P3 Project Management Manual: Fast-tracking Transportation Projects with PPPs, Slides of Project Management

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Colorado Department of Transportation

P3 Management

Manual

High-Performance Transportation Enterprise

UPDATED December 2017

Prepared by RS&H and Clary Consulting

Table of Contents 1 | P a g e

• Table of Contents Table of Contents
• I. Purpose and Goals
  • A. Purpose
  • B. Goal
  • C. P3 Defined...........................................................................................................................
• II. P3 Program Development and Management
  • A. Program Legal Direction and Policies
  • B. HPTE Mission/Goals.............................................................................................................
  • C. Program Organizational Chart/Decision-Making Authority
  • D. Overall P3 Process Chart
  • E. Identification of Potential P3 Projects
  • F. High-Level Screening of Potential P3 Projects..............................................................
  • G. Priority Setting for Potential P3 Projects
  • H. Program-Level Public Outreach and Involvement Plan
  • I. Program-Level Resources and Periodic Resource Evaluation...................................
  • J. Staff Training......................................................................................................................
  • K. Expertise Availability and Approach
  • L. Program-Level Procurement Policies
    • i. Unsolicited Proposal Process
  • Records M. P3 Program Transparency and Timing of Availability of Key P3 Program Public
  • N. P3 Records Management System
  • O. Conflict of Interest Policies and Review Process
  • P. Program-Level P3 Financial Policies
  • Q. Program-Level Funding and Project-Level Funding
  • R. Policies/Process for Dispute Resolution
• III. Project Planning and Development (Pre-Procurement Phase)................................
  • A. Decision-Making to Enter and Fund Project Planning and Development
  • B. Project-Level Organizational Chart
  • C. Decision-Making Authority, Roles, and Responsibilities and Key Decision Points
  • Schedule, Funding, Contract Manger) D. Identification of Team Needs and Contracts (Expertise Needed, Duration,
  • E. Funding Partner Coordination........................................................................................ Table of Contents 2 | P a g e
  • F. Project and Document Controls
  • G. Feasibility/Scoping of Project (Confirm Minimum Requirements)
  • H. Feasibility Schedule Development
  • I. Risk Analysis
    • i. Initial Risk Register Items
    • ii. Risk Register Template.................................................................................................
    • iii. Risk Analysis Strategy
  • J. Value for Money Analysis
  • K. Procurement Goals/Guidelines
  • L. Procurement Schedule Development
  • M. Project-Level Public Outreach Plan
  • N. Industry Outreach
  • O. Report to HPTE Board and Transportation Commission
  • P. RFQ Development
  • Q. RFP Development
  • R. Quality Assurance/Quality Control
• IV. Project Procurement Phase
  • A. Commitment to Transparency
  • B. Updating the Project Risk Assessment and Allocating Risk
    • i. Risk Workshop(s)
    • ii. Risk Assessment
    • iii. Updated Risk Analysis
  • C. Schedule
  • D. Two-Phase Procurement Process
    • i. Finalizing the RFQ
    • ii. Issuing the RFQ
    • iii. Submission of SOQS
    • iv. Evaluation of SOQs
    • v. Shortlisting of Qualified Respondents
    • vi. Developing the RFP
    • vii. Selection and Award
    • viii. Changes Prior to Execution of the P3 Project Agreement
    • ix. Stipend Payment Table of Contents 3 | P a g e
    • x. Protest Procedures
  • E. Commercial Close
    • i. Final VfM
  • F. Financial Close
    • i. Requests for Material Changes
    • ii. Failure to Reach Financial Close
    • iii. HPTE Acting as Conduit Bond Issuer..........................................................................
    • iv. Execution of Financial Close
• V. Project Implementation and Operations Phases
  • A. Organizational Chart/Decision-Making Authority
  • B. Program Organization, Roles, and Responsibilities......................................................
  • C. Project Management Team, Roles, and Responsibilities............................................
  • D. Technical Support
  • E. Project and Document Controls
  • F. Document Retention
  • G. Correspondence and Delivery
  • H. Serving Notices
  • I. Project Handoff Meetings
  • J. HPTE/CDOT Monitoring, Payments, and Reporting
    • i. Milestone/Progress Payments to Private Partner.....................................................
    • ii. HPTE/CDOT Monitoring Requirements
    • iii. Non-Compliance Monitoring Requirements and Payment Adjustments............
    • iv. Claims Assessment and Processing...........................................................................
    • v. Third-Party Coordination
    • vi. Public Outreach...........................................................................................................
    • vii. Transition Plan Development for Operations
  • K. After Action Report for Implementation Phase

Purpose and Goals 4 | P a g e

I. Purpose and Goals

A. Purpose

The High-Performance Transportation Enterprise (HPTE) Public-Private Partnership (P3) Management Manual provides a framework for both HPTE and the Colorado Department of Transportation (CDOT) for the development, implementation, and oversight of P projects.

