APWA Colorado Chaptercolorado.apwa.net/content/chapters/colorado.apwa... · Presentation on...
Transcript of APWA Colorado Chaptercolorado.apwa.net/content/chapters/colorado.apwa... · Presentation on...
Presented By:
Dave Zelenok John Danielson Chief Innovation Officer City Manager
City of Centennial
APWA Colorado Chapter Reinventing Public Works
Through a Public-Private Partnership October 2014
History
• Largest conversion of Public Works services from public to private sector
• July 1, 2008 program start
• 2011 citizen survey found 79% satisfaction rate with PW
• Award winning program!
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• Renegotiated contract in 2012 for new 5 year term
Award Winning Partnership
• American and City County Magazine
• 2012 Alliance for Innovation Transforming Local Governments conference – Feature Presentation on Centennial PPP
• National League of Cities Municipal Excellence
• National Council for Public Private Partnerships (NCPPP). The partnership for public works services selected in the Service Award category
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Award Winning Partnership
• Public Works Administration for Innovative Customer Service Call Center from American Public Works Association Colorado Chapter
• 2011 Excellence in Environmental Design – Energy Saving Transportation Project – Colorado APWA
• 2012 ITE Transportation Achievement Award in Operations – Snow Plow Route Optimization
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Click to edit Master title style
15 MILES
• Incorporated February 7, 2001
• Approximately 30 square miles (27 at time of incorporation)
• 1,100 lane miles (2014) • 54 FTE In-house Staff (2014)
City of Centennnial
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Fire Districts Park Districts
Stormwater Water & Sewer Districts
Arapahoe Park and
Recreation District
Partnerships with Other Public Agencies
Click to edit Master title style P2’s and P3’s in Centennial
• Sales & Use Tax Collection
• CIP Administration
• Public Works
• Animal Control
• Building
• City Attorney’s Office
• Code Enforcement
• Facilities/Fleet/Landscape
• IT
• Law Enforcement • Arapahoe County Sherriff
Largest Muni Public Works Contract
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Initial Conversion - 2008
PART I
Public Works
P3 Version 1.0
Click to edit Master title style Service Level Analysis
Decision to review Public Works Services
• 8 months / “Best Value” Quantified Pre-existing Levels of Service
– Snow Routes - # Plows, # Lane Miles
– Miles of Street Sweeping
– Tons of Pothole Patching
– Signs Replaced
– Citizen Requests – Call Volumes
– Emergency Response Ability
“Managed Competition”
= Public vs Private Sector
“Value for Money”
= Best method to provide service
Click to edit Master title style RFP Process Continued
3 teams vs Gov’t proposal
• Review Process:
– Step 1 – Quality-based selection • Proposals ranked independent of costs
– Step 2 – Costs reviewed Separately
– Step 3 – Costs compared to City’s in-house estimate
– Step 4 – Presentation and Interviews
Highly Competitive ~ $10 Million Per Year x 10 years
Click to edit Master title style Selection Process
Largest Public-to-Private Conversion of its Kind in the Nation Snow Removal Unique Only 33 Pages (+28 pp exhibits)
Click to edit Master title style Building a Public Works Dept. for Centennial Org. Chart
City Council
City Manager
Click to edit Master title style What does it include?
Pavement Maintenance
• 85% of Potholes in 24 Hours
• 1,000 tons of patching/year
• 45,000 lbs of crack filling
• 300 Tons of gravel
• City pays for asphalt materials (Shared Risk)
Click to edit Master title style What does it include?
Traffic Engineering
• 500 New signs per year (maximum)
• 7 year replacement of existing signs
• 15,400 feet of preformed stop bars
• 1.1 Million feet of latex striping
• Operate 70 Traffic Signals
Click to edit Master title style What does it include?
Snow Plowing • One Pass on 689 Lane-Miles in 12 hours
• 815 Lane Miles of Non-plowed Residentials
• Real-time GPS Tracking Mandatory
• City pays for deicing chemicals & materials
• 60 12-hour Call-outs Per Year
• $24,882 per additional Call-out -Shared Risk
Define:
What’s Important?
How FAST do you need it?
