Project Report: Achieving Value for Money

Port Mann/Highway 1
Improvement Project

March 2011
PORT MANN/HIGHWAY 1 IMPROVEMENT PROJECT

Purpose of this Document

This report describes the need for the Port Mann/ Partnerships BC, the Ministry of Transportation
Highway 1 Improvement Project, and the rationale, and Infrastructure and Transportation Investment
objectives and processes that led to the decision Corporation are accountable for the contents of
to proceed with the project. The report explains this project report, including the reasonableness of
how different procurement delivery models were assumptions and professional opinions that have
analyzed and how project benefits and innovations been presented.
are expected to be achieved in current market
For more information on the Port Mann/Highway 1
conditions. A summary of the key aspects of the
Improvement Project, go to: www.pmh1project.com/
final agreement is also provided.

Agencies are publicly accountable for projects

through regular budgeting, auditing and reporting
processes. In all of its procurement processes,
the Province is committed to a high standard
of disclosure as part of its accountability for the
delivery of public projects.

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 PORT MANN/HIGHWAY 1 IMPROVEMENT PROJECT

Table of Contents
Purpose of this Report......................................................................................................i

Executive Summary.........................................................................................................1

1. Project Background, Rationale and Objectives............................................................3

2. Project Benefits............................................................................................................7

3. Project Delivery Options..............................................................................................9

4. Competitive Selection Process..................................................................................11

5. Final Design Build Agreement...................................................................................14

6. Final Project Structure................................................................................................17

7. Ongoing Design Build Agreement Monitoring.........................................................19

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PORT MANN/HIGHWAY 1 IMPROVEMENT PROJECT

Executive Summary
In 2006, following three years of program Given the cost of the project and other provincial
definition, research and planning, the Province of priorities, a key objective was to be self-financing,
British Columbias Ministry of Transportation and paid for through user tolls. Following public
Infrastructure launched the Gateway Program, consultation in 2006, and in accordance with the
an important component of British Columbias Provincial Tolling Policy, the province determined
Pacific Gateway Strategy. The existing Highway 1 to proceed with the project as a tolled facility.
corridor from Vancouver to Langley was one of
The Project provides significant benefits that
three priority corridors identified in the Gateway
include reducing congestion and travel time;
Program. This corridor is the busiest and most
improving safety and accessibility; facilitating
economically critical route in Greater Vancouver.
transit service; and improved transportation
Built in the early 1960s when the population of
choice. Specific user benefits of the Project such
Greater Vancouver was 800,000, it now serves
as reduced travel times and vehicle operating
as the only major eastwest corridor for Greater
costs and improved safety were quantified with a
Vancouvers 2.5 million inhabitants, with the
present value estimated at more than $5 billion1,
Port Mann Bridge alone carrying approximately
calculated over a 35-year project operating
127,000 vehicles per day. Traffic has increased to
period. Additional benefits, which were not
the point where the bridge is congested, in both
quantified, include positive effects on regional
directions, 13 hours on an average weekday.
employment by generating more than 8,000
The Port Mann/Highway 1 Improvement Project person years of employment, contributing more
(the Project) was initiated as a key element of than $800 million to the provincial gross domestic
the Gateway Program to improve mobility for product, improving municipal access, improving
all modes of transportation in the Highway 1 the efficiency of regional corridors and reducing
corridor. The goals of the Project include reducing congestion-related emissions from idling vehicles.
congestion and travel time; improving safety
Key features of the Project include extending the
and accessibility; facilitating transit service; and
HOV lanes eastward into Langley, construction
expanding networks and transportation choice
of transit and commercial vehicle priority access
for high occupancy vehicles (HOV), cyclists and
as well as improved and expanded cycling and
pedestrians.
pedestrian networks. The Project will also allow the
reintroduction of public transit to a corridor that
has been too congested to support reliable service
for the past 20 years.

1
The user benefit analysis employs the discounted cash flow method over a Project life cycle of 35 years using a six per cent
discount rate.

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 PORT MANN/HIGHWAY 1 IMPROVEMENT PROJECT