This manual addresses P3 program development and management, and walks through the different stages of project development and defined roles and responsibilities to ensure timely and responsive actions between HPTE and CDOT to address common needs of P projects. The manual is divided into four sections:

1. P3 Program Development and Management
2. Project Planning and Developmental/Pre-Procurement Phase
3. Project Procurement Phase
4. Project Implementation and Operations Phases

The manual is meant to supplement existing laws, policies, and guidance already in place by CDOT for traditional projects and also by HPTE for P3 projects. The manual will not replace existing procedures for traditional projects, but specifically addresses additional guidance and processes for P3 projects. The manual incorporates appropriate laws and applicable HPTE/CDOT policies, manuals, and guidance, and provides direction for the HPTE P3 Program and P3 projects that the HPTE Board approves to move forward. The manual is not meant to be all-inclusive and specific elements will need to be developed in more detail as P3 projects move forward.

Each P3 project will include a project interagency agreement that identifies project resources and responsibilities as well as additional guidance for the P3 project. The interagency agreement will govern if there is possible confusion with guidance in the P manual.

In addition, it is important that the P3 Manual become a living document that is periodically updated for law and policy changes, and at the completion of any phase of a P3 project for best practices and any lessons learned on a given project.

P3 projects are complex and each is unique. At times it will be necessary to implement specific guidance on a P3 project that is different than the guidance in the P3 Manual. This will be documented for that P3 project and if the different approach becomes practice, the P3 Manual will be changed at the next update. In addition, specific guidance will be provided for each P3 project in documents such as the Request for Qualifications (RFQ), Request for Proposals (RFP), and P3 Project Agreement that is much more detailed than the P3 Manual and specific to that P3 project.

II. P3 Program Development and

Management

The HPTE has outlined P3 Program goals and objectives to serve as a resource for innovative finance and P3s. This will allow careful due diligence that evaluates whether moving forward with the proposed P3 project based on preliminary analysis supports using the P approach as the best value. This chapter outlines the process for screening and identifying prospective major projects that might fit the P3 approach and the due diligence process that will be followed for presenting recommendations to the HPTE Board for decision-making prior to moving the project forward as a P3.

A. Program Legal Direction and Policies In 2009, the General Assembly created the HPTE in the Funding Advancement for Surface Transportation and Economic Recovery or “FASTER” Act [Section 43-4-801, et seq., C.R.S.]. The General Assembly specifically charged HPTE with the responsibility to seek out opportunities for P3s for the purpose of completing surface transportation infrastructure projects through any available means of financing that will allow the efficient completion of projects [Section 43-4-806 (1) (c), C.R.S.]. By statute, HPTE’s business purpose is to “pursue public-private partnerships and other innovative and efficient means of completing surface transportation infrastructure projects [Section 43-4-806 (2) (c), C.R.S.].” To accomplish that purpose, HPTE has authority to:  Impose tolls and other user fees for the privilege of using surface transportation infrastructure.  Issue revenue bonds secured by those tolls and fees.  Contract with government and nongovernment sources for loans or grants to be used to support HPTE’s functions.  Seek out and enter into P3s. HPTE is a government-owned business established as a separate division within the CDOT. HPTE is an enterprise for purposes of Section 20 of Article X of the State Constitution (commonly referred to as “TABOR”), and accordingly is not subject to the revenue and spending limitations of TABOR as long as it receives less than ten percent of its total revenues in grants from state and local governments. A seven-member board of directors (the HPTE Board) oversees HPTE’s operations; four members are appointed by the Governor and three are appointed by the Transportation Commission. The HPTE Board appoints the Director and together, the HPTE Board and Director exercise powers and perform duties specifically given in statute. In the “FASTER” Act that created the HPTE, the legislative intent expressed that innovation and flexibility be interpreted broadly to help facilitate moving key projects forward. As such, HPTE has flexibility in the development and procurement of P3 projects. To help guide this

process the HPTE Board has adopted policies and key CDOT policies to provide guidance for the implementation of the P3 Program. The below are rules and policies adopted by the HPTE Board as applicable to the HPTE that have been adopted, as periodically amended by the Transportation Commission. These rules and policies carry the same authority as law and must be followed at all times in the development and implementation of the P program. These sections and links are current as of March 2016 and should be verified from time to time on the CDOT intranet to ensure this is most current version of the applicable rule and policy.