Admit – RISK
Decide How Much You’ll Accept
Explore - Partnering
Click to edit Master title style Performance Standards – Citizen Requests
Click to edit Master title style Work – Plan vs Actual
Click to edit Master title style Value Exchange
5=30?
Click to edit Master title style Value Exchange Table 2009 EQUIVALENT VALUES OF MAINTENANCE ACTIVITIES
2009
Number of units in these columns are cost equivalent to 1.00 units in the Maintenance Activity
Column
Unit Example: 0.091 CY of curb and gutter replacement costs the same as 1.00 T of major patching
Value
Maintenance Pothole Patch Major Crack Gravel ADA Xpan CGSW Curb &
Activity Patch Back Patch Seal Maint Ramp Apron Comb Gutter Sidewalk
Units T T T T T CY CY CY CY CY
Pothole patch T $ 93.00 1.000 1.500 1.755 0.058 3.720 0.175 0.204 0.175 0.160 0.171
Patch Back T $ 62.00 0.667 1.000 1.170 0.039 2.480 0.117 0.136 0.117 0.107 0.114
Major Patch T $ 53.00 0.570 0.855 1.000 0.033 2.120 0.100 0.116 0.100 0.091 0.097
Crack seal T $ 1,600.00 17.204 25.806 30.189 1.000 64.000 3.019 3.501 3.008 2.754 2.941
Gravel maint T $ 25.00 0.269 0.403 0.472 0.016 1.000 0.047 0.055 0.047 0.043 0.046
ADA ramps CY $ 530.00 5.699 8.548 10.000 0.331 21.200 1.000 1.160 0.996 0.912 0.974
Crosspans & Aprons CY $ 457.00 4.914 7.371 8.623 0.286 18.280 0.862 1.000 0.859 0.787 0.840
C,G & SW Comb. CY $ 532.00 5.720 8.581 10.038 0.333 21.280 1.004 1.164 1.000 0.916 0.978
Curb & Gutter CY $ 581.00 6.247 9.371 10.962 0.363 23.240 1.096 1.271 1.092 1.000 1.068
Sidewalk CY $ 544.00 5.849 8.774 10.264 0.340 21.760 1.026 1.190 1.023 0.936 1.000
Street Sweeping LM
$
40.00
0.430 0.645 0.755 0.025 1.600 0.075 0.088 0.075 0.069 0.074
Mowing & ROW AC $ 310.00 3.333 5.000 5.849 0.194 12.400 0.585 0.678 0.583 0.534 0.570
Lane Striping 10.5
CENTS PER
FOOT MI $ 3,696.00 39.742 59.613 69.736 2.310 147.840 6.974 8.088 6.947 6.361 6.794
Thermo markings SF $ 13.00 0.140 0.210 0.245 0.008 0.520 0.025 0.028 0.024 0.022 0.024
New sign Install EA $ 194.00 2.086 3.129 3.660 0.121 7.760 0.366 0.425 0.365 0.334 0.357
Click to edit Master title style Public Works
5th Year Contract Renewal - 2013
PART II
Public Works
P3 Version 2.0
Goals of Negotiations
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• City to receive best value
• Align with community priorities
• Encourage innovation and improved technology
• Increase flexibility and transparency
• Focus on outcomes
Click to edit Master title style Public Works Facility
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Office
Maintenance
Shop
Shed 1.5 Acre
Unprogrammed
Level of Service
• Improved level of service in areas:
– GPS tracking on all vehicles
– Increased concrete maintenance quantity
– Increased asphalt quantity
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Level of Service
• Improved level of service in areas:
– GPS tracking on all vehicles
– Increased concrete maintenance quantity
– Increased asphalt quantity
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Level of Service
• Improved levels of service in areas:
– GPS tracking on all vehicles
– Increased concrete maintenance quantity
– Increased asphalt quantity
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Level of Service - Street Name Signs
• Branding… City Identity
• 5-year replacement schedule
• 8,500 street name signs to be replaced
• Still maintaining and replacing other signs on a reactive basis (500 max/yr)
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Level of Service - Snow and Ice Management
• All Streets NOT Plowed
• Addition of 93 miles plowed
– “Route Optimization” Efficiencies =
– No additional cost
• Updated areas of special attention
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Click to edit Master title style Level of Service - Snow and Ice Management
• Cost structure
– Guaranteed
• Equipment
• Drivers
• Support
• 3,100 hours (light snow year)
• Ice “Cutting”
– Additional effort “pay as you go”
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Enhanced Service – Snow Removal
• Outcome based Performance Measurement