Rigorous and Fair Selection Design-Build Agreement

Process Under the DB agreement, Kiewit/Flatiron will
A two-stage competitive selection process, design and build the following elements of the
comprised of a Request for Qualifications (RFQ) Port Mann/Highway 1 Improvement Project:
stage and a Request for Proposals (RFP) stage, Widening of 37 kilometres of Highway 1 from
was used to choose a preferred proponent for the McGill Street in Vancouver to 216th Street in
Project. Three of the six teams that responded Langley, including 15 kilometres of new HOV
to the RFQ were invited to participate in the RFP lanes;
stage of the process. All three teams selected Upgrades to interchanges and improving access
represented a range of British Columbian, and safety along the corridor;
Canadian and international experience in design, A new, 10-lane Port Mann Bridge across the
construction, operations and maintenance, and Fraser River;
financing of major transportation projects. Capability for rapid bus transportation;
Following a rigorous evaluation process based on Transit and commercial vehicle priority measures
a design, build, finance and operate procurement where appropriate;
model (DBFO), Connect BC Development Group Dedicated cycling and pedestrian networks; and
was selected as the preferred proponent and Removal of the existing Port Mann Bridge.
entered into an agreement-in-principle with the The new Port Mann Bridge is expected to open
Province of British Columbia (the Province). A with eight lanes of traffic by December 2012, a
Fairness Reviewer was engaged to monitor the full year earlier than originally planned. Following
competitive selection process and concluded that removal of a portion of the old bridge, the final
it was conducted impartially and fairly. two lanes of the new bridge will be open for
Due to challenging and unprecedented economic use. Substantial completion is scheduled for
conditions and the financial market instability December 2013 and final completion, including
during final negotiations, the Province and removal of the old bridge is scheduled for
Connect BC Development Group were unable December 2014. The old bridge will be removed
to reach a mutually satisfactory agreement, and following completion of the improvements. The
negotiations were concluded. In accordance with total design and construction cost associated
provisions in the RFP, the Province then exercised with the fixed-priced, design-build agreement is
its option to enter into a fixed-price, design-build $2.46 billion.
agreement (DB) with Connect BC Development
Groups design-builder, the Kiewit/Flatiron General Transportation Investment
Partnership (Kiewit/Flatiron), for design and Corporation
construction of the new, 10-lane Port Mann Bridge In June 2008, the Transportation Investment
and Highway 1 improvements. On this basis, the Corporation (TI Corp) was established under
Province was able to incorporate many of the the Transportation Investment Act. TI Corp is a
benefits that had been realized through the DBFO commercial, self-sustaining Crown corporation
procurement process. wholly-owned by the Province. While maintaining
government oversight, TI Corps mandate is
to manage all components of project delivery,
including design, construction, financing and
operations. Originally, TI Corp was created to act
as the authority overseeing the concessionaire
for the Project, however under the current
delivery model TI Corp acts as the authority and
concessionaire overseeing the implementation of
the Project.

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PORT MANN/HIGHWAY 1 IMPROVEMENT PROJECT

1. Project Background, Rationale and Objectives

The Problem: Current Congestion This loss of mobility compromises the regions
Significant population and economic growth ability to take advantage of significant economic
combined with changing regional travel patterns development opportunities, negatively impacts
and expanding trade have placed considerable the regions competitiveness and reduces safety.
strain on British Columbias (B.C.) transportation Regional and inter-regional traffic would continue
system. Congestion on regional roads and highways to spill onto local streets, adding to congested
is increasing with growing impacts to residents, conditions already resulting in collision rates
communities, the environment and the economy. at least double that of free-flowing conditions,
and congestion-related idling that contributes
Over the next 25 years, Greater Vancouvers significantly to the regions greenhouse gas
population is expected to grow by about 900,000 emissions.
residents. Without action, congestion would get
worse, quality of life would suffer and economic Project Rationale:
opportunities would be foregone. Investment in Responding to the Problem
transportation is required to improve the regions Coordinated transportation infrastructure and
liveability and its competitiveness as a trading service improvements are necessary throughout the
centre and a place to do business. region to address current and future transportation
Dispersed employment growth, changing social needs and to realize potential economic
trends and increasing trade have caused Metro development opportunities from increasing trade.
Vancouvers growth to evolve differently than In 2006, following three years of program
anticipated by previous regional planning documents definition, research and planning, the Ministry of
such as the Liveable Region Strategic Plan. As a Transportation and Infrastructure launched the
result, the regions transportation network has been Gateway Program, an important component of
showing increasing strain from significant changes in British Columbias Pacific Gateway Strategy. The
travel patterns, rising traffic volumes and congestion Port Mann/Highway 1 Improvement Project is a
on major roads and bridges. key element of the Gateway Program focusing on
The increase in traffic volumes has been seen on almost Highway 1 between Vancouver and Langley.
all of the regions major roads, but most notably at
Measures to restore mobility to the Highway 1
water crossings. The existing Port Mann Bridge has
corridor were determined to be necessary as the
the highest daily traffic volumes per lane among all
corridor is the most significant commuter and
major water crossings in Greater Vancouver and is
goods movement route in the Lower Mainland. This
congested 13 hours a day. Built as a four-lane bridge
route suffers from the worst congestion of all major
in 1964 (now modified to five lanes incorporating an
roads and is experiencing the most rapid growth in
eastbound HOV lane) when the population of Greater
traffic.
Vancouver was 800,000, the Port Mann Bridge carries
approximately 127,000 vehicles per daya 65 per cent Objectives: Port Mann/Highway 1
increase since 1985 when daily traffic numbered Corridor Pre-Design Concept
77,000 vehicles. Despite having fewer lanes, daily
Studies were conducted using widely recognized
traffic on the Port Mann Bridge is 20 per cent higher
tools and planning models along with the goals and
than on San Franciscos Golden Gate Bridge.
analytical parameters established for the Gateway
The average morning peak period queue to access Program to develop a pre-design concept for the
the Port Mann Bridge westbound is approximately Highway 1 corridor. This concept represented
eight kilometres long, typically extending as far as a conceptual point of reference for the physical
192nd Street. Analysis indicates the average queue scope of the Project. Various components of
could extend 17 kilometres to 216th Street by 2021 the Highway 1 corridor were studied, with each
if improvements are not made to this corridor. study indicating the need to provide significant