This section outlines the legal direction for HPTE and the complete statutory language governing the HPTE can be found at the following links:

 Colorado Revised Statutes  Statute CRS 43-4-806 as of 2014

The HPTE has adopted the following guidance for the HPTE Board, which will be updated from time to time, and that should be reviewed as part of the P3 Program:

 HPTE Articles of Organization  HPTE Bylaws

 Mission Statement

The P3 Program has the following directive process:

 Applicable federal and state laws must be followed at all times for the P3 Program and P3 projects.  Rules have the same force as law and must be followed unless the rule is changed through the approved rule update process and policies can be adjusted by HPTE Board action. The below rules and policies directly related to the P3 Program and P projects adopted by the HPTE Board As of March 2016 these include: o HPTE Transparency Policy o Tolling Policy o Toll Enforcement Rules o Colorado Records Management Policies  The HPTE by law is a part of the CDOT and part of the State of Colorado, however, as an “enterprise” the HPTE is provided broad flexibility to implement P3 projects. The rules, policies, and procedures of the CDOT that have been adopted by the HPTE Board as applicable to the HPTE that must be followed for the P3 Program as shown in Attachment A. These items should be checked from time to time on the CDOT intranet to ensure this is most current version of the rule and policy.

B. HPTE Mission/Goals

The following is HPTE’s mission:

“The mission of the Colorado High Performance Transportation Enterprise is to partner with local agencies, communities and private industry to seek out opportunities for creative means of financing and accelerating the delivery of multimodal transportation infrastructure projects.”

 Policy Boards

o Transportation Commission – The Transportation Commission sets the overall policy for CDOT. Primarily related to major projects/P3 projects the Commission reviews and, if supported as the best approach, receives and/or approves:

• Briefings on key projects
• Approves moving a major project forward for consideration as a P3 in partnership with the HPTE Board
• Approves CDOT funds allocated to the P3 Program and/or a P project
• Approves agreements as needed for a P3 project, that CDOT is party to the agreement
• Other items as required by the Commission as CDOT policy board related to a P3 projects o HPTE Board – Approves the project moving forward as a P3 and is briefed on major elements of the project process such as reviewing and, if supported as the best value for the state, receives and/or approves the key items shown below:
• Approves the adoption of policies associated with the P3 Program
• Briefings on issuing the Request for Qualification (RFQ) to begin the P procurement process
• Briefing on the shortlist of proposers
• Briefing on issuing the final RFP
• Approves selection of the preferred proposer
• Approves commercial close – signing the P3 project agreement
• Approves financial close documents required for signature by the HPTE
• Approves amendments to P3 project agreements
• Receives briefings on major actions such as letter of interest (LOI) for a Transportation Infrastructure Finance and Innovation Act (TIFIA) loan, serving as conduit bond issuer or other authorized actions associated with facilitating the financing for a P3 project
• Receives briefing on accepting an unsolicited proposal
• Approves toll rates or dynamic pricing algorithms
• Approves other items associated with a P3 project as determined by the HPTE in coordination with the HPTE Director. o Colorado Bridge Enterprise (CBE) – Approves funding and/or financing for designated bridge projects that fall under the responsibility of the Bridge

Enterprise. The HPTE Director will coordinate with the CDOT Executive Director and jointly present a proposal to the CBE for the CBE to participate in funding and/or financing for designated bridge projects that relate to a P3 project. The CBE Board will review the proposal and either approve or reject the proposal based on the best interest of the State and the CBE.

 Functional Units and Offices

o Program Management Office (PMO) Governance Committee – The PMO Governance Committee (PMOGC) is composed of all major leaders in the CDOT, including the HPTE Director. The PMOGC will be included in key activities associated with projects that are being considered as potential P projects such as:

