Steps Toward Shovels in the Ground
As part of the Government of Alberta's Design, Build, Finance Operate delivery process, a business case was prepared to make sure that a DBFO procurement is appropriate for the southwest segment of the Calgary Ring Road.
Design, Build, Finance, Operate
- Under the DBFO process, a private-sector partner is responsible for the design, construction, partial financing, and operation and maintenance of a roadway for 30 years. Once the road opens to traffic, government makes monthly payments to the partner over 30 years. Government will advance funds during construction to lower the monthly payments.
- Government is guaranteed a fixed price and delivery date for the road. The private contractor assumes risks such as inflation and weather-related delays. The contractor can be penalized for late delivery.
- Government also receives a 30-year warranty on the work. Under traditional delivery, warranties are usually only one to two years.
- Previous P3 projects have included the southeast, northwest and northeast legs of the Edmonton Ring Road and the northeast and southeast legs of the Calgary Ring Road.
Request for Qualifications (RFQ) - Completed
- The RFQ determines potential partners’ qualifications and short-lists potential partners to three proponents. RFQs usually take up to three months to prepare, submit and review.
- Potential partners may be headquartered or operate in any part of the world.
- Potential partners are usually consortia of engineering, construction, financing, and road maintenance companies.
Request for Proposals (RFP) - Completed
- The three potential bidding consortia identified by the RFQ process were invited to submit proposals for the project. Three bidders are optimal because the competitors have a reasonable chance of success and the process remains competitive should one of the bidders withdraw.
- Preparation, submission, and review of proposals took nearly a year to complete because these are very large, complicated bids which require a significant amount of design work.
- Proposals were evaluated to determine if they represent good value. A proposal’s net present value, or its value in today’s dollars, is used to compare the proposals with each other and with the traditional delivery estimate. If all proposals exceed the upper limit of the traditional delivery estimate, the project does not proceed as a DBFO.
Final Contract Award
- Government will award the contract to the qualified proposal with the lowest net present value.
- On June 22, 2016, Mountain View Partners was selected as the preferred proponent. They have until September 13 to execute the final Design/Finance/Build/Operate (DFBO) Agreement with government.
- Once the final DFBO Agreement has been executed, final construction can begin.
- Government will release the agreement and the contract value once it has been executed.