Water Design-Build Council Blog

Can Industry Partnerships and Private Financing Create Evolutionary Change in the Water Delivery Market?

During the past two decades, this industry has seen tremendous change in the way water infrastructure projects are delivered. Fifteen years ago, design-bid-build was by far the dominant delivery mechanism. Today, collaborative project delivery using fixed-price, progressive, and construction management at-risk methods has increased significantly and, for projects of any size, is becoming the delivery vehicle of choice.
businessman hand working with new modern computer and business strategy documents digital layers with green plant foreground on wooden desk in office.jpegSo, what are some of the topics being addressed by the industry? One specific example is that in the next 15 years we will be challenged to find more efficient and creative ways to finance and implement projects. Currently, public water utility owners face unprecedented challenges in funding the work to keep their infrastructure current. Collaborative project delivery and public-private partnerships are logical solutions. However, the challenges in implementing these types of solutions require the industry to evolve. For example, many older cities in the northeastern U.S. have a fundamental math problem to solve. They are losing population and revenue base, yet their maintenance costs are increasing due to the age of their infrastructure, with some systems up to 100 years old. Privatization and consolidation can supply funding to repair or replace infrastructure while improving service and efficiency for customers.

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Follow the Money

Money is available, and opportunities exist for owners and municipalities to consider as options for solving the water and wastewater challenges. Private industry firms have financial resources to invest and are demonstrating that economy of scale can make water systems a solid investment. However, in order to pursue the use of private investment resources, the water sector needs to seriously examine the different solutions in which they are used, much like the transportation industry has done with toll roads. Taxpayers spend billions of dollars to access the convenience of toll roads; and many believe they will do the same for their water systems once they understand the value proposition. As an industry, we need to move beyond the status quo to find collaborative, joint solutions that are more efficient. Engineers, contractors, financiers, and developers must evolve together by promoting collaboration, not disaggregation. We have much to learn from our European counterparts as we, as a nation, move toward joint ownership models that bring public and private resources together successfully.

Risk that Leads to Reward 

Embracing such new paradigms for the water market isn’t always an easy task -- i.e., the change process requires examples and steps in small increments. Examining the financing options afforded by the private sector for challenging projects allows municipalities to achieve benefits from economy of scale through a collaborative process. The private sector can help them initiate scalable change. And as an industry, we all need to work together collaboratively to meet the challenges ahead of us in the next 15 years.

With 30 years of construction experience in a wide variety of areas, including water treatment, wastewater treatment, site development, and environmental remediation, Peter Bailey has been instrumental in the collaborative project delivery approaches for his vast portfolio of past projects. As PLW Waterworks' new Vice President of Alternative Project Delivery, Peter’s role consists of driving growth of water in North America using collaborative project delivery and growing PLW Waterworks from the inside out by developing a new team to support his project delivery methods. His expertise focuses on delivery of program-driven solutions, with an emphasis upon complex, multifaceted projects.

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