At the request of several state legislators, Colorado's Office of the State Auditor (OSA) conducted a comprehensive review of the US Highway 36 public-private partnership (PPP; P3) project, concluding that it delivered “best taxpayer value,” according to a March report.
Despite the positive outcome, the audit asserted that the arm of the Colorado Department of Transportation (CDOT) that oversaw the project, the High Performance Transportation Enterprise (HPTE), “could improve its planning, communications, monitoring, and project management practices for future P3 projects.”
Formed in 2009, the $490-million US-36 project that is being developed by a Plenary-led consortium under the name Plenary Roads Denver is HPTE's first P3, and while the audit found that the agency's development and procurement practices were “generally consistent with industry standard practices,” there were a few exceptions that led to project delays and cost overruns.
For one, trouble with the agency's planning for toll services, federal loan financing, and operations and maintenance (O&M) elements together contributed to a one-year delay in procurement completion and a six-month delay reaching financial close. This led to an increase of $5 million in project costs due to a heightened interest rate between the proposal due date and financial close.
The audit also states that the HPTE did not adequately inform, educate and involve legislators and the general public in the project development and procurement process, which was why legislators called for the audit in the first place, as noted by State Representative Matt Jones.
According to the Denver Business Journal, Jones took issue with the decision to eliminate two-person carpools and the establishment of tolls as high as $13.91, and with the locking in of a 50-year contract, all without giving the public any say during the 19-month project procurement process, noting that if he and his constituents had been involved, there would have been “a very different deal.”
Other issues highlighted in the audit included inadequate records management processes, lack of established systematic operations management procedures at CDOT and the HPTE, and lack of appropriate structure for sharing public records and protecting confidential records as specified by the Colorado Open Records Act.
The audit presented 13 recommendations in total, four of which were considered “key,” for future handling of P3 projects.
The key recommendations call on the HPTE to begin planning for critical elements of projects in the development stage and to improve information flow to bidders, to develop detailed schedules for P3 projects with achievable deadlines, to develop a comprehensive communications plan for informing and soliciting input from stakeholders and a compliant open records policy, and to develop a systematic project management framework and guidance for managing large P3 projects.
HPTE agreed with each of the auditors' recommendations, and agreed to implement the suggested changes by January 2016, the report said.
“CDOT and HPTE are committed to make all P3 projects open and transparent to the public, stakeholders and our legislators,” said CDOT Executive Director Shailen Bhatt in a related release. “We take seriously the lessons learned from US 36 […] and are already implementing or working on the recommendations we've received to improve all our processes.
“With these improvements, Colorado will be better poised to leverage P3s to address our critical infrastructure needs.”