Category: Save Money

What does Rehabilitation mean for a Public-Private Partnership?

Post author By Steve
Post date September 21, 2018

A Public-Private Partnership (P3) is a contract vehicle where a private developer – working with a public entity – designs, builds, finances and operates the infrastructure. This Pillar Talk will focus on the rehabilitation, or handback portion, of a P3.

P3 transportation projects have two varieties: availability payment or revenue risk.

In an availability payment model, the public entity pays a fixed amount on a monthly or annual basis, usually after making some larger “milestone” payments during or at completion of construction. The funding could come from general transportation funds, a bond issue or indirectly from tolls generated from the new roadway but retained by the public entity or any combination of these. An availability payment P3 is generally of shorter duration, generally 25 years.

A revenue risk project is funded directly by toll revenue generated by the facility. The developer takes on much more risk and is not guaranteed any level of funding from the public. Unless the public entity “buys down” the tolls by injecting cash, there is generally no “milestone” payments during or after construction. Due to these risks and funding variables, the revenue risk project duration is usually much longer: Often 50 years but it could be up to 75 years or longer.

Once the project is complete, it is turned over to the public entity. To ensure the public entity receives an asset in good condition, certain “handback” requirements must be met. The rehabilitation process is the manner in which the developer meets these requirements. The requirements are usually limited to major assets, such as pavements and structures.

Handback requirements generally require an asset be in a certain condition or have a set number of years of remaining service life on handover. For example, pavements could be required to have a maximum IRI or have structural capacity requiring no more than a 2” overlay within 10 years. Bridge structures may have to meet an NBIS rating of “7” or better.

Other items such as sign structures or high mast light structures may require 15 years of remaining service life. A high mast light structure may have a design life of 40 years. On a 25-year project, it would not need to be replaced. On a 50-year project, it would likely be replaced in year 40.

Longer projects tend to have lower handback requirements – this allows the project to be more affordable as it will likely be too expensive to expect a “brand-new road” be given back to the public at the end of the term.

To ensure the asset is in acceptable condition, a series of inspections will occur over the last five years of the project. The inspections would be made by an acceptable third-party engineer, with reports and recommendations made as to what the remaining service life is projected to be at project end. Some projects will have an escrow account where the developer sets aside money to guarantee funds will be available to complete the rehabilitation, with any remaining funds at handback kept by the developer.

Pillar, Inc. can help developers and owners understand the potential costs of handback requirements and can assist with bid-level budgets that ensure a quality asset is returned to the public. For more information, call 276.223.0500 or contact us online.

Mobile LiDAR’s fully automatic asset extraction capability sets it apart

Post author By Steve
Post date July 12, 2018

Modern technology has catapulted the maintenance of roadway infrastructure to a new level.

When it comes to collecting data about your assets, PILLAR utilizes the Leica Pegasus: Two Ultimate as its choice for mobile LiDAR. The laser scanning and mapping technology platform provides what we need to get the job done.

This device utilizes two back-to-back cameras to create 360-degree images from a vehicle, boat, 4-wheeler or train. A removable SSD means you have the information at your fingertips when you walk into the office.

Fully automatic feature extraction

Semi-automatic feature extraction is good. Fully automatic feature extraction is the best, quickest, and most helpful. It allows you to get started on projects as soon as possible.

Using our full automatic feature extraction program, we can extract assets and their quantities quickly and accurately. If saving time appeals to you, contact us to see how much time we could cut out of your project and add back into production.

More than 20 assets can be extracted into your own geospatial information system. This comprehensive transportation infrastructure management application includes:

Signs
Guardrails
Bridge Clearances
Trees
Ditches
Overhead Utilities
And More

Collection and Execution

The information collected provides the most detailed data possible on your assets, helping you determine what you have and where it is located. This information can then be used to identify which work needs to be given the highest priority, helping you work within your budget.

InfraTrak is a GIS system asset management application agencies purchase as an additional tool to better manage assets. It is an iPad-based app with a GIS interface, able to overlay assets on aerial maps for an interactive set of field plans. InfraTrak is completely compatible with the most popular GIS software such as Esri’s ArcGIS software and many others.

For more information on PILLAR’s Asset Management Solutions, contact us or call 276.223.0500.