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 PORT MANN/HIGHWAY 1 IMPROVEMENT PROJECT

improvements to accommodate forecasted traffic highway, twinning the Port Mann Bridge, upgrading
levels. These studies also strongly recommended interchanges and improving access and safety on
addressing safety issues along the highway which Highway 1 from the McGill Street interchange in
included insufficient merge lengths, extensive off- Vancouver to 216th Street in Langley, a distance of
ramp queues that back up onto the highway and approximately 37 kilometres.
undesirable lane changing at on- and off-ramps.
Specific physical scope elements of the pre-design
concept included:
Project Goals
As a result of these studies, the following goals McGill Street to Grandview Highway
were established for the Port Mann/Highway 1 (Vancouver): Two new lanes (one in each
Improvement Project: direction) and improvements to the following
interchanges: McGill Street, Hastings Street, First
Reduce travel times for trips along the corridor
Avenue, Boundary Road and Grandview Highway.
and increase travel time predictability;
Grandview Highway to Douglas Street
Reduce congestion at entry and exit points to
Overpass (Burnaby): Improvements at the
Highway 1;
Willingdon interchange and a new overpass
Reduce travel times for trips across the corridor
across Highway 1 at Wayburne Drive, as well
and improve connections within and between
as improved traffic flow via a new auxiliary lane
communities;
system.
Improve access to and egress from the corridor
Douglas Street Overpass to North Road
for goods movement;
(Burnaby): Two additional lanes (one in each
Facilitate the introduction of transit service along
direction) and improvements to: the Sprott
the corridor and the improvement of transit
Street and Kensington Avenue interchanges, the
service across the corridor;
Gaglardi Way interchange and the Cariboo Road
Expand HOV, cycling and pedestrian networks
overpass.
along or in the vicinity of the corridor; and
North Road to Cape Horn (Coquitlam): Two new
Improve safety for vehicle operators and
lanes (one in each direction) and improvements
passengers, cyclists and pedestrians.
to the Brunette Avenue interchange, an improved
The pre-design concept for the Port Mann/Highway highway crossing at King Edward Street and
1 Improvement Project included the following improvements to the Cape Horn interchange.
features: The Port Mann Bridge (CoquitlamSurrey): A
new four-lane bridge for eastbound traffic with
Added capacity to the Highway 1 corridor;
capacity to accommodate an additional lane in
Extending the westbound and eastbound HOV
the future.
lanes on Highway 1;
152nd Street to 200th Street (Surrey/Langley):
Transit priority measures, including the
Four new lanes (two in each direction), extension
introduction of bus service through transit queue-
of HOV lanes and improvements to the following
jumpers and extended HOV lanes;
interchanges: 152nd Street, 160th Street, 176th
Significant cycling and pedestrian infrastructure
Street and 192nd Street.
improvements; and
200th Street to 216th Street (Langley):
Ability to accommodate future light rail rapid
Transition to six lanes at 200th Street, then back
transit expansion across a new Port Mann Bridge.
to four lanes (two in each direction) at a new
216th Street interchange.
Physical Characteristics of the
Intelligent Transportation Systems: Including
Project dynamic message signs, closed-circuit cameras
In addressing these goals, the Ministry of
and vehicle detectors to provide for early
Transportation and Infrastructure developed a
detection of traffic incidents, effective emergency
pre-design concept for the Port Mann/Highway 1
response and efficient removal of vehicles and
Improvement Project which included widening the
debris.