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Before After
Click to edit Master title style Technical Standards
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Click to edit Master title style Response to Citizen Requests
• Recognized past performance
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0%
20%
40%
60%
80%
100%
JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC
Priority 1 Priority 2 Priority 3
2011 Average
Priority 1: 97.6%
Priority 2: 97.8%
Priority 3: 92.3%
New Goal = 90%
Click to edit Master title style Response to Citizen Requests
• Renegotiated performance measurements
• Over 400 Priority 1 requests received annually
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Click to edit Master title style Flexible Service Account
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Year FSA Annual
Funding
Maximum
with Rollover
2013 $500,000 N/A
2014 - 2018 $400,000 $500,000
• Flexible Services Account (FSA) used for… – Snow removal services beyond 3,100 CDL Hours
– Ice removal on unplowed streets (Not P1 or P2)
– Damage and repairs
– Technology innovations
– Minor nuisance issues
• FSA Annual Rollover Not to Exceed $100,000
Click to edit Master title style Budget
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CH2
Total Annual Fees
Flexible
Services Account
PW Service
Budget + =
Year Total Annual
Fees
Incentive
Fee
FSA Annual
Funding
PW Services
Budget
2013 $8,813,600 $30,000 $500,000 $9,343,600
2014 $8,953,711 $30,000 $400,000 $9,383,711
2015 $9,187,400 $30,000 $400,000 $9,617,400
2016 $9,439,867 $30,000 $400,000 $9,869,867
2017 $9,699,884 $30,000 $400,000 $10,129,884
2018 (6 Months) $5,004,529 $15,000 $400,000 $5,419,529
CH2
Incentive Fee +
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$-
$2,000,000
$4,000,000
$6,000,000
$8,000,000
$10,000,000
$12,000,000
2013 2014 2015 2016 2017 2018
Public Works with Enhanced Services
Projected
Proposed
Budget
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Difference
$139,217
Difference
$150,524
Difference
$149,423
Difference
$147,307
Difference
$(30,933)
Total
Difference
$955,933
Difference
$399,747
Click to edit Master title style In House vs Contract (?)
•Colorado Springs – Asphalt Paving Companies Complained and alleged – Contractors can do it cheaper •Result: City Auditor Independently Investigated •Not only should the city continue to pave streets, •They should consider following the Denver model
•Buy an asphalt plant!
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Developing a Bottom Line for Government:
A Very Big Practical Problem
Bottom Line in Private Sector:
Profits = Revenues – Costs
Bottom Line in Public Sector Net Public Value = Socially Valued Results – Costs
Key Problem in Public Sector: How Think About and Measure “Socially Valued Results”
Fully Load Cost Comparisons – “apples to apples”
Cost Side of Ledger Value Side of Ledger
• Dollar Costs to Government
• Unintended Costs
• Authority Used by Government
(Think: political capital)
• Mission Accomplishment
• Unintended Benefits
• Client Satisfaction
• Fair/Just Use of Public Money and Authority
Towards a Public Value Account
Click to edit Master title style Value for Money
via a Public Cost Comparator - “P.C.C.”
Compare costs for an in-house government operation vs a turn-key private sector contract
Both cost estimates represent the cost of providing the same level of service – Over the same time period – 5 years
Need to develop cost estimate for in-house operation.
– One-time startup costs – Recurring annual costs
– Final Answer: Net Present Value
Click to edit Master title style Public Cost Comparator - “P.C.C.”
Major Elements of a PCC
1. Start-up Costs
2. Operating Costs
3. Personnel Costs
4. Equipment Costs
5. Facility Costs
Goal – Compare Best Values (not low bid) Net Present Value Comparisons
Click to edit Master title style Start-Up P.C.C. Costs
Needed to begin operation
“Mobilization”
~ Month-long effort
Set-up for “seamless operation on “D-Day”
Click to edit Master title style Operating Expenses - P.C.C.