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Are You Staying Busy or Being Productive?

Post author By Steve
Post date June 6, 2017

As a business owner, I am frequently asked, “How is business?” I often used to reply “Busy” but had a colleague follow my answer up with the question “Is it productive?”

Wow, that was a new one. I stopped dead in my tracks with a blank but inquisitive stare on my face, prompting my colleague to explain the question. Being busy without making progress is like being stuck in the mud with your tires spinning every time you mash the accelerator. Sure, you’re giving the appearance of “working” to get out of the mud, but you haven’t moved or bettered your position. In essence, you’re not being productive.

How often do you catch yourself spinning your wheels in the mud? What can you do to zip out of the mud when you mash down the accelerator?

One of the first things you can do to increase productivity is prioritizing your to-do list, which is exactly what Pillar does when it comes to asset management. We make a list of your assets and determine which items to address based on the needs, resources, time, severity, permits, etc. This helps you maintain your assets as a whole while fully utilizing your budget, staff and resources.

We review and reorganize this “to-do” list frequently to ensure critical projects are being completed and general maintenance isn’t being overlooked. This ensures your roadways are in tip-top shape while also helping you better manage your staff and budget.

You won’t feel like your wheels are spinning in the mud as you complete important tasks on your to-do list. Give us a call at (276) 223-0500 or email us to see how Pillar’s asset management can help you make the most of your budget and time by prioritizing and completing tasks that help you maintain your roadways.

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3 Ways to Save on Roadway Maintenance

Post author By Steve
Post date October 2, 2016

The P3 approach includes preventive, lifecycle maintenance for the asset and avoids the problems associated with deferred maintenance. Simply put, deferred maintenance is the practice of postponing infrastructure maintenance activities, usually due to lack of available funding. Lack of proper and timely maintenance leads to early deterioration that costs more to repair later on or shortens the lifespan of the asset. Both of these situations will cost extra over the long term as the asset will have to be replaced well before it was planned, resulting in unanticipated capital costs.

What is the remedy?

Government agencies can participate in a P3 project delivery structure that involves the agency partnering with a private entity to design, build, finance, operate and maintain an infrastructure project. A P3 allows a government agency to mitigate the risks and costs associated with maintenance activities by requiring the builder to maintain the project for the long term drawing funding from a fixed, known payment structure negotiated before the job is even started.

How exactly does this solve deferred maintenance?

Annual vs. lifecycle budgets

Public agencies generally budget on an annual cycle. A private company utilizes longer term budgets and can “roll over” cost savings into later years. Snow removal is a good example: Savings in a “light” year will be sequestered and used in later years during an inevitable “heavy” year.
Annual budgeting usually means that savings is “lost” in that year and the money is used for other priorities which may not be related to the subject asset. More importantly when the “heavy” year causes the budget to be expended, other repairs will likely be deferred resulting in an asset in poor condition and likely higher repair cost later as the asset continues to deteriorate.

Resource leveling

Aside from a basic level of manpower and equipment for day-to-day tasks such as litter removal and incident management, many specialist tasks will be outsourced.
Typically, government agencies will procure equipment and sometimes manpower that only has limited usage, for example tractors for mowing or bucket trucks for lighting repairs and their associated crews. The equipment is expensive but may only be used a few times per year. An outsourced contractor will perform the work, then move on to other unrelated projects. The asset only pays for what is used at the time and avoids expensive capital expenditures for equipment that sits idle.

Handback requirements

To avoid having to rebuild or replace an asset prematurely (or at all), preventive maintenance is performed at optimum intervals to ensure the structure meets or exceeds its expected service life. The cost to clean, paint or repair assets periodically is far less than replacement cost if the asset doesn’t last as long as planned.

Conclusion

Using the P3 procurement method allows a private company to construct, service and maintain the asset which allows the government agency to save money through private company efficiencies, risk and responsibility allocation, and a firm funded budget.

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Are you counting pennies or benjamins?

Post author By Steve
Post date August 2, 2016

As an engineer, I am very analytical and linear in my thought process. This is natural and almost expected as I deal with equations following specific procedures to arrive at design solutions. After all, there is no gray in engineering – it is either black or white. I refer to this thought process as counting pennies – that is examining every detail down to the smallest one to make sure everything is accounted. Because of my ethical obligations to protect the public with my designs, I, as an engineer, have to count and take into account these pennies to avoid potentially disastrous situations.

