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Published byShannon Montgomery Modified over 6 years ago
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The Oregon Approach to Innovation in Infrastructure
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Oregon Needs Significant Investment
Infrastructure needs over the next 20 years: $2.8 billion for drinking water $3.8 billion for wastewater $2.5 billion for schools Address 135 high-hazard dams Repair 433 structurally deficient bridges Improve 1,341 functionally obsolete bridges And More…… Portland metro area alone needs $20 billion more infrastructure investment than what we can accomplish using traditional financing and procurement
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Einstein was right Doing the same thing over and over again and expecting different results simply will not work. Oregon must innovate to get more value for our infrastructure dollars if we are to preserve our quality of life and have a sound and resilient economy.
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The West Coast Infrastructure Exchange
Strategies to Create Higher Value for Money and Attract Private Capital Innovative procurement based on performance outcomes and highest life-cycle value For some projects, forms of public-private partnership may offer higher value for public dollars Transfer risks of design, construction, financing cost, and long-term performance to private partners Use innovation and life-cycle design to reduce total cost of asset and increase value for dollars invested, improve climate change resiliency Collaboration to establish a best- practices marketplace The West Coast Infrastructure Exchange Establish a functioning regional market for private capital investment in public infrastructure A forum for best practices and inter-jurisdictional cooperation Regionally-driven solutions in the absence of federal action
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Improving Outcomes Implement proven P3 procurement methods, including Performance-based, life-cycle procurement when the methods create a net public benefit Invite private sector competition to achieve innovation and performance outcomes Transfer risk for on-time, on-budget delivery and quality to the private providers Assure performance by placing private capital at risk with penalties for non-performance Stretch public dollars by leveraging private capital Achieve higher value for money because projects are designed to reduce long-term costs, not just to achieve least cost of construction Public sector owns infrastructure and enforces performance metrics
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Procurement Models and Range of Risk Transfer to Private Sector
Source: US DOT-FHA
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Drivers of Value for Money Differences
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Chosen as Oregon’s strategic partner, provides services in Oregon through intergovernmental agreement with DAS Established in 2002 as center of expertise for innovative procurement and finance. Operates as independent corporation, sole shareholder is Ministry of Finance Serves governments and public sector agencies through the planning, delivery and oversight of major infrastructure projects 40+ projects to date: $17.5B+ in value with $7B+ private capital at risk Projects have generated significant benefits for taxpayers: Greater value for money Reduced risk for taxpayers Certainty of project cost and schedule—on time and on budget Sectors include transportation, public buildings, energy, education, water Uses several procurement methods depending on rigorous analysis to determine best structure for highest value for money for public owners (DB, DBM, DBFM, DBFOM)
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Design Build Finance Maintain (DBFM) and similar methods are not privatization
Public owner transfers risk to private team that provides design, construction, some amount of financing, and long term maintenance through a single integrated contract for payments that are capped and scheduled for entire term of contract. Payment deductions apply if performance requirements not met. Encourages high quality, allows for highest teamwork and innovation in design and construction. Partnerships BC results: 100% delivered before or on due date, no cost increases except for owner requests. Overall Canadian Results from P3 methods Overall 13% higher value for money 83% on time and 95% within 6 months of scheduled delivery
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Surrey Pretrial Services Center Expansion
Examples of outcomes: -Lower Costs -Improved Performance -On time and on budget Surrey Pretrial Services Center Expansion 216-bed renovation and expansion of high-security inmate facility Provides maintenance for new and existing facility, to return entire facility in fully-maintained condition at end of life-cycle contract $148 million in traditional procurement, $133 million cost in DBFM Significant safety improvements because of private innovation As almost all DBFM projects, delivered on time and on budget
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Examples of Outcomes: - $131M in Additional Value through Innovation -Long term costs guaranteed
Sea-to-Sky Highway $600 million improvement of Highway between Vancouver and Whistler Ski Area Ministry could afford 60 km of passing lanes, 20 km of median barrier, and reflective markings for only most dangerous areas. With DBFM innovation, project delivered 80 km of passing lanes, 36 km of median barrier, and reflective safety material for the entire length Private innovation added $131 million in additional value. Contract includes long term performance monitoring and penalties for failure to achieve requirements
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Public Contracting Values Preserved
Projects are publicly owned. High-road contracting provisions such as prevailing wage apply because projects are public works. Taxpayer risk is reduced through long-term performance contracts. Higher value for money means we close the gap to achieve the infrastructure Oregon needs for a sound and resilient economy.
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Current Activities West Coast Infrastructure Exchange
Collaboration among Oregon, Washington, California, and British Columbia Best practices Public Infrastructure Commission Examining project-level innovation and Fund-level innovation Technical Assistance for major projects
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