Comments on Virginia P3 Risk Management Guidelines
April 30, 2015
Ms. Alexandra Lauzon
Office of Transportation Public Private Partnerships
600 E. Main Street
Richmond, VA 23219
Re: P3 Risk Management Guidelines
The American Road & Transportation Builders Association (ARTBA) offers these initial
comments on the Virginia Office of Public Private Partnerships’ (VAP3) draft update to the
Public Private Partnerships (P3) Risk Management Guidelines (Draft Update). Founded in 1902,
ARTBA’s membership includes private and public sector members that are involved in the
planning, designing, construction and maintenance of the nation’s roadways, bridges, ports,
airports and transit systems. Our industry generates more than $380 billion annually in U.S.
economic activity and sustains more than 3.3 million American jobs.
ARTBA maintains ongoing and thorough involvement in federal legislative, policy, regulatory
and legal developments relating to transportation infrastructure development and investment.
This includes P3s in transportation, with which ARTBA has a long history. Our P3 Division
dates back more than 25 years and includes prominent concessionaires, planning and design
firms, contractors, law firms, financial entities and other experienced parties in the P3 field.
Through the reauthorization processes which have produced a series of federal surface
transportation bills in recent decades, ARTBA has advocated for provisions that have helped
make P3s a viable option for the financing and delivery of transportation improvement projects
in appropriate circumstances around the country.
ARTBA appreciates Virginia’s longtime leadership in P3 project delivery. Last year, ARTBA
was pleased to offer comments on the updates to VAP3’s P3 implementation manual. ARTBA is
similarly encouraged that VAP3 has continued to strive for meaningful public involvement by
continuing to solicit input for the Draft Update. Given that P3-related developments in Virginia
can carry national implications, ARTBA – an association national in scope – carefully follows
these activities and engages in the commonwealth’s policy discussion on occasion. In fact,
ARTBA helped to defend Virginia’s P3 enabling legislation in court by submitting an amicus
brief in the Elizabeth River Crossings OPCO, LLC v. Meeks litigation. We are pleased to
participate in the current comment process as well.
Overall, ARTBA supports the proposed Draft Update and appreciates VAP3’s proactive
approach to risk decisions. We offer the following comments in hopes of improving further on
what has been proposed.
In general, we find this document to be well thought out and an excellent framework for risk-
related decision making on P3 projects. National implementation of processes like this would go
a long way towards ensuring that the risk profile of major projects are carefully balanced to
provide owners with the most efficient risk allocation.
Also on a general level, we believe the Draft Update should more fully detail as much as possible
the range of individuals making up the risk assessment team. We believe it is the intent of the
VAP3 office to include extensive engagement in the risk assessment process by key individuals
involved in all phases of the transportation project as well as representatives from all of the
different divisions of the Virginia Department of Transportation (VDOT), including right-of
way, planning, permitting, utilities, operations & maintenance, etc. The Draft Update could be
clarified in this regard.
We did note that in the Draft Update, the “Agency designated project manager” did not appear to
be engaged in the pre-procurement and/or procurement stages of the risk assessment[s].
Specifically, Page 23 of the Draft Update reads:
The VAP3 project manager is responsible for ensuring that the Risk Register is up to date
and is suitable for use by the implementation team. It is recommended that the
implementation team appoint a risk manager before commercial close in order to provide
this person with an opportunity to work with the procurement team on the handover of
the Risk Register and Risk Management Plan.
As it is written, we are led to believe that this individual is simply given the results of the risk
analysis for them to consider when implementing the project. We strongly believe that this
person should be engaged throughout project development and delivery. Consideration of design
and construction risks and other related implementation issues very likely are key project
delivery drivers and this input from knowledgeable individuals is critical in the pre-
implementation phases to ensure project success.
With this in mind, though, it is also important to concentrate authority for advancement amongst
a select group of knowledgeable individuals. A complete and thorough discussion of risk should
not become a handicap to project advancement by bogging the process down due to “risk
anxiety” by individual project team members. Additional parties to the process should not dilute
the decision-making process. Further, advisors to the process should be involved prior to the
procurement phase, such as legal, technical and procurement advisors. Advisors who are
brought in should have significant prior experience with P3 projects. This will help to make the
discussion as complete as possible.
