One example of a public/private partnership process is the Seattle Public Utilities Tolt River Water Treatment Plant project. SPU and a team headed by R.W. Beck and Malcolm Pirnie went through what was one of the of the largest alternative procurement efforts in the country at the time.
SPU planned to develop a new 120 mgd water treatment plant incorporating filtration/ozonation for a surface water supply on the Tolt River. Utility staff initially benchmarked the cost of the project using a traditional or conventional approach. SPU then went through an extensive design/build/operate, or DBO, procurement process, through which private contractors bid the design and construction of the facility, as well as a contract for the operation of the facility for 25 years. SPU retained ownership and liability for future capital improvements. The City of Seattle provided project financing.
SPU negotiated a contract with a consortium lead by CDM-Phillips that resulted in a cost-savings of 40 percent or $70 million less than what SPU would have expected for a similar facility developed and operated using the traditional approach. In addition to the dollar savings, SPU benefited from risk mitigation, rate stabilization and guarantees concerning regulatory compliance.
Last summer, the Seattle City Council approved SPUs recommendation to hire another team headed by R.W. Beck and Malcolm Pirnie to help determine the best contracting process for several facilities on the Cedar River.
The Cedar River is a larger, more complex system than the Tolt, and the projects include a 250 mgd treatment facility with associated water transmission and storage facilities; the upgrade and rehabilitation of an existing diversion facility; and a salmon hatchery and series of fish passage structures. The team is now in the early stages of exploring the possibilities of alternative arrangements for water treatment, headworks rehabilitation and fish passage work.
SPU initially needed to develop new water treatment plants for a sizable source of water supply. Utility staff benchmarked the cost of the projects using a traditional or conventional approach. However, because SPU wanted to provide the most cost-effective approach and did not have staff available for operating complex treatment plants, the city concluded that the DBO process was more promising than a traditional approach.
They were persuaded by the potential for substantial construction and operating cost savings created by efficiency and quality improvements resulting from designers, constructors, and operators working together as a team from the beginning of the projects.