As the leader of PILLAR, my thought process is different. I can’t get bogged down with all the little details; otherwise nothing moves forward at the pace it needs to because people are waiting on me. I need to think bigger and broader and count the Benjamins. That doesn’t mean the details aren’t important. On the contrary, they are very important and can’t be ignored. Here is where leadership comes into play. As I don’t have the resources to examine all the little details, I have to responsibly delegate them by providing a clear vision with enough direction to my employees.

In short, I have to lead not do.

When I focus on the Benjamins – the big picture or total package – and let other employees count the pennies, I have to provide the tools and atmosphere of collaboration and teamwork to maximize individual strengths in order to achieve maximum performance in a timely fashion to either meet deadlines, exceed expectations, or act quickly enough to stay ahead of the competition. I also have to know my employees well enough to put them in a place where they can confidently work the details and excel at what they are good at. When my employees take a portion of the bigger picture, they accept responsibility for taking care of and focusing on their stack of pennies.

All this dialog of pennies and Benjamins is not a discussion on revenue or profit. Rather it is a discussion on short-term versus long-term thinking. As a leader, focusing on pennies is short-term thinking dealing with an event happening now or in the immediate near future. Focusing on Benjamins is long-term thinking dealing with the future or the direction of the firm. Dealing with pennies is like a horse with blinders. You can only see what is in front of you with a very limited and narrow view of the scene. You cannot get stuck in one pile of details for any length of time, lest some of the other piles get either too enormous to overcome or dwindle away to nothing from lack of attention. If you’re focusing on Benjamins, you’re gazing on the wider view of the horizon.

As a by-product of focusing on the Benjamins and relinquishing control of the pennies, I have fostered a cultural shift of accountability and responsibility while simultaneously empowering those who can make it happen. When you empower others, growth occurs exponentially not linearly. Empowerment comes in several forms. Simply put, it is removing roadblocks thereby building an atmosphere of collaboration and teamwork. Empowerment also fosters an environment that nurtures a positive spirit, pride, and loyalty.

Focusing on Benjamins allows me the time to reflect on our firm’s vision and purpose and formulate a path on how to fulfill them. It is easy to get caught up in working a pile of pennies as problems arise. I call this putting out brush fires. Unfortunately, this leads one to scramble with no sense of direction or purpose and eventually reflects and resonates with employees by stagnating any growth, duty, or loyalty.

I’ll admit focusing on the Benjamins is a continuous work in progress and there are still times I get stuck in the piles of pennies. As the firm grows and I mature, I like to think I am getting better at looking at Benjamins.

How about you? Are you focusing on pennies or Benjamins?

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What PILLAR Asset Management Means For Your Company

Post author By Steve
Post date January 28, 2016

Is “asset management” more than a buzz-word to you and your organization? Are regulations and costs leading you to question whether you need a better understanding of your assets and their future value, risks, and needs?

You may find yourself wondering “How can we boost asset life-span?” or “Has the cost of this asset been justified?” PILLAR provides asset management to help you with the entire process of properly planning, building, operating, maintaining, upgrading and decommissioning assets.

This is big-picture thinking and long-term strategizing. For assets to be sustainable and cost-effective, you need a broad analysis of engineering, economics, risk management and user needs.

With appropriate asset management methods, you can answer key questions about:

FINANCES

Long-term funding, including grants and loans
Potential budget fluctuations
Total cost of ownership

DECISION-MAKING

Current state of assets
Maintenance scheduling
Rehabilitation vs. replacement
Risk analysis
Gaps in institutional knowledge
Internal and external communication

REQUIREMENTS

Technological and material life-spans
Current and future regulations
User demands

Asset management results in better business practices and a more proactive mindset. It allows your organization to identify strengths as well as weaknesses, creating a better foundation for decision-making.

With systematic and coordinated asset management techniques, PILLAR will provide your organization with the tools to succeed now and in the future.

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Importance of Roadway Operations and Maintenance

Post author By Steve
Post date June 2, 2015

In our world today we have an incredible amount of freedom to move about wherever and whenever we want. We just hop in the car, spend some time on the road and voila. We go to work, visit friends and family, or just go out for ice cream.