In discussing risk, it is also important that all key risks are identified, including those that are
outside the control of the VAP3 or the agency. While some of these may not be easily
quantifiable, every effort should be made to at least increase awareness of these sorts of risks in
order to factor them into an overall risk assessment. Examples of such risks could include, but
are not limited to, possible changes in state administrations, events which could influence public
opinion towards a project, and/or possible opportunities for litigation by outside groups opposed
to a project.
ARTBA also offers comments on the following sections of the Draft Update:
Section 1.5 Capture and Feedback Lessons Learned
It is very important when making project decisions that these decisions are based, as much as
possible, on substantive historical details that provide fair and accurate comparisons.
Programmatic and corridor-specific construction and asset management cost and performance
data are key elements in assessing the true risks of any related venture. ARTBA recommends
this section include language describing the need to track all reasonable costs for work
performed by each affected agency that can be the basis for these comparisons.
Table 2.3 Typical Risk Allocations for a Highway Project
ARTBA asks that this table be viewed as a “starting point,” and therefore noted as such, as
opposed to a definitive guide to risk allocation by delivery model. In looking at risk allocation,
attention clearly should be paid to project specifics, not a generic table. For example, the table
lists construction as allocated to the private sector under all delivery models. Construction risk
in each of these procurement alternatives is, in reality, shared by both the public and private
sectors. What differentiates each from the other in this regard is the shifting of the risk profile
from more of a public apportionment in the design-bid-build method to a substantially more
private one in the P3 scenario.
Section 4.1.3 Outputs
This section deals with the Risk Register. In the last part of the section, it is stated that the Risk
Register can be used for “consideration of risks and potential allocations as input for forums and
meetings.” ARTBA suggests more detail regarding the need for critical private sector
involvement in this section. Specifically, the section should detail that the risk assessment and
allocation process needs to be a very collaborative process involving pre-procurement interaction
with the private sector. Further, there should also be ongoing confidential interaction with
proponents during procurement. The VAP3/Agency Risk Register should then reflect the input
and decisions as a result of this collaborative process.
On a more general note, ARTBA urges VAP3 to consider being more descriptive of how the
environmental processes (e.g. the National Environmental Policy Act (NEPA)) are included in
the risk assessment procedures. It should be clearly stated that risk analysis during development
of an environmental impact statement (EIS) or other environmental study process is a critical
consideration. Equally as important are decisions during any phase of project development
where decisions are necessary outside the control of VAP3/VDOT.
Additionally, efforts should be made to reduce duplicative efforts and ensure consistency
through the project development process as it relates to risk analysis. Analysis done multiple
times during different processes serves no benefit. Instead, where appropriate, the results of risk
analysis should be shared amongst the different processes, allowing for a reduction of delay
without any sacrificing of valid information.
Finally, ARTBA asks VAP3 to consider some form of formal risk management training once the
Draft Update is complete. Formal training would allow all parties to familiarize themselves with
new risk management guidelines and ensure they are implemented in a uniform manner. As a
unique national federation that includes public and private sector entities in its active
membership, ARTBA would be pleased to help coordinate or otherwise contribute to any such
Again, these comments constitute initial feedback upon review of VAP3’s current Draft Update,
and in many ways suggest areas for further discussion rather than definitive opinions on the
many details of that draft.
We appreciate VAP3’s considering these initial views and the request for more interaction as the
agency further refines the Draft Update to the existing Risk Management Guidelines. As noted
previously, ARTBA and its P3 Division remain available to work with VAP3through the
remainder of this process, as well as any other activities relating to Virginia’s P3 policy. Please
contact ARTBA’s Vice President for Regulatory Affairs and Assistant General Counsel Nick
Goldstein at any time. He can be reached at 202-289-4434 or email@example.com.
Thank you for your consideration of these views and your leadership in P3 policy.
T. Peter Ruane
President & C.E.O.