The Water Advisory Committee continued its education on the design-build-operate delivery method at its meeting Thursday, essentially the third piece of the surface water project puzzle that it must fit into a recommendation to the City Council.

After the committee chooses between projects with Woodland or West Sacramento, and after it makes a decision on the rate structure that will determine how much Davis residents will pay for their share of the project, the group must settle on a water delivery method.

The committee is scheduled to make a final decision on delivery at its next meeting on Sept. 27.

When the cities of Davis and Woodland first agreed to the Joint Powers Authority deal in 2009, the Woodland-Davis Clean Water Agency had been pushing the DBO delivery method, where one umbrella company would be responsible for every phase of the project.

The company would design the project, build it and then, once it was built, operate it for a determined amount of time depending on the contract it signed with the JPA.

According to Herb Niederberger, the city’s new general manager of utilities, development and operations, the water agency already has a draft contract ready if or when Davis picks the Woodland project.

Ed Schroeder, professor of civil and environmental engineering at UC Davis, began the water committee’s meeting by outlining some of the advantages and disadvantages of taking the DBO route.

As far as the advantages, Schroeder says integrating the three teams necessary to carry out a project often can streamline the entire process, which can result in a more efficient project and, eventually, cost savings.

“Turns out you might get a better quality of product with a DBO scheme, you might,” Schroeder said.

Dennis Diemer, general manager of the WDCWA, also added that the competition among the three DBO teams vying for the job should drive down the costs of the overall project.

But to maximize the benefits of the DBO process, the initial contract the water agency drafts for the DBO teams to sign must put the JPA in the driver’s seat.

“What this all comes down to really is the contract that you have with the DBO group is going to be exceedingly important, and having that all done up front very well,” Schroeder said. “(That’s) where all the cost savings and the control are going to be coming from.”

Once that contract is signed, however, the JPA loses that control. That, Schroeder says, is the biggest disadvantage of going with DBO.

“You lose control of the process and you have less input into it as it goes along,” Schroeder explained. “You may have some surprises at what comes out of the other end in terms of the product. That’s something I think is of concern.”

Schroeder added that agencies often worry about the quality of the work and the quality of the equipment the DBO company uses. The professor explained that while those aspects can be controlled through the initial contract, the cities still have less involvement in the development and outcome of the project.

After Schroeder’s presentation, Niederberger also answered the committee members’ questions regarding the DBO process.

Perhaps most importantly, he said utilizing the DBO method over other delivery methods would save the city approximately $5 million to $10 million in the long run.

The other types of delivery methods the city could consider include design-build, where the city would hire a company to design the project and carry out construction and then either run the plant itself or hire a separate entity to do so.

Or the city could choose a design-bid-build, where it would hire a design firm to draw up the plans for the project. The city would take those plans and put them out to bid. Once the project was built, the city could choose to hire an outside operator or operate the plant itself.

The savings from the DBO process, Niederberger said, would come in the form of labor costs, as public workers would stand to earn more through total compensation compared to private contractors.

After the presentations, to prepare for the decision the City Council has asked it to make by Sept. 27, committee members voiced the questions they still have about the DBO delivery method.

Several questioned whether there is any empirical evidence or any comparable situations where different cities chose different delivery methods to build large capital infrastructure projects like this forthcoming surface water project.

“How pervasive is this model?” committee member Mark Siegler asked. “Are there places that have, whether it’s the same size and so forth, that one place decided to go to DBO and one place decided not to? … I just would like more evidence on the cost savings.”

Committee member David Purkey similarly asked to see a list of how many agencies in California are using DBO and also asked to see, if possible, the differences in labor costs between utilities using a private operator versus a public operator.

Several other committee members, including Jerry Adler and Jim West, did not have questions for staff and appeared to be ready to make its decision on the delivery method.

— Reach Tom Sakash at [email protected] or (530) 747-8057. Follow him on Twitter @TomSakash

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