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PORT MANN/HIGHWAY 1 IMPROVEMENT PROJECT

Tolling In keeping with current tolling methodology around

Another important element of the Project pre- the world and considering the projects primary
design concept was the consideration of tolling as a objective to address congestion as well as the
potential option to reduce congestion, limit growth geographic constraints of the Highway 1 corridor,
in traffic demand and generate revenue to pay for a fully electronic, open road tolling system was
the improvements. adopted as the tolling methodology. This ensures
no toll booths, no stopping and no unnecessary
Analysis showed that tolling, as part of a suite travel time delays for users. A wide range of
of congestion reduction measures, would help convenient payment methods was also determined
manage traffic growth over time, and ensure to be necessary to ensure that the system is simple,
the long term effectiveness of the highway easy and effective to use.
improvements.
Open road tolling systems generally require users
An extensive public consultation process was to possess an electronic tolling device, such as a
undertaken regarding the proposed improvements transponder, linked to a credit card allowing tolls
and the bridge toll. A majority of consultation to be automatically charged when the user travels.
participants supported the $2.50 (2005$) toll each Traditionally, users without an electronic tolling
way for private vehicles. With consumer price device are required to pay a higher rate, or not use
index increases, the toll rate for cars will be in the the system at all. However, key to the Port Mann/
$3.00 range when the Port Mann Bridge opens in Highway 1 Improvement Project was ensuring all
2012. In June 2006, following the extensive public users would qualify to pay the lowest possible rate.
consultation process, it was announced that tolls This necessitated creating options for vehicles
would be applied to the new Port Mann Bridge. without a transponder to pay the minimum toll rate.
These options include permitting these users to pay
in advance of travel or to pay in a timely fashion
following use.

Artists rendering of the new 10-lane Port Mann Bridge. The new bridge will accomodate new Highway 1 RapidBus service, providing
service between Langley and Burnaby in 25 minutes or less. The bridge will also be built to accomodate future light rail rapid transit.

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 PORT MANN/HIGHWAY 1 IMPROVEMENT PROJECT

Construction of westbound HOV ramp to Grandview Highway. This upgraded connection will provide significant benefits to users
such as improving safety and accessibility.

Other elements of the proposed tolling structure An Environmental Assessment Certificate under the
include: B.C. Environmental Assessment Act (BCEAA) was
received on June 12, 2008 and the federal screening
Registered HOV vehicles using the HOV lanes will
decision under the Canadian Environmental
pay a reduced toll rate during peak hours;
Assessment Act (CEAA) was received in July 2008.
Motorcycles will pay a reduced toll rate;
This constituted approval under the harmonized
Commercial vehicles will pay a toll rate higher
BCEAA/CEAA environmental review process and
than passenger vehicles, but this rate will be
identified the commitments that the proponent
reduced at night;
must implement throughout the various stages of
Registered vehicles for persons with disabilities as
the Project.
defined under the Persons With Disabilities Act,
will travel for free; and
Public Consultation
Other potential toll discount options to be
Extensive public consultations on the Port Mann/
determined.
Highway 1 Improvement Project began in 2006,
occurring at key design stages including pre-design
Environmental Assessment
(2006-2007) and preliminary/detailed design as the
The Port Mann/Highway 1 Improvement Project
contractor completes design work (late 2009-early
was subject to a harmonized federal/provincial
2011). Consultation has involved small group
environmental review process. An environmental
meetings with a broad cross-section of stakeholders,
assessment for the Project was prepared and
open houses, local area community meetings and
submitted to the B.C. Environmental Assessment
web-based consultation.
Office for review. Potential environmental and
socio-community impacts were identified, along with For more information about the Project, including
proposed mitigation and compensation measures, community and stakeholder input received
to ensure that the Project could proceed with no during each phase of consultation, visit:
significant environmental impacts. www.pmh1project.com/

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PORT MANN/HIGHWAY 1 IMPROVEMENT PROJECT

