Pennsylvania serves as a case study for a new project that could help fortify the nation’s aging infrastructure. A new cost-effective approach for rehabilitating bridges is improving safety, mobility, and resiliency for communities across the state as other states learn key lessons in order to implement similar programs within their jurisdictions.
The Need States and local governments across the United States are struggling with replacement and rehabilitation of structurally deficient and functionally obsolete bridges. The Federal Highway Administration (FHWA) defines structurally deficient bridges as having significant portions with deteriorated conditions and potentially reduced load-carrying capacity. Such bridges typically require significant maintenance and repair to remain in service and will eventually require major rehabilitation or replacement to address the underlying problems.
A bridge is considered functionally obsolete when it does not meet current design standards (such as lane width), either because the volume of traffic carried by the bridge exceeds the level anticipated when the bridge was constructed and/or the relevant design standards have been revised. Structurally deficient and functionally obsolete structures have significant impacts on mobility and resiliency, as many of these structures have weight limits and cannot be used for larger vehicles.
According to FHWA statistics, of the 609,539 bridges in the United States, nearly 60,000 (9.6 percent) are rated as structurally deficient. Pennsylvania leads the nation with 21.0 percent of its bridges considered structurally deficient, while Nevada has just 1.8 percent of its structures in this rating category. In addition, more than 79,000 structures across the nation have been rated as functionally obsolete, meaning that 22.6 percent of U.S. bridges are either structurally deficient or functionally obsolete.
The Approach With the Federal Highway Trust Fund and local funding sources not keeping pace with the ever-growing needs of the aging infrastructure, many are seeking innovative approaches to maintain mobility and ensure resiliency. To this end, some states are implementing an innovative design, construction, and financing procurement methodology to more effectively reconstruct infrastructure while reserving sufficient resources for new infrastructure. One approach that accelerates the delivery of bridges is to “bundle,” or combine, a large number of structures into one contract using a design, build, finance, and maintain (DBFM) public-private partnership (P3) delivery model. In this way, a large number of structures can be addressed in a much shorter time period, saving both time and money.
A unique feature of the DBFM approach is that it considers not just the design and construction of the new structures, but also lifecycle maintenance for a predetermined period. Typically, a 25- to 30-year fixed-price maintenance term is negotiated, with the owner making monthly availability payments (under which the concessionaire receives a periodic “availability” payment from the public partner based on the availability of a facility at the specified performance level) over the term of the concession. The availability payment is sized to cover debt repayment, maintenance costs, and project company costs indexed to inflation. Payments are subject to deductions for poor performance, thus ensuring quality construction and maintenance. During the maintenance period, all of the maintenance and rehabilitation risks are shifted to the private sector, allowing the owner to allocate valuable resources to other needs within its network.
The Benefits Utilizing the bundled bridge DBFM model offers the following benefits to owners:
Economies of scale, due to the bundling, lead to design and construction efficiencies and cost savings.
An accelerated schedule results from the standardization of bridge designs and construction methodology.
Completing a large number of bridges (500+/- has proven to be a cost-effective range) in approximately three years minimizes the inflation effect that would result from a normally much longer replacement schedule.
Active preventive maintenance lowers the life-cycle costs of bridges.
Rehabilitated bridges improve safety, mobility, and resiliency, and the number of posted bridges is reduced.
A fully functioning roadway system provides for cost-effective movement of goods and services, resulting in enhanced economic vitality.
The Case Study To date, Missouri and Pennsylvania have utilized this bundled bridge approach to address their structurally deficient inventory problems. The Missouri Department of Transportation used a design-build procurement method to replace 554 rural structurally deficient bridges across the state, while the Pennsylvania Department of Transportation (PennDOT) recently chose to award a DBFM contract to a private-sector consortium (see Figure 1). The following briefly describes Pennsylvania’s approach.
In 2012, the Pennsylvania legislature passed Act 88, enabling legislation that allows public infrastructure works to be procured using a P3 methodology. For roads, bridges, and tunnels, Act 88 provides for either tolled or untolled infrastructure, with the initial financing coming from private funds. This initial funding can then be repaid to the private entity under a variety of methods, including tolling or availability payments, which are essentially annual fees paid to the private entity by the owner, tied to certain performance standards.
For its bundled bridges program, PennDOT decided to use a DBFM approach with availability payments. The contract was awarded in late 2014 and covers 558 mostly small, rural, structurally deficient structures located within all 11 of Pennsylvania’s transportation districts. In order to accelerate the program, PennDOT developed the following criteria to determine which bridges would fit its timing goals:
Limited or no right-of-way acquisition – the structure could be replaced in largely the same location;
No tolled or historic bridges – no lost revenue or preservation issues;
No roadway bridges crossing railroads – saves permitting time; and
Mostly simple one- or two-span bridges – less time required to design and construct.
The design-build portion of the contract totaled $899 million, approximately $1.6 million per bridge. The bridges are being designed and constructed in the first three years of the contract and will then be maintained by the private sector concessionaire for 25 years. At the end of the 25-year maintenance period, the bridges will be handed back to the Commonwealth of Pennsylvania. The bridges must be maintained to achieve stipulated performance standards during the maintenance term and at the end of the maintenance period. Failure to meet these performance standards could subject the concessionaire to penalties.
State officials have commented that replacing the bridges using this P3 DBFM procurement methodology saved between 15 and 20 percent compared to a more traditional design-bid-build procurement, which does not include the life-cycle maintenance benefits. More than 30 states have enacted P3-enabling legislation, and all are considering how to best utilize this procurement tool to rehabilitate or replace aged infrastructure. As owners continue to struggle to find sufficient funds to maintain safe and resilient bridges, they are watching the Pennsylvania Rapid Bridge Replacement project, seeking to use lessons learned to implement similar programs.
Based in the firm’s Washington office, Thomas Clark currently serves as vice president of Parsons, responsible for the development of the group’s East Coast Roads & Structures work in market sectors including design-build, public-private partnerships, tunnel engineering, planning, asset management, and highway/bridge design. He has been working to develop and implement innovative highway design, maintenance, and operations contracting methodologies since 1999, and has provided consulting services to a number of state Departments of Transportation. He holds an undergraduate degree in economics from Harvard University and an MBA in finance and marketing from the Wharton School, University of Pennsylvania.