CAPITAL MAINTENANCE AGREEMENTS (CMA) · –Use: SH 71, LP 1604, SH 360 Errors and Omissions (Texas Law) 1-Year Materials and Workmanship Warranty 5-Year Performance Based Warranty

PFDSCD Maintenance Briefing October 11, 2016

CAPITAL MAINTENANCE AGREEMENTS (CMA)“The Good, the Bad, and the Ugly”

October 11, 2016


Table of Contents

2

4-5

6-17

18-22

23-24

25-28

3Introduction

Fundamentals of DB Delivery

Purpose of CMAs and Warranties

CMA Features

CDA/DB O&M Program

PFDSCD O&M Support Services

1

2

3

4

5

6


Introduction

PFDSCM O&M Responsibilities

– Ensure compliance with contractual commitments of the DBA are met

across the CDA/DB program

– Provide District support throughout the O&M term beginning at

construction close-out through life of the Maintenance Agreement

– Provide direct assistance during the critical transition from construction to

O&M, and key contract milestones

– Protect the Department, ensure the integrity of contractual allocation of

life-cycle risks

3



DB Delivery

The two main benefits of DB delivery are cost savings and accelerated delivery. But how?

– DB Contracts hand over control of design, construction, quality control, and quality acceptance to the DBC.

– The decreased level of TxDOT control allows the contractor to tailor the design to suit his strengths and capabilities.

– Constructability is a major priority for the DBC, and significantly reduces time and costs in practically every activity

– The DBC has the strategic advantage in price negotiations. Massive economies of scale, flexibility to strategically time purchases, intense market competition among suppliers, and the DBC’s strategic ingenuity result in advantageous purchasing power and significantly reduced costs

4



The DBC will design the project to meet the requirements as closely as

possible, with minimum “fluff”.

Simply said, economizing the project begins at the proposal stage and

continues until the last grass seed is placed in the ground.

As a result, the DBC is well equipped to construct projects at a reduced cost.

However, certain cost savings introduce potential lifecycle risks. The goal is to

keep risk ownership with party in primary control of constructing the facility.

The subject of this Session is to discuss how TxDOT does this.

5


Purpose of CMA’s and Warranties

One method of protecting TxDOT from those risks is to transfer long-term

maintenance obligations to the DBC.

TxDOT has utilized a menu of delivery types to accomplish this, one of the

more commonly used methods is the Capital Maintenance Agreement or the

CMA.

The primary purpose of CMAs and Warranties is to hold the DBC responsible

for the long-term performance of the facility. This places responsibility with

the DBC, the party in control of the work.

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Purpose of CMAs and Warranties - Protection from Defects Options

7

Errors and Omissions

(Texas Law)

1-Year Materials and

Workmanship Warranty

5-Year Performance

Based Warranty

15-Year Capital

Maintenance Agreement

State Law Standard Warranty

Workmanship

Extended Warranty w/

Performance Thresholds

Long-Term obligation w/


Guarantees design

compliance

Standard in DBB & DB

Guarantees construction

quality


Guarantees durability of

the Capital Assets in the

initial 5 years

Guarantees the durability

the Capital Assets for up to

15 years



8


(Texas Law)



5-Year Performance

Based Warranty

15-Year Capital



Workmanship





Guarantees design

compliance



quality




initial 5 years


the Capital Assets for up

to 15 years

Errors and Omissions (Texas Law)

– By law, Texas Statute of Limitations provides recourse by TxDOT for up to ten years

for errors and omissions with enforcement through the courts.



9


(Texas Law)



5-Year Performance

Based Warranty

15-Year Capital



Workmanship





Guarantees design

compliance



quality




initial 5 years



to 15 years

One Year Materials and Workmanship Warranty (All DBAs)

– Guarantees quality of work, materials and equipment for one year - DBA Section 11

– DBC responsible for D&C related defect repairs

– Presumes defects beyond one year are due to unrelated causes

– Warranty cost included in DB Price

– Use: standard on all DBAs, very similar to TxDOT DBB warranty



10

Limitations of E&O and One-Year Workmanship Warranties– Defects must be directly related to E&O, and provable in a Court of Law

