Design-Build-Operate - Design-Build for Water and Wastewater Projects - page 317

DESIGN-BUILD-OPERATE PROJECT CASE STUDIES
Two case studies of recent DBO projects are presented here.
Case Study—Seattle Tolt Water Treatment Project
The 120-mgd (454 ML/d) Tolt Water Treatment Facilities project for the City of Seattle
(City), Wash., met the principal objectives of life-cycle cost efficiency, risk transfer, and
partnering with a highly qualified team. The DBO contract, signed in 1997, was one of
the first municipal water projects delivered by DBO in the United States. It included up
to 25 years of operation and maintenance. The DBO approach was estimated to provide a
life-cycle cost that was 35 percent less than costs for traditional DBB with City staff pro-
viding operation. The City was willing to proceed with DBO delivery due to its lack of
experience with design and construction of drinking water treatment facilities and its lack
of existing staff for operation and maintenance.
In the procurement process, the City described project performance standards and
requirements, and allowed the proposers to develop optimal and cost-effective solutions
in a competitive environment and limited the proposers to a short list of qualified firms.
The City relied on a single point of accountability for all phases of the project with a team
that was supported by a guarantor with a strong financial condition. For this project, risk
was assigned to the party best able to manage it, and the project benefited from the inte-
gration of design, construction, and operations. Ownership of the assets was retained by
the City due to the essential nature of the asset, and financing by the City achieved the
lowest possible cost of financing for the project.
Case Study—Fillmore Wastewater Treatment Project
The City of Fillmore (City), Calif., entered into a DBO contract in 2006 to replace its
obsolete WWTP with a new 1.8-mgd (6.8-ML/d) water reclamation facility. The contract
required that the DBO contractor operate the existing wastewater treatment plant for
six months and decommission and demolish the existing plant, and design, construct,
and operate the new reclamation plant for an initial 20-year period (including asset man-
agement and disposal of biosolids). Performance guarantees and liquidated damages for
effluent quality, odor emissions, and sludge quality were also a part of the contract. The
City owns the new facilities and provided financing for the permitting, design, equipment
procurement, construction, startup and acceptance testing costs.
The DBO contract included a fixed DB price, which consisted of a fixed develop-
ment price and a fixed construction price. Payment of the fixed development price was
based on the DBO contractor's achievement of design and permitting milestones, and
payment of the fixed construction price was based on the percent completion of construc-
tion at the end of each month. The fixed DB price was subject to adjustment for any spe-
cifically defined “uncontrollable circumstances.”
During operation, the City pays a monthly service fee, which includes a base fee that
is comprised of a fixed component and a variable component, a pass-through fee, and
any extraordinary items. Each element of the service fee is designed to reimburse the
DBO contractor for distinct costs of operation and maintenance. The costs of electricity