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Negotiations Begin on 1st Public-Private Initiative

Fri January 20, 2006 - Southeast Edition
Jeff Cronin



The Georgia Department of Transportation (GDOT) has launched the negotiation process for the first construction project to be built as a Public-Private Initiative (PPI) in the state, a move that could spring its expected date of completion forward by a decade.

The Transportation Board voted unanimously in December to begin discussing the details of the Interstate 75/575 project (also known as the Northwest Corridor) with Georgia Transportation Partners, a joint venture of Bechtel Infrastructure Corp., Gilbert Southern Corp. and C.W. Matthews Contracting Company Inc.

With the board’s vote and signature on the letter of intent to negotiate, the development phase of the Northwest Corridor project has commenced. Its approval is only allowed with the support of GDOT, an evaluation committee and a minimum 15-day public comment period.

The letter of intent is not a binding document, and the scope of the project may change as its environmental impact is assessed.

Through negotiations, a final contract will be agreed upon between the contractor and the advisory committee. Its approval will be recommended to the governor and the GDOT commissioner. Nothing is final until a Transportation Board vote, with the concurrence of the governor.

PPIs, under which GDOT partners with a private or corporate business to help finance, design, construct, operate and maintain a road project, were first approved by the state legislature in 2003, but only for unsolicited proposals. It wasn’t until 2005 that the General Assembly amended the law to allow GDOT to solicit proposals.

The amendments also extended the time for receiving proposals from 90 to 135 days and provided for mandatory public review and input periods.

The PPI process is seen by GDOT officials as a saving grace for a tightened budget.

“PPI will help fill in some of the funding void that the department is currently facing,” said David Doss, Transportation Board chairman.

Jim Dell, manager of business development at Bechtel, said the primary cost savings comes from the ability to compress the time frame from a project’s conception to its completion. The design phase could be drastically reduced and could allow for construction to begin even as the details of the later phases of the job are finalized.

Initially, GDOT had hoped to complete improvements on the Northwest Corridor sometime between 2020 and 2030. Under Georgia Transportation Partners’ plan, work is expected to begin in 2008 and take three to five years, depending on its final design.

Still, GDOT spokeswoman Karlene Brown said, “comparing the construction costs for a design-bid-build project with a PPI project is a little tricky since we really don’t have any historical construction data on a Georgia PPI project yet.”

She expected to see cost savings simply because a PPI project will be completed before a traditionally awarded contract, thus reducing costs associated with inflation and project modification.

“We have observed that the longer a project remains unbuilt, the more the cost tends to increase,” Brown said.

Because of reasons such as increase in its scope over time and more stringent environmental regulations, the average overall project modification factor is approximately 30 percent, she said.

This first PPI negotiation is an especially vital one, as it will include the framework for future agreements, with respect to the design process, project development and construction.

The process, which Dell expected to take two years, will result in a preliminary design and a fixed price. Some aspects of the job, such as utility work, may be designed by as much as 80 percent to ensure a fair payment.

Dell expected he and his colleagues, who have had experience in public-private projects in other states, will have a lot to offer GDOT officials as they work through their first contract of this type.

Brown said GDOT is still developing criteria to assist in determining which projects would make for good PPI projects.

“There are a lot of components to consider and GDOT staff has been working to develop ways to frame an open and competitive, but efficient, process to select projects for PPI implementations,” Brown said.

She said GDOT officials hope to get the criteria completely approved this month.

Details of the Project

Georgia Transportation Partners’ proposal for the 26-mi. (41.8 km) Northwest Corridor project, which was submitted in November 2004, would add high-occupancy vehicle or high-occupancy toll lanes on I-75 from Akers Mill Road to Hickory Grove Road and on I-575 from the I-575/75 interchange to Sixes Road in Cobb County. The proposal also includes a bus rapid transit system from Cobb County to downtown Atlanta, as well as a truck-only lane separated by a barrier.

All existing general-purpose lanes will remain free and any toll lanes will be geared with express electronic collection devices, which means traffic will not be slowed down by tollbooths.

The price of the toll may just be worth it to commuters. GDOT estimates that in 2011, drivers could save 14 to 22 minutes by using the toll lanes during peak morning and afternoon hours. By 2030, the time saved could be as high as 38 minutes. All tolls will be set and collected by the state.

Under state law, GDOT advertised for competing proposals upon receiving Georgia Transportation Partners’ proposal, but none were submitted.

Georgia Transportation Partners will be responsible for hiring its own subcontractors, but all firms must meet GDOT’s standards, said spokeswoman Jerrice Boyd. A majority of the work will be completed by local, specialty or minority firms and will put more than 800 people to work through the project’s construction.

The partnership’s unsolicited proposal for the Northwest Corridor came from a familiarity with the area, Dell said.

When Georgia first approved the PPI legislation, Dell said the company was well aware of the public and political support for improvements to roadway and began working on its proposal. CEG