– Defects caused by E&O are very rare, E&O suits are extremely rare

– Defects must be discovered within the first year

– Defect must be attributable to flawed construction and/or substandard material, and must be provable

– Defects caused by M&W are fairly common, but cause is often open for debate


(Texas Law)



5-Year Performance

Based Warranty

15-Year Capital



Workmanship





Guarantees design

compliance



quality




initial 5 years



to 15 years

PFDSCD Maintenance Briefing October 11, 2016 11




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Five Year Performance Based Warranty

– Guarantees durability of the Capital Assets (5 years), Non-Capital Assets (2 years)

– Mandates minimum levels of performance – skid, ride, rutting, settlements, etc.

– DBC responsible for performance related defect repairs

– Warranty cost included in DB Price

– Use: SH 71, LP 1604, SH 360


(Texas Law)



5-Year Performance

Based Warranty

15-Year Capital



Workmanship





Guarantees design

compliance



quality




initial 5 years



to 15 years



14

15-Year Capital Maintenance Agreement (CMA)

– “Paid Guarantee” - CMA costs are in addition to D&C Price

– Furnishes all maintenance of Capital Assets to mandated Performance Standards

– Includes preventative maintenance (overlays, rehabilitation)

– Use: GP F&G, US 77, Horseshoe, I35E, DFWC, GP H&I, SH 249


(Texas Law)



5-Year Performance

Based Warranty

15-Year Capital



Workmanship





Guarantees design

compliance



quality




initial 5 years



to 15 years



15

TxDOT selects the appropriate delivery method for the specific project characteristics.

CMAs are predominant in the program for projects with significant life cycle risks, size and complexity.

Defects is in Capital Assets represent the high potential losses (pavement, structures, earthwork/slopes & drainage (optional).


(Texas Law)



5-Year Performance

Based Warranty

15-Year Capital



Workmanship





Guarantees design

compliance



quality




initial 5 years



to 15 years


Purpose of CMA

The CMA or Warranty are an integral part of DB delivery by providing:

TxDOT Protection from defects

DBC Responsibility for durability over many years

“locks-in” minimum performance standards for the facility

Assurance to bondholder’s their investment is protected

Encourage DB contractor to integrate quality and durability into facility

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Purpose of CMA - Checks and Balances

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Risk Premiums CMA 2016

TxDOT Influence %

Reduced Level of OVTI

TxDOT Influence %

Prescriptive Pavement

DesignTxDOT

Influence %

Cost of Lifecycle Maintenance

Interrelationship between

CMA – Design – OversightChecks and Balances



CMA Features - Maintenance Services – DBC vs TxDOT Responsibility

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Scope ElementDesign-Build

ContractorTxDOT

Pavement X

Drainage (District Choice) X

Structures X

Earthworks, Embankments X

Pavement Markers X

Curbs, Guardrail X

Traffic Signs X

Traffic Signals X

Lighting X

Fences, Walls X

Roadside Management X

Snow & Ice Control X

Incident Response X

CMA Features

– DBC Furnishes all maintenance work including preventative maintenance (overlay, rehab)

– TxDOT maintenance limited to non-Capital Assets (roadside, incidents, mowing, litter, sweeping)

– DBC must monitor asset performance

– Joint Monthly and final inspections


CMA Features: Project Profile – US 77

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Anticipated Project Costs

Anticipated Substantial Completion

$84,195,780

Late 2016

The 8-mile project will upgrade U.S. 77 between Kingsville and Driscoll to

Interstate Highway standards to improve safety and mobility.

US 77 Upgrade

Design & Construction Phase

Anticipated CMA Commencement Early 2018

48 lane-miles; 8 centerline miles

21 bridges

15,500 LF of guard rail

160 AC (mowing)

Project Stats:


CMA Features: Project Profile - US 77

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Tasks/Milestones ’13 ’14 ’15 ’16 ’17 ’18 ’19 ’20 ’21 ’22 ‘23 ‘24 ‘25 ‘26 ‘27 ‘28 ‘29 ’30 ’31 ‘32 ‘33

Design & Construction Phase

Substantial Completion

Final Acceptance

DB Warranty Period

Maintenance NTP1

Initial Maintenance Term

Maintenance NTP2

Second Maintenance Term

Maintenance NTP3

Third Maintenance Term

MilestoneActivity

KEY DECISION POINTS FOR

MAINTENANCE TERMS


CMA Features: Project Profile - SH 99/Grand Parkway

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260 lane-miles; 45 centerline miles

124 bridges

3-year schedule for ROW acquisition, utility relocations, design, & construction

Project Stats:

Anticipated Project Costs

Substantial Completion

$1,537,623,367

March 2016

A 38-mile new location toll road with discontinuous frontage roads from

US 290 to US 59/I-69 in Harris and Montgomery Counties.

