Managing P3 Water Contracts: Mitigating Risks while Maintaining Quality, Schedule, and Budget

Across the nation, utilities are facing mounting challenges-aging infrastructure, emerging contaminants, climate resilience, workforce continuity, and rising regulatory and financial pressures. Specifically in South Florida, low bid contractors have slipped significantly on their construction schedules. In response, many utilities are re-evaluating traditional procurement methods to accelerate delivery while managing long-term risk. The City of Fort Lauderdale has taken a bold step in this direction through the Prospect Lake Clean Water Center, a 50-MGD advanced water treatment facility being delivered under a DBOMF public-private partnership valued at $600 million. This project represents one of the largest and most innovative water P3s currently under construction in Florida. This presentation explores how the City and its partners moved from concept to construction, emphasizing how the team mitigated risks while maintaining schedule, budget, and quality.

Project Background and Goals The Prospect Lake Clean Water Center replaces the 70-year-old Fiveash Water Treatment Plant-an aging water treatment plant struggling with water quality and resilience issues. The new water treatment plant, located at the City's Prospect wellfield, embodies a forward-thinking investment in reliability. From the beginning, Fort Lauderdale's goals were clear: maintain public ownership and rate control, ensure long-term performance and cost predictability, and minimize the City's risks through a 30-year performance-based agreement. A major workforce goal was to preserve City union jobs by establishing a hybrid O&M model-IDE Technologies provides technical oversight while City staff remain public employees. The City selected the P3 entity from several proposers and then worked directly with the P3 entity to develop the contractual agreement. After the P3 selection, the City decided to hire an Owner's Representative/Owner's Advisor (OR/OA). Hazen and Sawyer (Hazen) was selected as the OR through the City's typical procurement process. Under the OR agreement, Hazen was asked to serve as the City's onsite resident inspector and technical reviewer throughout the P3 design/construction process. The technical input Hazen provided was reviewed by the P3 and then determined to be within or outside of the P3 agreement. What resulted was a collaboration between the City, the P3, and Hazen to adhere to the contractual requirements while adding enhancements and coordinating with the City enabling works projects to maximize the functionality of the P3 project.

Procurement Strategy: An Unsolicited P3 Proposal The project originated through an unsolicited proposal submitted under Florida Statute 255.065 by IDE Technologies and Ridgewood Infrastructure, who together formed the Project Company. The Project Company hired Kiewit Water Facilities Florida as design-builder, leveraging a proven partnership among the firms. The P3 proposal was based on the existing master plans and studies, including Fort Lauderdale's 2017 Master Plan, the 2019 Carollo Report, and a 2021 Technical Evaluation-all of which supported a nanofiltration-based treatment approach. Following the statutory 90-day 'go-shop' period, four competing proposals were received. Ernst & Young performed an independent evaluation, scoring the IDE-Ridgewood proposal highest for alignment with City goals, team experience, and resilience criteria. The City Commission voted to proceed with the team's proposal and authorized detailed due diligence and negotiation.

Navigating the P3 Process The path from proposal to construction required navigating complex contracts and building strong public support. The project's structure included multiple interdependent agreements-design-build, operations, financing, and interface-each with clearly defined performance metrics and penalties. During an interim development period, the team conducted site investigations, permitting, and design refinements while engaging the public through education and communication. On February 7, 2023, the City Commission formally approved the P3 agreement, followed by contract execution one week later. This structure gave Fort Lauderdale long-term assurance: if the project underperforms, payment is withheld. Accountability is embedded throughout the contract chain, reinforcing the public's confidence in the process.

Implementation and Progress The chosen site-a 295-acre wellfield with 29 production wells-presented logistical and environmental challenges. The team coordinated over 70 permits, rezoning, and re-platting activities, while elevating the site seven feet for flood resilience. The project's progress is striking. Within 20 months, a greenfield site transformed into a near-complete water treatment plant. Nanofiltration and ion-exchange systems are installed, mechanical and electrical work is nearing completion, and full commissioning is expected mid-next year. The City's vision of a modern, resilient water system is becoming reality. In parallel, the Safe Drinking Water Act's PFAS regulations were proposed. Hazen requested a proposal to revise the treatment technology to achieve PFAS compliance. The nanofiltration process stream, 70% of the total treatment process, will remove the PFAS. But the ion exchange process, will not remove the PFAS without an additional set of ion exchange vessels. The P3 proposed a cost for adding the additional ion exchange vessels for PFAS removal. Hazen reviewed and suggested that pilot testing first be conducted to determine what higher percentage of treatment could be directed to the nanofiltration process, and if the resulting blend with the ion exchange process would be below the regulatory limit. This configuration would save significant dollars for PFAS compliance. The P3 agreed to the request and submitted a proposal for pilot testing, which is presently ongoing.

Lessons Learned for Utilities Considering P3s The Prospect Lake project offers several key takeaways for public utilities exploring alternative delivery:
1. Start with a strategic vision-define clear objectives for performance, resilience, and public benefit.
2. Clearly define process design criteria – project upcoming regulatory requirements and include the requirement to design for these upcoming regulations; a minimum of a basis of design report should be used by P3s to develop their designs,.
3. Secure internal alignment-unite procurement, legal, and operations teams early.
4. Engage industry early-engaging with design-build teams reduces risks and encourages competition.
5. Bring the right advisors at the right time-legal, financial, and technical expertise is essential for structuring performance-based agreements; technical expertise should be contracted prior to the City signing the agreement with the P3 entity.
6. Build readiness-prepare internal policies for evaluating unsolicited proposals to maximize opportunities under the regulatory requirements.

Conclusion
The City, P3, and Owner's Representative collaborated to maximize the Prospect Lake Clean Water Center while maintaining quality, budget and schedule. The Prospect Lake Clean Water Center is more than a construction project-it's a case study in collaboration, transparency, and innovation. By combining public leadership with private expertise, Fort Lauderdale has established a resilient model for how utilities can modernize critical water infrastructure while maintaining control and accountability.