Warning signs that critical equipment may be facing potential catastrophic failure are certain to get the attention of any public utility. Urgent action is needed. Timelines to fix problems must be compressed to months or even weeks, instead of years.
Conventional project delivery methods aren’t set up to meet these scenarios. That’s why engineer-procure-construct (EPC) project delivery should be available to publicly owned utilities when needed.
Tried-and-True Versus Today’s Realities
For many municipal utilities, state laws and local ordinances require design-bid-build (DBB) project delivery. DBB has long been accepted as a tried-and-true method of procuring engineering and construction contracting services because it sets out a structured process of competitive bid solicitation. Though many states are relaxing these rules, it is still widely accepted that selecting the lowest bid under the DBB process will deliver the best value to municipal utility ratepayers.
However, this is not always the most efficient project delivery method, particularly when a capital improvement is urgently needed.
Under the DBB method, the selected engineering contractor develops an overall 100% design and then turns the drawings over to the construction contractor to develop pricing. Design and construction teams often work in a vacuum, with very little interaction. The process increases risks of not meeting the owner’s budget and reduces opportunities for project costs to be locked in early. It may also increase the time of delivery if redesign and rebidding are required for certain project elements.
Opting for EPC at Beaches Energy
Beaches Energy Services, a utility serving 35,000 customers in Ponte Vedra Beach, Jacksonville Beach and Neptune Beach, Florida, was facing an imminent risk of failure at a critical high-voltage substation. Two of three transformers had already failed and the third was a 40-year-old piece of equipment that would only load halfway, among other signs of erratic behavior. The Sampson Substation is one of six in a chain serving Beaches Energy customers and was in a position where a failure could have knocked out other substations.
With the overall system on precarious footing, Beaches Energy needed a fast response and opted for a progressive EPC approach. However, Florida laws and municipal ordinances presented some challenges. Legal requirements had effectively prevented Florida municipal utilities from utilizing EPC for many years, due to complications that made it extremely difficult for contractors to meet differing legal criteria.
The Beaches Energy management team knew that it could not afford the risks of a drawn-out design, procurement and construction process and was convinced that EPC delivery offered the best chance of meeting targeted in-service dates.
It became challenging, however, to convince the utility’s governing body due to perceptions that EPC would result in higher upfront costs. The team needed to make a persuasive case that the benefits of cost certainty and dedicated project management would result in an acceptable trade-off of schedule efficiency and a date-certain for completion. The team pointed out that another similar project that had begun in 2017 under the DBB method had taken three years to be completed and energized. The vital Sampson Substation project needed to be completed in months, not years.
RFQ Instead of RFP
Upon convincing municipal authorities that the EPC method would result in the best chance of success, the Beaches Energy team elected to solicit qualified contractors under a request for qualifications (RFQ) process instead of the more traditional request for proposals method. With project scope already well defined, an RFQ would take less time and give the utility a good framework to evaluate contractors’ experience in executing complicated projects under expedited time frames.
The RFQ evaluation criteria focused on these variables:
- Execution plan
- Key personnel dedicated to the project
- Material management and procurement lead times
- Proximity to project site
- Quality of comparable projects
- Safety record
- Utilization of local and disadvantaged subcontractors
Based on its ability to meet these variables, as well as a commitment to utilize progressive, open-book EPC delivery, the project was awarded to Burns & McDonnell.
Effective Management Lowers Risk
We worked collaboratively with Beaches Energy as we quickly put construction packages out for bid. With many cost elements locked in early, we were able to discuss, evaluate and assign risk elements in advance, evaluating all bids collaboratively and transparently. The process allowed us to start many project elements early and coordinate various steps in parallel.
Under this process, subcontractors were brought in at the 30% design threshold and given insight into what was to be built. These early constructability reviews allowed us to brainstorm ideas on how to achieve objectives with minimal outages while achieving maximum safety and efficiency.
The project also benefited enormously by having an on-site construction superintendent with more than 30 years’ experience dedicated to day-to-day management and monitoring construction, safety and quality.
Added Value Realized
Not only did the EPC delivery framework allow the project to meet its eight-month in-service deadline, it also enabled the flexibility to upgrade other critical equipment.
In addition to installation and energization of an autotransformer at the substation, a 138-kV station service voltage transformer was connected to the 138-kV ring bus to provide a measure of redundancy. Five motor-operated disconnect switches were replaced as well, along with a range of other equipment.
Had a project of this magnitude been executed under any other method, the utility and its partners would have needed to schedule service outages months in advance to mitigate impacts to the regional bulk electric system. Once those details were nailed down with transmission grid authorities, it is highly likely that discrepancies in materials and/or designs would have occurred, causing further delays. With the flexibility of EPC, all those details were managed seamlessly, allowing the Sampson Substation to be energized on schedule with no service interruptions to customers.
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