October 28, 2016
Pittsburgh Business Times article recently published in a construction-focused edition of the paper:
Nearly 18 percent of the bridges in Pennsylvania have been deemed structurally deficient, meaning they have at least one component that is deteriorating. To combat this, the Pennsylvania Department of Transportation embarked on the Rapid Bridge Replacement Project, the state’s first public-private partnership (P3) to fix bridges. As part of the initiative, PennDOT selected a consortium of companies, dubbed Plenary Walsh Keystone Partners, to replace 558 structurally deficient bridges and maintain them for the next 25 years.
Plenary Group USA Ltd. and Walsh Investors LLC are providing financing and long-term management, while a joint venture between Walsh and Granite Construction Co. is leading construction. HDR Inc. is the design firm, while Walsh Infrastructure Management is providing the maintenance. PennDOT, the public entity in the public-private partnership, maintains ownership of all the bridges. The total cost to design and construct the bridges is $899 million.
The project is unique because it’s the largest road project ever in Pennsylvania and the first P3 partnership in the state. The state now is using the P3 model for other projects, including building compressed natural gas stations. Below, Scott Benjamin, deputy project manager for Walsh/Granite JV, and Ed Dice, head of delivery for Plenary Group, discuss the status of the project, its economic impact and how it’s been working out.
Can you give me an overview of the project?
Dice: This is unique. This is the first [public-private partnership] to be done in the state of Pennsylvania and the first of its kind in many ways in the United States for a bridge project.
Benjamin: Act 88 was passed in Pennsylvania about a year before the project was started. Pennsylvania was I think the 37th state to be able to do P3s, so they didn’t waste any time. They went and started procuring this project. We were one of four shortlisted proposers and eventually won the job in October 2014.
Why do you think you were selected for the project?
Benjamin: We bid it with a more aggressive schedule than the other bidders. We promised to get the job done by the end of 2017, whereas the contractual ending is Aug. 30, 2018. … Between our price and our schedule and our proposal, [that’s why we were selected].
How bad of shape are these bridges in?
Benjamin: They are all structurally deficient. That doesn’t mean they are unsafe. It just means at least one component of the bridge … is in need of replacement. Pennsylvania has over 6,000 of those statewide, so this project will wipe out 10 percent of those.
Where are most of these bridges located?
Dice: They are fairly everywhere. There’s certainly a cluster in Allegheny County I would say.
Benjamin: Out of 67 counties, we have a bridge in 66 of those counties.
Tell me about the types of bridges you are replacing.
Benjamin: They are mostly smaller bridges, single-span. There’s a few two-span bridges. On average, they are about 50 feet in length, and 90 percent of them cross streams. We have a small fraction that cross railroads or overpasses to other roads, but most of them are over water and streams. For the most part, we are using precast beams made off site and trucking them in. There’s foundations, and cast-in-place concrete that go into it as well.
How is that different from how a bridge is traditionally constructed?
Benjamin: It’s not really. It’s just we have a uniform design. We are using a similar design for every bridge. Our beams are largely spread-box beams. We have an ability to contract in bulk, so you can gain cost savings from doing that and ultimately pass it along.
How much are you saving?
Dice: The bridge cost for these types of bridges under the regular DOT construction program averages $2 million per bridge. The price under the P3 program averages $1.6 million.
How much more quickly can the bridges be replaced under this new system?
Benjamin: Our standard time frame is 75 days under detour. A normal PennDOT detour would probably be six to nine months.
Dice: The thing the P3 model brings to this is the influx of cash into the state over a three-year time frame [and] is why we can do this many so quickly. PennDOT [typically] has to budget and plan quite further out to have a bridge replaced. The way the P3 model works is Plenary Walsh goes out and secures funding to be able to fund the $899 million over the three-year period and then be paid back over 25 years from the state.
Where is the financing coming from for it?
Dice: Private activity bonds, investors essentially. … What I’m essentially doing is paying Pennsylvania contractors $899 million over three years to do the work, and PennDOT is repaying [Plenary Walsh Keystone Partners] over a fixed time period. That’s why we can do it so quickly.
The key thing to note is if PennDOT tried to quickly secure $899 million for bridges, it wouldn’t be able to do it. That’s an exorbitant amount, not to mention they also are already saturated performing work within their regular bridge program every year. We can catch up to replacing the deficient infrastructure that we have in the state. The influx of money into Pennsylvania is not only good for the economy, the contractors and all the workforce, but it’s good for PennDOT as well to start to make up some of the structurally deficient bridges.
