2019 CSCE Annual Conference - Laval (Greater Montreal)

2019 CSCE Annual Conference - Laval (Greater Montreal) Conference

Risk Transfer in P3 Infrastructure Projects due to Construction Deficiencies

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Mr. Venkata Vemana, TransEd Partners (Presenter)
Dr. Smitha Koduru, Veracity Engineering & Risk Consulting Services
Mr. Chris Gentile, City of Edmonton

Public-Private-Partnership (P3) model for infrastructure projects are bid to be design-build-maintain-finance by the concessionaires. The financial success of P3 infrastructure projects depends on the project performance over its entire service life. In traditional design-build, the role of the contractor is limited to ensuring successful construction within schedule and budget while meeting the contractual and regulatory requirements. In such cases, the focus is to optimize the design and construction elements, while the risk of maintenance costs is borne by the infrastructure owner. When a non-conformity arises, typical design-build approach is to consider the design intent and contractual approval by the clients for addressing such non-conformity. In this case, any risk of service life performance remains with the client or owner once the project is closed and the completion is achieved.

In the case of P3 projects, the role of concessionaire is not only to finance the design-build and maintain for a period of time. Therefore, a successful project should not only meet the budget, schedule and contractual requirements, but also minimize the maintenance costs. Any deficiencies at the design-build stage of the project  would have negative implications throughout the project service life, and can affect the overall financial performance and ultimate success of the project. Therefore, it is important to not only consider the design intent for safety and minimization of construction costs, but also consider the implications of any actions on the overall durability. In some cases, infrastructure elements that have to be repaired or replaced during the construction stage must be under a greater scrutiny to prevent  the risk transfer from the construction stage to the greater operational costs during the maintenance stage.

It may appear inefficient from the design-build point of view to repair or replace an element instead of accepting it as-is, but from the P3 life-cycle point of view, a better course of action would be to accept the cost and schedule delays during construction to prevent taking on greater financial risks during the service life. In such scenario, the construction quality management is a key element to balance between the construction costs, maintenance costs and schedule delays. This paper presents an innovative approach to construction quality management through an integrate quality management program that would involve design-build contractors, operations-maintenance contractors, owners and concessionaires to review and assess the impact of performance requirements and construction deficiencies on the service life and to identify the sources of risk transfer from the design-build stage. Successful application of the program in a P3 infrastructure project is presented through a case study.