in 2009 • More and more agencies looking at this form of delivery It’s not a matter of if…..but when!