A standard design-build-operate (DBO) partnership in the water and wastewater market may include an operations company, a lead design engineering firm, and a contractor to complete the construction phase. Depending on the contractual arrangement, each organization is typically contractually bound to one another through the completion of the construction elements of the project, and in some cases this relationship extends into the steady-state, long-term operations and maintenance period. Given the complexity of these projects, the question arises: How does each company succeed in a DBO partnership? Is there an overarching goal that will share success between the companies equally, or is everyone trying to achieve success for themselves?
During the project procurement and proposal phase, the goal of the partnered organizations is clear: Win the job, together. The operations, engineering, and construction teams are all working together to put forth the best proposal to the client. The shared goal of the combined organizations is pulling each partner toward the common goal of winning the project. Wanting to win guides behaviors to create a motivated environment with a common reward for all parties. But does this shared goal continue once the team is selected and the project awarded?
When a design-build-operate team is selected by the owner, the team can take pride in their ability to beat the competition with their winning approach. But what is the next shared goal that motivates each party to work closely together? The truth is that each organization wants to complete the project within their projected costs and their margins. This is especially true in a fixed-price DBO model. But does each company’s bottom line motivation create a situation where everyone is pulling together in the same direction? Perhaps, but this alone is certainly not as strong or as binding as the initial shared goal of winning the job.
DBO construction projects, especially those within the confines of an existing treatment plant site, are inherently complicated and difficult to schedule. Think of a major home renovation where the occupants of the house can’t leave, and can’t be without bathrooms, bedrooms, and a kitchen. At a treatment plant, the operations team is tasked with maintaining plant performance during construction, often without any relief from the governing regulatory authority. All of these challenges must be addressed within a defined project plan and set budget. The construction team is tasked with completing the project on time and budget. The engineering team needs to manage their design throughout construction and complete a successful startup and acceptance testing. Those individual company roles are critical to overall success of the project, but they are not always in alignment together.
Let’s look at the following typical project scenarios. You can decide what you think the right decision is.
- Over the course of construction, the engineering and construction team may find a way to reduce costs on the installation of equipment that saves the team money. But what if this change places an extra maintenance cost for the operations team? What if the change also creates schedule relief for the overall project timeline? What is the right decision?
- The construction schedule may need to take tanks or other unit processes offline to perform the necessary installations. What happens if the plant is not performing well at that time, and the operations team does not want to jeopardize permit compliance by making the unit or tank available? Which is worse, a potential permit excursion or falling behind in the schedule?
How you answered each question may be an indication of where you sit in a design-build-operate partnership. The reality is that within any DBO contract, there will always be situations where each team member is faced with protecting their own interests which may not align with the overall success of the project. Each team member isn’t necessarily wrong to want to protect their own interests. So how do the team members reconcile these issues so that the project is a success for everyone?
The answer may not be that surprising – communication, and a lot of it. Teamwork and open communication made the initial goal of winning the project possible, and it’s the best way to ensure the project is ultimately successful for all involved. At the onset of the team formation, there needs to be established communication protocols for resolving issues. Management boards are often in place at the highest levels of the partnered companies, but it may be worthwhile to have a similar risk committee that is involved in the week-to-week activities of the project. The members of these decision-making groups need to represent all parties, and they need to look across company lines when deciding issues. The clearest motivation for all the involved organizations is that an unsuccessful project is a failure for everyone. “If a rising tide lifts all boats, then it’s equally true that an ebbing tide can leave them all stranded.”
The initial partnership to form the DBO team helped win the job. During the proposal phase, each company came together toward that single goal of creating the best solution. It’s important to keep that in mind once the job has been booked. It is possible for all parties to enjoy success in a DBO, but the overall project needs to be a winner as well. Shared success needs to be representative across all parties.
Chapter 8 of the WDBC Water and Wastewater Design-Build Handbook provides additional insight and information on best practices for design-build-operate projects.