• Serve as the “vetting organization” for key projects including receiving briefings from the Regions and HPTE on projects that have potential to be considered for P3.
• Discuss and, with the assistance from the Region and HPTE, review key projects that are being recommended for a P3 approach.
• When it is in the best interest of the state, the PMOGC will recommend to the CDOT Executive Director that a project should be developed for a P3.
• Consider and make recommendations related to priorities for CDOT regarding funding allocations for in partnership with the Region Director where theP3 project is located. The recommendation for funding allocation will be made to the Executive Director and Commission. o An Executive Oversight Committee (EOC) will be established to provide project specific guidance once a project is prioritized to move forward as a P3 Project. The committee will provide overall policy direction, dispute resolution, and guidance to the P3 Project Team during pre-procurement and procurement activities. The primary functions of the EOC are to:
• Make policy decisions for the project
• Ensure adequate resources are provided from each respective organization to support the project
• Provide support to the project team in relation to regional and national stakeholders
• Resolve questions related to technical aspects of the P3 Project during all phases of the project, once it is established as a P3 Project
• Monitor the progress of the project

• Project delivery expertise including alternative procurement methods such as design-build, design-build finance, design-build-finance- operate-maintain
• Feasibility expertise for value for money analysis to help determine the best value method for delivery of projects
• Legal expertise related to innovative finance and alternative project delivery
• Public outreach related to innovative finance and alternative project delivery
• Project management of innovative finance and P3 project development, procurement, contract management and operations

The HPTE augments its resources with contracted resources for legal, financial, public outreach, technical, and tolling expertise. The HPTE partners with the local Region on each project being considered as a P3 in their respective region(s). The roles and responsibilities of each will be further defined in a P project interagency agreement. Once the Commission designates a project to be considered for the P3 approach, HPTE assumes the leadership for the P aspects of the project in coordination with the CBE (where applicable), including due diligence to determine if the project should move forward as a P3 as the “best value” for the state. Should a project be deemed the best value as a P3 project, HPTE, in partnership with CBE (where applicable) and the Region, leads the project procurement. HPTE “owns” the P3 project agreement upon execution and manages the P3 project agreement in partnership with the Region once the project reaches commercial and financial close.

Figure 2 - Governance at Major Program and Project Delivery Milestones

The following table provides general guidance on the differentiation of who leads and who supports certain activities. Upon adoption of this P3 Manual by the HPTE Board and the Transportation Commission, the table below shall amend and replace the table in the MOU between CDOT and HPTE (see attachment A) that outlines the key areas, as well as which group leads and supports for each area.

Program / Project Phase Description

Responsibilities and Resources (HPTE Eligible Projects Only) Region HPTE

Overall Program

Management and Oversight: Provide communications, overall administration and reporting of P3 Program

Support Lead

• Establish policies N/A Lead
• Provide strategic master planning Support Lead
• Conduct program communications and marketing* Support* Lead*
• Establish procedural guidelines and procedures* N/A Lead*
• Conduct program-level budget planning and reporting Lead (Commission)

Lead (Board)

• Review proposals and conduct evaluations Support Lead
• Conduct public engagement (project specific) Lead Support
• Conduct stakeholder engagement (local TR agencies) Lead Support
• Provide FHWA coordination and approvals Lead Support
• Select winning bidder and negotiate contract Support Lead

Construction

Management and Oversight: Construct the project

• Provide contract management and administration Lead Support
• Provide change management Lead Support
• Provide budget management Lead Support
• Provide financial reviews Support Lead
• Conduct design reviews Lead Support
• Construction oversight and quality audits Lead Support
• Conduct final project acceptance Lead Support

O & M

Management and Oversight: Operating the project

• Manage P3 project agreement and related contracts (including reporting)

Support* Lead*

• Toll collection Support Lead
• Maintenance Support Lead
• Roadway Operating Decisions such as road closure Lead Support

Figure 3 - Identification of Leadership and Support

*Denotes a change from the MOU

This manual will help provide guidance to help clarify what the lead role and support role means for the various categories as outlined in the chart above.

D. Overall P3 Process Chart

Each P3 project is unique in the project scope and expertise that might be required throughout the life of a potential P3 project. The leadership of HPTE, and the Region, in coordination with the Executive Director, will partner to provide P3 project teams that bring together the most appropriate resources and skills for the applicable P3 project phase. In addition, each phase may have different decision-making hierarchy for major milestones and authorizations to continue as a P3 project. The chart below helps identify the key roles and responsibilities that occur throughout the life of a P3 project. Many of the steps are shown as a joint responsibility that could be led by either HPTE or CDOT depending on the project and specific resources available and needed. It must be understood that many activities must overlap phases to continue the progress of the project and procurement. The subsequent chapters in the P3 Manual outline in more detail the key roles and responsibilities at each stage of the P3 project.

