AASHTO AASHTO Construction Sub-Committee Construction Sub-Committee

Annual MeetingAnnual Meeting

Virginia BeachVirginia Beach

Adrian SheppardAdrian Sheppard

““Director for PPP and Asset Management”Director for PPP and Asset Management”

11stst August 2011 August 2011

Delivering Highway Services Delivering Highway Services through through

The Portsmouth PFI experienceThe Portsmouth PFI experience

OverviewOverview

Background to the Contract - Funding Background to the Contract - Funding issuesissues

Contract Structure & ControlsContract Structure & Controls Contract EfficienciesContract Efficiencies Delivery through the Core Investment Delivery through the Core Investment

PeriodPeriod Transition into the Life Cycle Replacement Transition into the Life Cycle Replacement

PeriodPeriod

The City of PortsmouthThe City of Portsmouth

Unitary Authority - Unitary Authority - 19971997

Population 190 000Population 190 000 Predominantly UrbanPredominantly Urban Gateway to EuropeGateway to Europe Total Road Length Total Road Length

455km455km• PRNPRN 66km66km• SRNSRN 94km94km• TRNTRN 295km295km

84 Structures84 Structures 20 000 lighting units20 000 lighting units

Key IssuesKey Issues

Strategically important cityStrategically important city Cyclical peak traffic flowsCyclical peak traffic flows Residential and business pressuresResidential and business pressures 27 Political Wards27 Political Wards Competing needsCompeting needs

Key IssuesKey Issues

Road Condition Road Condition 48% failed or critical48% failed or critical Insurance ClaimsInsurance Claims Public DissatisfactionPublic Dissatisfaction Insufficient fundingInsufficient funding Lack of investmentLack of investment Other prioritiesOther priorities

Bid ProcessBid Process

• OBC Outline Business Case

• EOI Expression Of Interest

• PQQ Pre-Qualification

• ISOS Outline Solutions

• ISDS Detailed Solutions

• ISRS Refined Solutions

• CFT Final Tender

• PB Preferred Bidder

• FC Financial Close

The HighwayThe HighwayMaintenance ProjectMaintenance Project

• Ensign Highways LtdEnsign Highways Ltd• 25 year Contract25 year Contract• 5 year CIP5 year CIP• $850m $850m

Core Investment Period 5yrs $100m

Life Cycle Replacement 20yrs $80m

Operations & Maintenance 25yrs$670m

Total $850m

Contract ValueContract Value

AdvantagesAdvantages

Transfer of risk to service companyTransfer of risk to service company Local authority gains non-refundable Local authority gains non-refundable

grant from the Government to help grant from the Government to help with the cost of borrowing with the cost of borrowing

Service budget is ring fenced and Service budget is ring fenced and certaincertain

Significant and guaranteed Significant and guaranteed improvements in network conditionimprovements in network condition

Hand-back in a guaranteed condition Hand-back in a guaranteed condition with residual lifewith residual life

Exclusions fromExclusions fromthe Contractthe Contract

Urban Traffic Control SystemsUrban Traffic Control Systems Bus StopsBus Stops Refuse CollectionRefuse Collection Coastal ProtectionCoastal Protection Retained Highways FunctionsRetained Highways Functions Abandoned VehiclesAbandoned Vehicles Other City Council ServicesOther City Council Services

Key PrincipleKey Principle

Design, construction and operation risk Design, construction and operation risk transferred to the Service Providertransferred to the Service Provider

No third party claims to PCCNo third party claims to PCC

““Fence to Fence” ConceptFence to Fence” Concept

Shared RisksShared Risks

Major Structural Repairs Major Structural Repairs • BridgesBridges• Highway drainageHighway drainage

Change in StandardsChange in Standards Other Network Changes Other Network Changes Insurance- Total Loss of the Network Insurance- Total Loss of the Network Interest Rate Risk Interest Rate Risk Inflation Risk Inflation Risk Force MajeureForce Majeure

PFI Credit Project Agreement Facility Agreement Sub-Contract

DEPARTMENT FOR

TRANSPORT

PORTSMOUTH CITY COUNCIL

INDEPENDENT

CERTIFIER OWEN WILLIAMS

ENSIGN HIGHWAYS LTD

SPV SHAREHOLDERS

COLAS SA AND COLAS LTD

COLAS LTD

PORTSMOUTH BUSINESS UNIT

LLOYDS TSB

TECHNICAL ADVISERS

ATKINS

StructureStructure

Role of the SPVRole of the SPV

The SPV is the interface between all The SPV is the interface between all parties to the project:parties to the project:

• The Public Authority and their advisorsThe Public Authority and their advisors• The Lenders and their advisorsThe Lenders and their advisors• The Contractor and their advisorsThe Contractor and their advisors• The Sponsors and their advisorsThe Sponsors and their advisors

Role of the SPVRole of the SPV Core tasks for the SPV management Core tasks for the SPV management

function include:function include:

• Develop and deploy processes, systems and Develop and deploy processes, systems and procedures procedures

• Technical and commercial risk assessment and Technical and commercial risk assessment and managementmanagement

• Financial reportingFinancial reporting• Performance monitoringPerformance monitoring

Role of the SPVRole of the SPV Core tasks for the SPV management Core tasks for the SPV management

function include:function include:

•Management of funding arrangementsManagement of funding arrangements•Contract profile and promotionContract profile and promotion•Dispute managementDispute management•Partnership developmentPartnership development

Scope of WorkScope of Work RefurbishmentRefurbishment Winter maintenanceWinter maintenance Periodic maintenance Periodic maintenance Sweeping & cleansing Sweeping & cleansing Third party claimsThird party claims Statutory UndertakersStatutory Undertakers Network ManagementNetwork Management

Fence to Fence

Payment MechanismPayment Mechanism Usage Payment = Shadow toll (10%)Usage Payment = Shadow toll (10%) Availability Payment = Monthly lump sum Availability Payment = Monthly lump sum

(90%)(90%) Deductions (Performance based)Deductions (Performance based)

65%12.5

100%

18.6

MaintenanceInvestment period

20 yrs5 yrs

NCI AP

MonitoringMonitoring

SurveysSurveys InspectionsInspections Internal AuditsInternal Audits PCC Independent CertifierPCC Independent Certifier Bank’s Technical Advisor Bank’s Technical Advisor Residents / City Help DeskResidents / City Help Desk CouncillorsCouncillors NewspapersNewspapers

Liaison and Dispute Liaison and Dispute Resolution ProceduresResolution Procedures

Progress Meeting Operational Meeting

Network Board

‘Principals’

‘Expert’

Progress Meeting Operational Meeting

Network Board

‘Principals’

‘Expert’

• Service Points

• Warning Notice

• Contract Termination

Default Notice PeriodsDefault Notice Periods

R & DR & D Pavement designPavement design

Project and Project and Construction Construction ManagementManagement

Model DevelopmentModel Development Products & bindersProducts & binders Recycling Recycling

& Environment& Environment

Expertise & InnovationExpertise & Innovation

Performance MeasuresPerformance Measures Number of public enquiriesNumber of public enquiries

Performance MeasuresPerformance Measures

Performance MeasuresPerformance Measures

Performance MeasuresPerformance Measures

Performance MeasuresPerformance Measures

Performance MeasuresPerformance Measures

Performance MeasuresPerformance Measures

Efficiency SavingsEfficiency Savings Investment at right timeInvestment at right time Combined Maintenance/Improvement Combined Maintenance/Improvement

SchemesSchemes Maintenance/Capital Works/Cleansing Teams Maintenance/Capital Works/Cleansing Teams

interactinteract Shared OfficeShared Office Joint Training InitiativesJoint Training Initiatives Seeking InnovationSeeking Innovation Better management of Utilities activitiesBetter management of Utilities activities

Efficiency SavingsEfficiency Savings Integrating design with constructionIntegrating design with construction

▪▪ Improved buildabilityImproved buildability

▪▪ Better budget managementBetter budget management

▪▪ Speedier construction processSpeedier construction process

▪▪ Better interface managementBetter interface management

▪ ▪ Improved responseImproved response

Public Satisfaction 2005Public Satisfaction 2005 4Ps Excellence Award 20064Ps Excellence Award 2006 IHT Effective Partnership Award 2008IHT Effective Partnership Award 2008 Other Local Authorities in UK following modelOther Local Authorities in UK following model Public Satisfaction 2008Public Satisfaction 2008 Highways Partnership Awards 2009Highways Partnership Awards 2009 ICE Award 2010 - Best Community Project ICE Award 2010 - Best Community Project

RecognitionRecognition

58%

13%

45%

0%

20%

40%

60%

Satisfied Dissatisfied Net satisfaction

Satisfaction with Colas' work

Mayfield SchoolMayfield School Tidy SchoolTidy School The News “We can do it”The News “We can do it” PCC Tidy campaignPCC Tidy campaign Portsmouth in BloomPortsmouth in Bloom Brunel commemorationBrunel commemoration Kid safeKid safe University of PortsmouthUniversity of Portsmouth

Local CommunityLocal CommunityInvolvementInvolvement

THANK YOUTHANK YOUasheppard@colasinfrastructure.comasheppard@colasinfrastructure.com