Incentives push storm sewer project to early finish
The Albuquerque (N.M.) Metropolitan Arroyo Flood Control Authority (AMAFCA) recently completed a large storm sewer project that set new standards for public/private cooperation. As a construction project, installing the storm sewer was relatively simple. However, each step embodied the principals of partnering and shared costs.
For example, the construction phase included incentive payments for the contractor to drastically reduce construction time, yielding a minimum of a three-to-one payoff.
The storm sewer project involved burying a one-mile stretch of 96-inch, concrete pipe and box culvert in street rights-of-way, to capture storm flows from an arroyo – or water channel – and the adjacent properties. Another half-mile of smaller, collector pipes was also installed.
Without the storm sewer, landowners would have been required to pond stormwater on their properties. But, at the encouragement of an AMAFCA board member, the agency’s staff approached the adjacent landowners and suggested that their money would be better spent on a permanent storm drain than on temporary ponds.
The landowners agreed in principle, and a formula was derived whereby AMAFCA, the city and the landowners would share equally the cost of storm sewer and street improvements. Landowner costs were further apportioned by a formula based on: 1) amount of drainage contributed; 2) frontage on the storm sewer; 3) flood-plain removed from their land; and 4) acreage benefited.
Just before the project went to bid, an “orange-barrel policy” was instituted, requiring that each phase undergo a lengthy analysis to determine the impacts on drivers and adjacent businesses. If necessary, mitigation measures would be implemented.
Because of the impending storm season and the disruption of traffic that the project would cause, AMAFCA decided to offer incentives for early completion. This decision was a significant departure from traditional practice in New Mexico, where public agencies typically only impose “damages” for late completion.
Six contractors volunteered to review the project, determine the proper phasing and recommend incentives for an earl finish as well as damages for a late finish.
The contract schedule developed by the six contractors called for seven intermediate phases. Incentive payments were set for four of the phases, ranging from $500 per day to $1,500 per day, with corresponding liquidated damages. Overall project completion was based on separate deadlines for the storm sewer portion and for the full project, with incentives and damage payments of $2,000 per day for both.
None of the contractors were prohibited from bidding on the project, and, in fact, one of them was the successful low bidder.
AMAFCA mailed out letters to area residents informing them of the upcoming project, and contacted all neighborhood association presidents.
In its invitation for bids, AMAFCA asked for a “partner” in the project. The successful bidder, locally based Condore Construction, responded to the partnering offer, and a charter was signed that outlined the goals of all parties. As part of the agreement, monthly breakfast meetings were held in which all stakeholders participated.
To earn incentives and minimize disruption, the contractor applied extra effort and equipment. During certain phases, the equipment fleet was doubled, especially when traffic was being disrupted. The contractor’s superintendent even gave tours of the site for school children and interested neighborhood officials.
The contractor finished each phase, as well as the storm drain and overall project, well ahead of schedule, earning incentive payments of $350,000. One phase was completed in half the time; most phases were completed in two-thirds of the time.
During the course of the contract, the engineering consultant, locally based Leedshill-Herkenhoff and Associates, did a theoretical analysis of the daily cost to the public of the traffic interruption. This analysis yielded estimated costs of $13,000 per day.
In addition, a survey was undertaken to quantify the actual costs to the public. One thousand questionnaires and self-addressed, stamped envelopes were distributed to motorists traveling through the construction site. The survey asked questions like:
* how much are you delayed?
* how many extra miles do you travel to detour the site and how much is your time worth? and
* are incentive payments a good expenditure of your tax dollars?
AMAFCA staff and contractor personnel did interviews on morning radio shows to draw attention to the questionnaire. The survey received a 20 percent response, and it was calculated that the cost to the public was actually $26,000 per day for every day the project went unfinished.
Seventy percent of respondents said they would be willing to pay extra taxes to have such a project finished early. Thus, the survey suggested offering the contractor incentives for early completion had been a good idea.
The project now provides unrestricted drainage for several square miles, handling full stormwater discharge from streets and adjacent property. The project removed 15 acres from the floodplain and made streets and intersections more safe and efficient.
Cost-sharing and cooperation between landowners, AMAFCA, the city and the contractor greatly reduced hassles for the public at a positive pay-off in dollars and productivity.