2. Project Benefits
User Benefits Economic Benefits
The new Port Mann Bridge will replace the existing The Project is expected to generate more than
45-year old bridge and provide the capacity 8,000 person years of employment and contribute
needed to meet current and future traffic demand. more than $800 million to the provincial gross
The Project will also provide the first bus service domestic product.
across the Port Mann Bridge in more than 20 years,
Throughout construction, the Kiewit/Flatiron
including a new RapidBus servicea joint initiative
General Partnership (Kiewit/Flatiron) will hire
of the Province and TransLinkthat will allow
hundreds of workers. At the peak of construction,
commuters to travel from Langley to the SkyTrain
Kiewit/Flatiron expects to have up to 1,200 staff
in Burnaby in less than 25 minutes. In addition to
and trade workers of which the vast majority will be
RapidBus service, the new bridge will be built to
from British Columbia.
accommodate potential light rail rapid transit at a
future date. As of July 2010, Kiewit/Flatiron has tendered and
awarded more than $500 million in subcontracts
Improving capacity and transit will provide
for the Project to approximately 100 companies,
significant road and bridge user benefits, primarily
most of which are based in British Columbia. This
through:
represents about 20 per cent of the total design-
Travel time savings (avoiding delays); build agreement value and additional subcontracts
Reducing vehicle operating costs; and will be initiated as construction progresses.
Improving safety.
The Project will also provide long-term economic
These improvements will help travelers realize benefits by:
time savings of up to 30 per cent due to reduced
Improving the competitiveness of B.C. and
congestion. The value of the anticipated travel time
Canadian businesses moving goods to market
and operating cost savings is estimated to have a
through and within the region;
present value of more than $5 billion over a 35 year
Reducing transportation costs of goods and
operating period.2
services for consumers; and
Increasing the productivity of workers by reducing
Safety Benefits
the travel times of service providers in the region
The Project will also provide significant safety
and the number and extent of delays.
improvements along this major transportation
corridor, including:
Additional Benefits
Reducing congestion on Highway 1, particularly Additional benefits of the Project relate to
during peak periods, through widening the anticipated long-term socio-community
highway; extending HOV lanes; providing transit improvements, including:
and commercial vehicle priority access measures;
Improving intra-municipal access by reducing
and a new, wider Port Mann Bridge;
highway queuing that currently spills onto
Providing safer, more efficient highway on- and
municipal streets;
off-ramps, improving connections and improving
Providing improved cross-highway connectivity
cross-highway movement; and
within municipalities that span both sides of
Improving access for all modes of transportation,
Highway 1;
including public transit, and non-vehicle traffic
Maintaining local streets for local use by
by enhancing and adding cycling and pedestrian
improving the efficiency of regional corridors; and
facilities.

2
The user benefit analysis employs the discounted cash flow method over a Project life cycle of 35 years using a six per cent
discount rate.

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 PORT MANN/HIGHWAY 1 IMPROVEMENT PROJECT

Improving air quality by reducing congestion- A new 10-lane bridge that will result in improved
related idling vehicle emissions and providing safety and traffic flow. The new bridge will
reliable alternatives to the single occupant include dedicated lanes that separate highway
vehicle. through-traffic from the more than 30 per cent of
bridge traffic that exits in Surrey or Coquitlam,
In addition, the design and construction partner,
immediately after the crossing;
in response to the competitive selection process,
Significant environmental improvements as a
proposed a number of value-added improvements
result of having fewer piers in the river.
beyond the Ministry of Transportation and
Increased capacity for transit across the Fraser
Infrastructures requirements. These improvements
River through improved access to bridge on-
will result in better safety, improved traffic flow and
ramps;
reduced operations and maintenance costs over
Earlier bridge opening; and
time. These improvements and associated benefits
Removal of the existing bridgeonce the new
include:
bridge is completewhich will save expenditures
in maintenance, rehabilitation and seismic
upgrades that would have been required on the
old bridge.

Construction of the north tower. This is one of the two towers, rising 158 metres from the water that will be supporting the
cable-stayed main bridge.

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PORT MANN/HIGHWAY 1 IMPROVEMENT PROJECT

3. Project Delivery Options

The B.C. Ministry of Finance has mandated through Minimizing traffic impacts during construction;
its Capital Asset Management Framework (CAMF) and
that the following principles guide all public sector Fulfilling all environmental obligations.
capital procurement:
Procurement Options Analyzed
Fairness, openness and transparency;
The Ministry of Transportation and Infrastructure
Allocation and management of risk;
and Partnerships BC considered a range of
Value for money and protecting the public
procurement options as described below.
interest; and
Competition.
Design Bid Build (DBB)
In addition, in 2008 the Province revised the capital This is a traditional project delivery model where
standard requiring, for all capital projects in which the Province develops a detailed design for the
the provincial government contribution exceeds construction requirements of the project. Once
$50 million, that a public private partnership (PPP) the design and specifications are complete, a
be considered for procurement unless there is a tender call is issued. The lowest qualified price is
compelling reason to do otherwise (e.g. a different selected and a construction contract is awarded.
procurement model will generate better value The construction contractor takes responsibility
for money). Further, projects where the provincial for performing the construction work based on
government contribution is between $20 million the specifications and detailed drawings. Under
and $50 million will be screened to determine DBB procurement the contractor usually receives
whether a more comprehensive assessment of the monthly progress payments. The management of
project as a PPP is warranted. the interface between major project elements is the
responsibility of the Province. When construction
Project Procurement Objectives is complete, the asset is handed over to the
In support of the Provinces Capital Asset Province who would then contract separately for
Management Framework, procurement was the operation and maintenance of the project.
carefully considered through the development Rehabilitation is designed and funded by the
of procurement objectives based on the Project Province and contracted when the work is required.
goals. These procurement objectives were then
In this model, separate parties are responsible for
used to help in identifying and assessing a range of
design, construction and maintenance at different
procurement options for delivering the Project. The
times in the projects life cycle and therefore
procurement objectives included:
opportunities for innovation in these areas are
Achieving value for taxpayers dollars; potentially not optimized.
Meeting the Provinces financial goals and
constraints;
Developing an attractive and marketable
transaction;
Achieving a fair and transparent procurement
process;
Ensuring public and stakeholder input throughout
the delivery of the program;
Achieving timely delivery and efficient Project
sequencing;
Ensuring effective asset performance throughout
the Project term;

