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With tax revenues down at all levels of government,
funding for some new highway projects has been reduced. So it’s no surprise
that an alternative financing strategy — using private funds to pay for new
road construction — is gaining more ground.
Colorado’s Northwest Parkway, part of a new outer
highway loop in the Denver area, is one of the latest road projects with a
funding plan that uses private bonds to be paid off by tolls.
“Not a single dollar for the project, which included
10 miles of highway and 26 bridges, came from the tax rolls,” says Dick
Bauman, chief engineer for the Northwest Parkway Public Highway Authority,
the quasi-governmental body that owns and manages the project. “The project
would not have been built if it had depended on state funding,” he says,
“and more states are taking a close look at this financing model for new
highway construction.”
Few states are willing to raise taxes for new roads
these days. “Most states are just barely able to maintain their existing
road systems,” Bauman says. “States that are financially constrained have to
look at other ways to finance projects.”
Design-build critical
The key to the successful construction of this
10-mile stretch of highway, which opened in November 2003, was the
design-build delivery method. The advantages of design-build — faster
project schedules and a commitment by the contractor to stick to a fixed
price — were vital to secure financing. Because tolls are the only source of
income for the NWPA, the project had to be completed within 31 months, so
that the authority could meet its first scheduled bond payment on time. Any
significant delays would have meant missed payments, drawing the ire of
bondholders.
“Carter & Burgess was commissioned by the NWPA to
serve as its project oversight engineer to provide program coordination,
contract administration, and monitoring of the multi-million dollar
design-build contract,” says Mark Shotkoski, Carter & Burgess associate and
project manager in Denver.
The project had to stick to its $420-million budget
because the authority couldn’t turn to the state or Uncle Sam to pay for
cost overruns. It needed a contractor that would commit to a price even
though only a small portion of the design was completed. By contrast, in the
traditional design-bid-build delivery method, contractors typically look at
the entire design plan before bidding on projects.
The contractor, Northwest Parkway Constructor, a
partnership between Peter Kiewit Sons Inc. and Washington Group
International, had worked on another part of the new Denver loop, E-470, so
it was able to estimate costs based on its work on that previous project,
which was constructed on similar terrain, says Shotkoski.
Project on target
Acting as Bauman’s staff, the Carter & Burgess
Project Oversight Engineering team monitored design plans, construction
work, and schedule adherence to ensure that the project progressed smoothly
and delivered a high-quality product. Because the NWPA chose to operate very
lean, Bauman is the authority’s only engineer. Thus, the Carter & Burgess
team provided the essential oversight role that would normally be performed,
at least partially, by state engineers on a government-financed project.
Shotkoski and the Carter & Burgess team were
responsible for project quality assurance. As the owner’s representative,
Carter & Burgess was responsible for approving all design plans. The
project’s success depended on NWPA, Carter & Burgess, and all members of the
design-build team working closely together so that construction could
proceed on schedule. To ensure project success, the parties forged a
well-coordinated, cooperative partnership early on.
Higher quality roadway
Although the NWPA was focused on staying within its
schedule and budgetary constraints, the Authority didn’t cut corners on
aesthetic elements. “The NWPA insisted on a roadway that was of exceptional
quality,” Shotkoski says, primarily because drivers paying to drive on it
would expect a superior road for their money.
The NWPA and Carter & Burgess negotiated changes for
some design elements such as the architectural treatment of certain bridges,
making roadside grading along the road less steep to allow the project to
blend in better with the adjacent rolling farmland, and altering the mix
design of pavement materials to improve durability. Most of these measures
were fairly inexpensive to make, Shotkoski explains.
“To construct 10 miles of highway with 26 bridges in
29 months is a tremendous accomplishment for all parties involved,”
Shotkoski says. And, while private financing of highways in this manner
isn’t the answer for all areas, it does make a lot of sense where the
conditions are right, he adds.
Determining whether a tollway is appropriate for a
new road requires a study of traffic conditions and a forecast of what the
potential toll revenue would be on the highway. In some European countries,
private funding for highways supported by tolls has been common for decades.
With the success of the Northwest Parkway and similar projects, it just may
become an increasingly practical solution in the United States, too.
Sharon McKone represents Carter & Burgess,
Incorporated.
Reprinted from Better Roads Magazine
October 2004 |