Has PennDOT started to pay back some of the money?
Dice: Yes, there’s incremental payments to us for milestones that we hit along the way. … It’s very much like a mortgage.
Is the project still on schedule to be done by the end of 2017?
Dice: As the schedule stands today, no.
Benjamin: For the most part.
Dice: There are some outliers that we need to improve the schedule to get them into next year, and the amount of entities we have to coordinate with is a lot. … There’s a lot of regulators we have to work with. It’s really hard to say.
How many bridges are done?
Dice: We expect to be done with about 200 of them at the end of this year.
How many are in progress?
Benjamin: As of today, we’ve touched the construction on 130 of them.
Dice: We have potentially 70 more started and complete by the end of this year. I think it’s important to note that in the first year, 2015, because design led up to construction, we essentially had one construction season because of coordination and design. We had two construction seasons in 2016. Next year, we will have three construction seasons. We will be able to encroach upon our goal, but the outliers are going to be 30-, 40-some bridges that might get built in 2018. It’s just how the schedule is working.
What opportunities are there for local businesses to get involved?
Dice: Thus far, we’ve paid about $370 million to Pennsylvania base contractors of about $450 million paid out thus far over the last two years. We are about halfway built. … Going forward, I don’t think that changes a whole lot. A lot of the contractors we have will be Pennsylvania-based contractors.
Are there any types of contractors for which you are particularly in demand?
Dice: Bridge building and bridge inspectors are generally going to be in high demand and have been in high demand.
Will you be using contractors to help maintain the bridges as well?
Dice: We will. That will go on for a 25-year term. The beneficial part of the P3 program to both taxpayers and to the DOT is that it’s in our own best interests to build a quality product because we are the ones that have to keep an eye on it for a quarter of a century, and we have to pay the maintenance costs associated with it for that time frame.
What happens after 25 years?
Dice: We would sign it back over the PennDOT, and then they’ll take the maintenance responsibilities back. It’s been quite a challenge from a learning perspective working with PennDOT. They have certain requirements. … For instance, if the road or the walls start to chip away or crack, we have to do that repair. … A lot of the time a bridge looks like a bridge looks like a bridge, and if a routine Department of Transportation maintenance individual goes out and he sees something wrong with it, he might write that up. … [He might not know if it’s our maintenance requirement]. So what we’ve started to implement to be helpful is identifying those 558 bridges with certain markers. … The district maintenance person can look at that and say that’s not my bridge. Because in 15 years, there’s going to be someone working there that doesn’t know anything about this. They can say, ‘that’s not my responsibility,’ and they can call our number [to handle the maintenance.]
What overall do you hope this partnership will accomplish?
Dice: I think we are trying to lessen disruption to the road user; we are trying to maximize value, maximize quality and predict schedule. Those are the big things.
Benjamin: Minimize environmental and right-of-way impacts.
Dice: Another thing that is important to mention is we have more leverage in the quality of the contractor that we select as to maybe a typical DOT bidding process. If we don’t think a contractor has performed admirably for us in 2016, we can just say no, we’re not going to take you for 2017, whereas PennDOT has more rules that they need to follow to make sure they encourage all bids and best value.
Benjamin: The bridges have a unified look. You’ll know when you see a P3 bridge what it looks like just by appearance. There’s also a polyester overlay on every bridge and that’s to increase the life of the bridge deck and reduce maintenance costs.
This is the first time this new type of P3 project has been done. How do you feel it’s been going?
Dice: It’s just like many projects. It’s been challenging for both [us and PennDOT] to ensure you know the expectations up front. Once you get into the groove, things started really coming together and will even improve more. It’s nice that we have the construction season in Pennsylvania [where] we have a few months in the winter to reset, take a lot of our lessons learned and do training on things we need improvement on and get everything planned and in order for the spring. We take that seriously; we take good advantage of what we call “white-space times.” The biggest challenge has been the learning curve for all parties. … I think a lot of those hurdles have been achieved, but inevitably it’s still construction and there are still things that are going to come up.
Benjamin: I think the repetitive nature is good for all participating businesses. People who are new to the P3 program come in not knowing what to expect or maybe they are more fearful of the different delivery model, but once they get into it, I think they like the work and are interested to do more of it once they get started because it’s pretty repetitive.