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 PORT MANN/HIGHWAY 1 IMPROVEMENT PROJECT

Design Build (DB) In the case of the Port Mann/Highway 1

In this project delivery model the Province enters Improvement Project, the risk associated with the
into a DB agreement with a lead contractor revenue stream from the collection of a toll led
who has the responsibility of both preparing the to the consideration of a variation of the DBFO
detailed design of the project and undertaking arrangement. Like other DBFO arrangements,
the construction. Combining the design and build the private partner would be required to design,
aspects of construction focuses responsibility for build, finance, operate, maintain and rehabilitate
the construction risks on a single entity. The lead the corridor over the life of the agreement.
contractor is paid based on certain construction However, once the Project had been substantially
milestones being achieved. However, the Province completed, instead of receiving compensation
retains the responsibility and risk associated with through a performance-based payment mechanism,
the performance of the asset during the operations the private partner would receive compensation
phase. The management of the interface between through levying government regulated tolls on
major project elements is the responsibility of the road users and would therefore assume the risk
Province. When the DB agreement is complete, the associated with this revenue stream. Thus, the
asset is handed over to the Province who would private partner would bear the full cost of the
then contract with an operations and maintenance Project regardless of whether or not the forecasted
contractor to perform those functions for the traffic volumes materialized. This approach would
project. Rehabilitation is designed and funded still include the ability to impose penalties for non-
by the Province and contracted when the work is performance.
required.
Recommended Procurement
As separate parties are responsible for the Model
construction and the ongoing maintenance of
The procurement options analysis identified the
the project, life cycle innovation is potentially not
variation of the DBFO as the preferred procurement
optimized nor is any long-term risk of the design
delivery model. This variation included the
and construction quality transferred.
requirement that the private partner only apply tolls
within the tolling framework set and regulated by
Design Build Finance Operate the Province.
(DBFO)
In a DBFO agreement, the private partner accepts In addition, if actual revenue from the tolls
responsibility for arranging design, project exceeded expectations, a revenue sharing
financing and for carrying the costs of construction, mechanism would have been applied to protect
operations and maintenance during the term of the public interest and allow for a reasonable
the agreement. The contractor typically receives rate of return for the private partner. Performance
compensation through a performance-based incentives were also included to ensure the private
payment mechanism which may involve payments partner effectively managed the entire corridor.
for road availability, safety, congestion management At the time of approval, the DBFO model was
and other independent measures. The payment considered to be the most effective procurement
mechanism allows the application of penalties for model to achieve the procurement objectives
non-performance during both the construction and and the Port Mann/Highway 1 Improvement
operations phases. The penalties vary in severity Project goals, while delivering strong value for
depending on the type of non-performance. taxpayers dollars by transferring risks ranging from
construction to traffic volumes.

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PORT MANN/HIGHWAY 1 IMPROVEMENT PROJECT

4. Competitive Selection Process

Once the preferred procurement model was The RFP encouraged the proponents to innovate
determined, a competitive selection process for the and provide their own design solutions as
Project was designed that would be transparent, long as the performance standards set for the
fair, encourage competition, and allow the selection Project could be met or exceeded. For example,
of an industry partner that would best support proponents had the opportunity to determine
the Provinces objectives and achieve value for whether to retain the existing bridge and provide
taxpayers. a second bridge to meet capacity requirements, or
to provide a new bridge that would carry all of the
The Ministry of Transportation and Infrastructure
traffic.
engaged Partnerships BC to manage the
competitive selection process. The competitive The RFP was based on an interactive approach
selection process included two stages based on a that included extensive technical and commercial
Request for Qualifications (RFQ) and a Request for in-confidence workshops and topic meetings.
Proposals (RFP). The Project RFQ was marketed These sessions were intended to address and work
provincially, nationally and internationally resulting through any project-specific issues identified.
in submissions from six respondents. From the
Evaluation of the RFP submittals was undertaken
respondents, the three most qualified teams that
by an evaluation team comprised of leading
had demonstrated their capability to successfully
experts in key areas, including:
design, build, finance, operate and maintain the
Port Mann/Highway 1 improvements, were invited Highway safety;
to submit proposals for delivery of the Project. Construction traffic management;
The three proponents announced in August 2007 Highway design and construction;
included: Finance;
Environmental management; and
Connect BC Development Group:
Engineering.
The Macquarie Group (Macquarie Bank Limited,
Macquarie Infrastructure Group and Macquarie The responses to the RFP were received in two
Infrastructure Partners) submissions. A technical submittal, which was
Transtoll Inc. evaluated to ensure that the design, construction,
Gateway Mobility Partners: maintenance and operations proposed by each
Cintra (Concesiones de Infraestructuras de proponent would meet the requirements of the
Transporte) S.A. RFP. Subsequently the final submittal, which
Skanska Infrastructure Development, AB addressed pricing and financing requirements, was
Highway 1 Transportation Group: provided a short time following the completion
Bilfinger Berger Group of the evaluation of the technical submittal. After
Transurban Group completion of the evaluation, and according to
the criteria and procedures as set out in the RFP,
the Connect BC Development Group was selected
as the preferred proponent in August 2008.
An agreement-in-principle was then reached in
January 2009.