Figure 4 - Overall Process Flow Chart

E. Identification of Potential P3 Projects

CDOT conducts a continuing, comprehensive, and cooperative (3C), performance-based, multimodal transportation planning process in accordance with federal and state requirements. CDOT works closely with many planning partners throughout the state, including local officials in the ten rural Transportation Planning Regions (TPR) and five Metropolitan Planning Areas. The Metropolitan Planning Organizations (MPO) and Regional Planning Commissions (RPC) in these 15 regions meet regularly to plan for their areas. The Statewide Transportation Advisory Committee (STAC), comprised of representatives from each of these planning organizations, meets monthly to advise the CDOT on the multimodal transportation planning needs of the state. Transportation stakeholders are also represented on other statewide planning bodies including the Statewide MPO Committee, Transit and Rail Advisory Committee (TRAC), and the Freight Advisory Council (FAC). Transportation planning is an ongoing process that periodically culminates in the development or update of several required planning products including a Statewide Transportation Plan (SWP), Regional Transportation Plans (RTP), and a Statewide Transportation Improvement Program (STIP). These products include:

o If so, the project might be more appropriate for a design-build approach instead of a P3. o Does the project generate revenues and if so, have these been forecasted at a preliminary level? o If the funding is identified over a long-term, such as ten years or longer in the cost feasible Long-Range Transportation Plan, or there are challenges finishing out the funding plan that equity or tolling could help solve, then this might warrant evaluation as a P3 project.  Project complexity or uniqueness o Does the project include challenging elements that innovation and/or a life- cycle approach can help solve? o Combining phases such as design-build-operate-maintain are areas where P projects can be helpful.  Project is broken up into multiple projects (accelerating improvements/project efficiencies) o Is the project being broken up simply due to funding challenges, which costs more, increases coordination challenges, and is more disruptive to the public? o If so, combining the project into a larger P3 may be an option. o If the project was done as a P3 would it free up funding for other projects that may not be viable as a P3?  Environmental review process is underway or cleared o Has the project received environmental approvals or the environmental review stage is underway and can be completed in a reasonable time?  Project risks o Are there risks that a P3 model could help transfer to the private sector for a long term agreement?

G. Priority Setting for Potential P3 Projects

When the initial screening is provided and there is more than one candidate P3 project under consideration by the HPTE, the HPTE Director will consult with CDOT’s Executive Director, PMOGC, and HPTE Board to set priority for the candidate P3 projects. Key items to consider include:

 Production readiness o What is the current production phase for the project? o Projects that have environmental approvals and required right-of-way in hand will generally receive a higher priority. o Projects that are in the later stages of the environmental review process will also receive consideration.

o Acknowledgement, status, and magnitude of any known project risks. This could include a project requiring extensive environmental mitigation, or high potential for encountering contamination. These examples may require long lead times to investigate and develop solutions that could be difficult to simply transfer to a private party, therefore they could carry risk for a procurement as well as a risk of poor value to the owner if the risk is transferred without fully understanding it.  Relative benefit to the travelling public o What are the safety challenges, traffic levels, and congestion periods, and what benefit does the project provide to improve safety, relieve congestion, and provide options/choices for the travelling public? o Projects that provide a major benefit will receive a higher priority.  Funding status o Has a preliminary funding plan been identified for the project under a P approach? o Projects that show a preliminary “path” for reaching financial close as a P project will generally be given higher priority. o This is not all inclusive as part of the mission of the HPTE is to help solve funding challenges.

H. Program-Level Public Outreach and Involvement Plan

By nature, P3 programs and projects require more public outreach and a comprehensive involvement plan. Each P3 project will have unique project characteristics, possibly the CDOT Region, the location, and interested parties. The HPTE Director will provide a comprehensive P3 Program-level public outreach and involvement plan (P3 Public Outreach Plan) in coordination with the HPTE Board and CDOT Office of Communications. The P3 Public Outreach Plan will be updated periodically based on feedback and periodic assessments of best practices, and updates included in the revised P3 Public Outreach Plan. The P3 Public Outreach Plan will be included on the HPTE internet site and updated as changes are made.

The P3 Public Outreach Plan will include key elements, such as:

 Key focus groups for outreach – The Plan will identify the key groups, including applicable elected officials, interest groups, and others.  Key public outreach approaches and mediums – The Plan will identify the major approaches such as public meetings, official briefings, written materials, posting to the website, other forms of social media, and the overall delivery approach for the Plan.  Plan implementation – The Plan will be put into action and delivered by appropriate officials, staff, and consultants.