Tag Archives: P3

“D.C.’s Metro and the Power of a P3” – Governing Magazine

If the District of Columbia’s transit system was a public-private partnership, some say it wouldn’t be falling apart right now.

BY | OCTOBER 2016

As I listened to S&P Global’s Anne Selting at a Governing event earlier this year describe how public-private partnerships work, I had a sort of epiphany. “If Metro in Washington, D.C., were a P3,” I asked her, “would it still be falling apart right now?” She replied that, while S&P’s role is not to opine on public policy, her answer would be a qualified no. Under a P3 structure, she explained, the concession grantor, typically a government, is contractually committed to a funding regime that provides for adequate maintenance.

Maintenance — the lack of it, that is — is at the heart of the crisis facing the Washington region’s transit system. In the past year it has had several serious maintenance-related smoke and fire incidents, including one that resulted in a passenger’s death. Train delays and equipment failures, such as escalators and elevators not working, are an everyday reality for riders. With the subway system facing an $18 billion capital deficit over the next 10 years, fixing these problems will be extraordinarily difficult.

Metro is not alone, of course. The maintenance backlog for the Boston region’s transit system, for example, is reported to be at least $7 billion. The Federal Transit Administration’s most recent estimate of the nationwide transit repair backlog is $85.9 billion.

The ramifications go far beyond transit, encompassing our entire nationwide infrastructure mess. As the Beeck Center at Georgetown University put it in a recent report, “There is a strong public-sector bias to invest in new capital projects rather than effectively maintaining and extending the life of public infrastructure assets meant to last 30-50 years.” In other words, these problems are not simply the result of some politicians or some governments behaving irresponsibly. They are built into the system.

This is the crux of one the most important arguments for P3s for major infrastructure. It forces policymakers to confront the true life-cycle cost of a project up front. The accepted rule of thumb for capital projects is that for every $1 of design costs, $10 will be spent for construction and $100 for maintenance over the life of the asset. But since most public discussion focuses only on the money for construction, the public is horribly misled about real long-term costs.

As I learned in my epiphany, the power of a P3 isn’t that it’s a source of money. The revenue that will support a project will always be public money, whether the capital is raised through private equity or through traditional municipal bond financing. The strongest argument for a P3 is that it forces a more honest appraisal of life-cycle costs, better aligning the incentives of the public and private partners. When we get that right, we are less likely to have Twitter feeds like @dcmetrosucks, which as of a few weeks ago had clocked more than 23,000 tweets.

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“Skanska reaches substantial completion of the new Midtown Tunnel of Elizabeth River Tunnels project”

Civil Engineering News | <Full Story>

Washington, D.C. — Skanska, leading a joint venture of Skanska, Kiewit Construction and Weeks Marine (SKW Constructors), reached substantial completion of the new Midtown Tunnel, a key element of the Elizabeth River Tunnels (ERT) project between Norfolk and Portsmouth, Va., four months ahead of schedule.

“This project was Skanska’s first public private partnership (P3) in the U.S. and the early completion clearly demonstrates the value that Skanska can provide in developing and investing in critical infrastructure,” said Johan Henriksson executive vice president, Skanska Infrastructure Development. “P3 allows for effective risk recognition and mitigation and more efficient and accelerated procurement than the traditional design-bid-build process.”

The ERT project consists of Elizabeth River Crossings (ERC), a joint venture of Skanska Infrastructure Development and Macquarie Infrastructure and Real Assets. The project is using a P3 model for the finance, development, design, construction, operation and maintenance of a new two-lane tunnel adjacent to the existing Midtown Tunnel under the Elizabeth River, connecting the communities of Norfolk and Portsmouth. The 3,800-foot-long underwater vehicle tunnel is one of the few immersed-tube tunnels in the U.S., and is comprised of eleven, 16,000-ton concrete elements.

The tubes were fabricated at Sparrows Point, Md., and towed 220 nautical miles down the Chesapeake Bay to the project site in Portsmouth. They were then immersed and positioned — one element at a time — in a dredged trench nearly 100 feet at the bottom of the Elizabeth River and then connected together through a series of locking mechanisms anSkanska_LayBarge-700d seals.

“It is a significant accomplishment to have completed the new Midtown Tunnel several months ahead of schedule,” said Wade Watson, ERT Project Director for SKW, responsible for the design-build aspect of the project. “This allows us to begin rehabilitation of the existing Midtown Tunnel months sooner than originally planned.”

The new tunnel will reduce traffic congestion on U.S. 58 by providing extra travel lanes, and enhance driver safety by having one tube for eastbound traffic and another tube for westbound traffic. The existing Midtown Tunnel is more than 50 years old. It is considered the “most heavily traveled two-lane road east of the Mississippi,” according to the Virginia Department of Transportation. When it first opened, it handled nearly 8,400 vehicles a day. In 2013, that number rose to nearly 40,000 per day. Traffic is projected to rise to nearly 50,000 vehicles per day by 2026.

“Opening the second travel lane in the US 58 West Midtown Tunnel immediately doubles roadway capacity for motorists traveling from Norfolk to Portsmouth,” said ERC CEO Greg Woodsmall. “Our project team worked extremely hard to deliver this much-needed improvement, months in advance of our contract delivery date. This new facility will help to reduce our regional congestion, ultimately improving the quality of life for Hampton Roads residents.”

Now that the new Midtown Tunnel is operational, the existing Midtown Tunnel will undergo rehabilitation to bring it up to the same standard and the Martin Luther King Expressway will be extended from London Boulevard to Interstate 264. Maintenance and safety improvements to the existing Downtown Tunnels (both eastbound and westbound tubes) has already reached substantial completion.