Structuring Alternative Project Delivery Procurement

The rise of alternative project delivery methods over the last decade has provided water and wastewater utility managers the opportunity to draw from a spectrum of options, each with their relative advantages and disadvantages, for delivery of capital projects. This spectrum of options ranges from traditional delivery methods to various forms of integration of design, construction, operations and financing. This integration affords opportunities for substantial cost savings, scheduling benefits, and preferred risk allocations. However, it also heightens the importance of capital project procurement processes, most notably development of contract terms and conditions.Several recent major water and wastewater plant project procurements have been characterized by extensive delineation of design requirements and performance and technical specifications related to construction and facility operations. These processes have involved protracted discussions of risk allocation and labored negotiations of contract terms and conditions.This paper outlines the importance of both structured selection of alternative project delivery options, and subsequent procurement processes for contracting project delivery. Strategies for minimizing both procurement time and expenditures will be discussed, as will the implications of alternative approaches to risk allocation – the centerpiece of most integrated delivery contracts. Though a water treatment plant procurement, the City of Houston's recent procurement of the Northeast Water Purification Plant and initial transmission main provides many examples of procurement process principles that may be extended to biosolids and residuals projects 1, and will serve as a case study example.