SH 99-Seg F1, F2, and G

Operations & Maintenance Phase

Anticipated CMA Commencement September 2017



CDA/DB O&M Program - Long-Term Maintenance Agreements

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CDA/DB O&M Portfolio

– Concessions <5>

– Capital Maintenance Agreements (CMA) <5>

– Comprehensive Maintenance Agreements (COMA) <2>

– Design-Build-Operate-Maintain (DBOM) <2>

35

911

1214

FY 2015 FY 2016 FY 2017 FY 2018 FY 2019 FY 2020

CDA/DB PROJECTS IN SERVICE


CDA/DB O&M Program - CMA Program Schedule

25

Maintenance NTPKey Decision Points - Option Rights for Additional TermsInitial Term

Project ‘10-’12 ‘13-’15 ’16-’18 ‘19-’21 ‘22-’24 ‘25-’27 ‘28-’30 ’31-’33 ’34-’36

DFW Connector

Fort Worth District

Substantial Completion – Nov. 2013

SH 99 Grand Parkway F&G

Houston District

Substantial Completion – Mar. 2016

US 77

Corpus Christi District

Substantial Completion – Nov. 2016

Horseshoe Project

Dallas District

Substantial Completion – 2017

IH35E Managed Lanes

Dallas District

Substantial Completion – 2017

Second Term Third Term


PFDSCD O&M Support Services – Grand Parkway & US 77

O&M Support Services

• District liaison with Division (FIN, TOD, PFD, SCM)

• Inter-division coordination

• District Project Support

• District Maintenance Office Support

• Support at key milestone decision points

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District Project Support

• Furnish key documents as follows:

–Overall Schedule of Activities - 15 years from construction close out to end of CMA

–24 Month Look ahead schedule

–Activity Checklists (Quick Reference)

• Transition to O&M

• Oversight Duties

• Key Milestone/Tasks, etc

District Maintenance Office Support <State forces>

• Maintenance Quantities – for TxDOT maintained elements,

• Cost Estimates & Projection

• Lane Mile Calculations

• Maintenance Limits Exhibit

Support at key milestone decision points

• Evaluation Tools(Qualitative and Quantitative)

• TxDOT Option Rights

• Response to any Contract Compliance

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PFDSCD O&M Support Services

– Available Resources and Services

• Knowledge transfer – lessons learned

• O&M Implementation Guide for PMs

• Contract renewal decision - TxDOT’s Option Rights

• Construction Close-Out

• Transition to O&M – the role of the maintenance manager

• Contract Oversight – (Inspections, Asset Condition Scoring, and compliance)

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What are the 3 main objectives of long-term maintenance agreement in DB? (Choose 3)

A. Encourage DB contractor to integrate quality and durability into facility

B. Supplement Department limited resources

C. Meet toll paying customer expectation of enhanced level of service

D. Enhance Investor / Bond Holder Confidence in Departments’s commitment to protect asset value

E. Privatize Department Services

F. Incentivize DB Contractor to minimize cost and accelerate delivery.

DBC assumes control and responsibility for QC/QA, Design, Construction AND Long-Term

Maintenance

Risks remain with the party in control of the asset

29

Answer to Polling Question


Thank You!

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Beau Buchanan, P.E.

PFDSCD O&M Manager

Texas Department of Transportation

E-Mail [email protected]

Questions?

Documents

CAPITAL MAINTENANCE AGREEMENTS (CMA) · –Use: SH 71, LP 1604, SH 360 Errors and Omissions (Texas Law) 1-Year Materials and Workmanship Warranty 5-Year Performance Based Warranty