But sometimes we find ourselves asking, “Why is this lane closed? I’m in a hurry,” and assume there must have been an accident to cause this inconvenience. “It must be a bad one, traffic is terrible. I hope no one was injured.” Then when you find out there is no accident but a crew diligently working on the road you think, “What? Why are they doing this now? Couldn’t it wait till a time when I’m not trying to get through?” Unfortunately, if we waited until a time that was convenient for everyone there would never be time for maintenance, and maintenance needs to be done.

Our roadway infrastructure ranges from brand new to 100+ years in age. Even roads that are brand new still need maintenance. There are numerous reports that talk about the condition of the nation’s infrastructure and how bad it is. The majority of the nation’s interstates were built 50 and 60 years ago with some structures approaching the end of their designed lifespan. To make things more challenging for DOTs they have to make decisions with tighter budgets.

Road maintenance (Asset Management) is similar to home maintenance in the fact that there are variables that guide your decisions. Let’s use the roof on your home as an example of different aspects of maintenance to consider.

Condition: knowing the condition of the roof is a critical part of the decision making process. If the majority of the roof is in good shape but you are missing a few shingles you may just want to repair the shingles. Maybe the wind is steady against the front of your house but not the back. You might need to replace the front half every 5 years and the whole thing every 10. When enough shingles have blown off, they are deteriorated, or they are reaching the end of their lifecycle, then it may need to be replaced. If you installed 20 year shingles and it’s been 19 years you might want to consider replacement.

Budget: replacing a roof is an expensive endeavor and you want to make sure you have the money to cover the cost or the roofer might not show up. Knowing the condition helps tremendously with budgeting. Environmental factors: you don’t want to expose the roof to rain or snow. That’s what it’s supposed to keep out, right? You might skip scheduling it in April (April showers) and wait till July or August to make repairs.

Material requirements: the ideal temperature for asphalt shingle installation is between 70 and 80 degrees. Any colder than 70 and they may not seal correctly.

Resources: you’ll inevitably need some resources to help. Probably a ladder or some type of lift, extra manpower, a truck to get your materials to the house, etc.

Safety: if you install your own shingles you’ll want to make sure your ladder is safe, that you always use a three point stance when climbing up and down, and that you have a harness among other things. Or you can hire a professional and let them worry about it. So like the homeowner, budgets, asset conditions, environmental factors (weather/seasonal), material requirements, resources, and safety all have an effect on the decision making process of Transportation Asset Management.

The Asset Manager has to also consider items the homeowner does not: the scale (number of assets and locations) and contending with traffic. Asset locations: the homeowner’s asset is in one location, where the maintenance manager has tens of thousands of assets of different types scattered over hundreds of miles. In this situation, the asset location becomes important to help direct work and eliminate wasted efforts.

But wait a minute! That’s great you are considering all these different factors, but why are you in my way? The homeowner doesn’t have to contend with Traffic. With scheduled work, some maintenance work can be completed at night when traffic volumes are low. But even low traffic volumes have increased risk factors such as an increase in the number of drunk and tired drivers. Some work is just better accomplished during the day. You have more light to see and temperatures are usually more conducive for the workers and materials used.

Either way, the maintenance worker has to keep one eye on traffic and one eye on the job. They work just feet away from 2 ton hunks of steel traveling at 70 miles per hour. Traffic engineers do everything they can to keep workers safe. They design special boxes to go on big trucks that absorb the blow of a misdirected vehicle called crash attenuators; and they require workers to install signs, cones, barrels, messages signs that give the traveling public as much advanced warning as possible. The public can also call 511 for traffic information, check the 511 app, or use third party apps such as Google Maps and Waze all to see how traffic is flowing.

We refer to juggling all these different variables as Transportation Asset Management. This is all done to keep the infrastructure in the best shape possible for as long as possible, to keep the workers and traveling public safe, and make sure travelers can get from point A to point B with as little interruption as possible while staying within budgets. So the next time you run across a work zone hopefully you’ll have a better appreciation for the amount of work and planning that has gone into that work.

https://www.youtube.com/watch?v=Wpzvaqypav8

http://www.cbsnews.com/news/falling-apart-america-neglected-infrastructure/