Recurring expenses:
– Maintenance and replacement schedule for Start-up items
– Fuel, mileage, car allowances
– Office space
– Maintenance facility
– Professional services
– Insurance premiums (toughest)
Click to edit Master title style Personnel – P.C.C.
Performance metrics used to estimate how many FTE’s (labor hours) needed for defined “level of service”
City employees – 54 FTE’s Ops -Traffic Engineering, Street Maintenance Workers
Full time support: fleet manager, contracts manager, etc.
Fractions of support FTE’s - Risk Mgt, HR, payroll, etc.
Assumed some lost productivity in training government employees
Labor costs are fully “loaded” -benefits, vacation, legacy pension costs etc.
Contract costs -defined by performance standards – and ultimately – decided by the bids (actually proposals)
Click to edit Master title style Facility P.C.C.
Maintenance facility
– In 2008, major facility purchase (~$7M) used as comparison, but not considered in estimate – rental assumed
– Assumed a 5-year lease & material storage needed
Bulk Material Storage Needed
Click to edit Master title style Equipment P.C.C.
Heavy Equipment Acquisition - Combination of purchase of new and used, leased
and “subbed” equipment – best value & mix
– Equipment purchases:1/3 new, 1/3 medium, 1/3 older
Replacement - Capital reserve funds considered an annual cost of operation and applied to NPV calculations
Click to edit Master title style Financial Analysis – P.C.C.
Equipment (cont.)
– Other considerations, credited as a City asset
• Salvage value
• Depreciation
• Capital reserve
Material and Oil Price Risk
– Purchased by the City in all scenarios
Insurance ~ +1%
– Risk mitigation varies for governments
– Unlimited - private sector
– Different annual cost assumptions – vary by state
CAUTION: Lawyers
And Accountants
Ahead
Click to edit Master title style Financial Analysis – “N.P.V.”
Net present value – All proposals adjusted for NPV over 5-year term
– City credited with assets
• Equipment
• Capital reserve
• Materials, fuel, and other purchases
– No adjustment for contractor costs since City does not obtain assets in those scenarios
Final comparison – NPV basis
No significant advantage to in-house operation
Click to edit Master title style Lessons Learned
• Companies don’t enjoy gov’t immunity – • (liability is unlimited)
– Signal warrants unsupported
• Minor Amendments – Make them easy! – Reimburseables
– Pass throughs
– Offsets
– Plus-ups
– Recompete for similar work?
– Exclusive - or can the city go out for other contractors?
You KNOW what you’re doing….
Just not exactly WHAT you want.
Click to edit Master title style Lessons Learned
Quantify what you want
• Performance Standards are the key: tons, miles, hours, etc.
• Incentives, Self-auditing, Reporting & GPS Tracking
• Eliminate Uncertainties for Bidders – Fuel, Asphalt, De-icers
• Allow flexibility to adjust quantities – Trade-offs
• Eliminate “Nickel & Dime” Changes in Scope
• Fuel Taxes may apply (local laws vary)
CAUTION:
REDUCED SERVICE LEVELS
AHEAD
?
Click to edit Master title style Lessons Learned
• Dashboard required - burn rate
• QA/QC program - need one with established standards, how to handle noncompliant subs <0.5%
• Data Entry - Cartegraph - city-wide system - ensure carry-over at contract termination
• Define customer service standard up front – when calls roll to answering system and max hold times
• Revenue Generation - street cut permits - successful
• Turn-Key vs Major Contracts ~ 10% (?)
Click to edit Master title style Lessons Learned
• Asset Inventory – Critical
• Call center feedback QC
• “Collection work order” labor hours
• GPS on everything and define GPS “ping” interval
• Require self-reporting of non compliance
• Define your measurements
• Sign replacement – 2 sided, single post - 14,000 vs. 22,000
• Federal (MUTCD) standards changing
• End of year rollovers – credits to future years??
• Define cost adjustment system based on values
• Get some professional help!
FUTURE MIDSIZE
OPPORTUNITIES
P3 ‘s & Private Capital
Click to edit Master title style Questions
Acknowledgements: Dr Mark Moore, Harvard Kennedy School
Wayne Reed, Deputy City Manager, City of Centennial