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 PORT MANN/HIGHWAY 1 IMPROVEMENT PROJECT

The table below summarizes the competitive selection process timeline.

PROCUREMENT STAGE TIMING OUTCOME:

Request for Qualifications May 22, 2007 to The project was marketed locally, provincially and
June 15, 2007 nationally. Submissions from six respondents were
evaluated and a shortlist of three teams was announced
August 7, 2007
Connect BC Development Group
Gateway Mobility Partners
Highway 1 Transportation Group

Request for Proposals Issued August 7, The three shortlisted teams submitted proposals. This
2007 stage included extensive workshops and topic meetings.
Technical
Submittals
February 29, 2008
Final Submittals
May 30, 2008

Selection of Preferred August 19, 2008 After evaluation of the proposals, Connect BC
Proponent Development Group was selected as the preferred
proponent.

Agreement-in-Principle January 28, 2009 The parties agree to work to finalize terms of the
agreement.

Negotiations impasse February 27, 2009 An agreement could not be reached, and the Province
announces plans to proceed with the project using
traditional financing.

Design-Build Agreement March 17, 2009 The Province enters a fixed-price, design-build
agreement with Kiewit/Flatiron General Partnership to
design and build the Project.

Fairness Reviewer Decision to Proceed Using a

A Fairness Reviewer, Jane S. Shackell, QC, Design-Build Agreement
monitored the competitive selection process and Following the agreement-in-principle, several
completed four fairness reports at key points during weeks of comprehensive negotiations took place.
the procurement process. However, the Province and the preferred proponent
The Fairness Reviewer concluded that the were unable to reach a mutually satisfactory
evaluation and selection process was implemented agreement and on February 24, 2009, negotiations
impartially, fairly and without bias or discrimination. were concluded. The inability of the parties to
reach an agreement reflected the challenging and
Agreement-in-Principle unprecedented economic and financial market
On January 28, 2009, the Province entered into environment at the time. Despite the significant
an agreement-in-principle with Connect BC commitments of debt and equity capital to the
Development Group. The agreement specified Project, and the strength of the consortium
broad terms of a DBFO agreement to guide further partners, Partnerships BC ultimately recommended
negotiations. Due to the international economic that the Province not proceed. The Province and
crisis, the agreement-in-principle also specified the Connect BC Development Group mutually agreed
Provinces commitment to provide about one-third to end the DBFO procurement process.
of the financing required for the Project, standing The competitive selection process was designed to
behind a significant equity investment from the allow for an agreement with individual proponent
private sector partner, and on the same terms and team member(s) in the event an agreement could
conditions as the banks providing debt financing. not be reached with a proponent. The Province

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PORT MANN/HIGHWAY 1 IMPROVEMENT PROJECT

determined that the DB agreement proposed by On this basis, the Province was able to incorporate
Kiewit/Flatiron in the Connect BC Development many of the benefits of the DBFO procurement
Group proposal provided the best value. On process that had been realized to date, including
February 27, 2009, the Province announced it the innovation of the single bridge, and transferring
would enter into a fixed-price contract with Kiewit/ the risk of cost overruns and schedule delays to the
Flatiron General Partnership, to design and build contractor.
the new, 10-lane Port Mann Bridge and Highway 1
improvements.

Completed sections of the new bridge deck and the gantry crane. The new Port Mann Bridge will be operational by December 2012.

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 PORT MANN/HIGHWAY 1 IMPROVEMENT PROJECT

5. Final Design Build Agreement

On March 17, 2009, the Province entered into a Profile of the DB Partner
fixed-price, design-build agreement with Kiewit/ Kiewit/Flatiron General Partnership is a joint
Flatiron General Partnership. The Kiewit/Flatiron venture between Peter Kiewit Sons Co. and Flatiron
proposal went through a rigorous, competitive Constructors Canada Limited.
process as part of the original RFP for the Port
Mann/Highway 1 Improvement Project, where Members of the Kiewit/Flatiron General Partnership
it formed the design-build portion of the bid are:
submitted by the Connect BC Development Group. Peter Kiewit Sons Co.: Since establishing its
presence in British Columbia in the early 1940s,
Innovations/Benefits Gained from Peter Kiewit Sons Co. has been a leading heavy
the DBFO Process construction contractor, earning the reputation
Significant innovative approaches to the final DB for successfully delivering some of the largest
agreement and associated benefits were achieved and most challenging projects in the province
as a result of undertaking a DBFO competitive on time and within budget. The Kiewit group of
selection process. These include: companies is among North Americas largest and
most successful contractors.
Competition and innovation: The competitive
Flatiron: Flatiron, established in 1947, is a
nature of the bidding process encouraged
subsidiary of Hochtief Aktiengesellschaft, a
the proponent teams to develop innovative
leading provider of international construction
solutions in all aspects of the Project from design,
related services, and is consistently ranked
construction and through to operations. In this
among the continents top builders, providing
case, the Connect BC Development Group
quality and ingenuity in transportation and civil
proposed an innovative single-bridge design
construction.
which included the demolition of the existing
H5M: A design joint venture between Hatch Mott
bridge. The single-bridge design was based
Macdonald Ltd. and MMM Group Ltd., will lead
on their assessment that over the term of the
the on-shore design services for the Project.
agreement, this approach would be the most
TY Lin International: With extensive experience
cost-effective. This formed a key component of
in cable-stayed bridge design, TY Lin
the final DB agreement with Kiewit/Flatiron.
International will lead the design team for the
Schedule and cost certainty: The risks of cost
new Port Mann Bridge crossing.
and schedule overruns are transferred to the DB
contractor, thereby providing a financial incentive
to complete the Project on time and on budget.
Key Terms of the DB Agreement
Integration: One of the benefits of the DBFO Final Design-Build Costs
delivery model is the integration of design, The total design and construction cost associated
construction, long-term maintenance and with the fixed-price, design-build agreement with
rehabilitation of the Project into one agreement, Kiewit/Flatiron General Partnership to design
with a single point of accountability and and build the new, 10-lane Port Mann Bridge and
responsibility for those functions transferred Highway 1 improvements is $2.46 billion.
to the private partner. Although the DBFO
agreement was not concluded, the final DB
agreement with Kiewit/Flatiron incorporates this
whole Project life cycle approach taken by the
Connect BC Development Group, and includes
optimized design and traffic management
solutions that may not have otherwise been
considered.

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PORT MANN/HIGHWAY 1 IMPROVEMENT PROJECT

Scope of the DB Agreement: Design and New special purpose ramps at four locations:
Key Features HOV ramps at Grandview Highway
Kiewit/Flatiron is responsible for the following (Vancouver);
aspects of the design and construction of the Port Transit-only ramps at Government Street
Mann/Highway 1 Improvement Project: to connect to the Lougheed Town Centre
Station (Burnaby);
Widening of Highway 1: Widening of 37 Truck-only ramps to United Boulevard/Pacific
kilometres of Highway 1 from the McGill Street Reach (Coquitlam); and
Interchange in Vancouver to 216th Street in Transit/HOV ramps at 156th Street (Surrey)
Langley. New Port Mann Bridge: A new, 10-lane bridge
West of the Port Mann Bridge one additional with a capacity of five tolled lanes of traffic in
general purpose lane will be added in each each direction and the ability to accommodate
direction (total of three general purpose and light rail rapid transit in the future. The new
1 HOV lane in each direction to Grandview crossing will be 2.03 kilometres long, 50 metres
Highway and two general purpose and one wide (roadway only) and will have a minimum
HOV lane in each direction to McGill Street of 40 metres of clearance above the high
when completed). water level. The new bridge will have three
East of the Port Mann Bridge two additional components:
lanes in each direction will be built to 200th A cable-stayed main bridge across the Fraser
Street, providing one new HOV lane in each River (850 metres);
direction (total of four lanes in each direction). South approach, Surrey (360 metres); and
Between 200th Street and 216th Street, one North approach, Coquitlam (820 metres).
additional general purpose lane is planned Cycling and pedestrian access: Cycling and
in each direction (total of three lanes in each pedestrian measures will be incorporated into all
direction). new structures where they connect to existing or
Upgrading interchanges and improving access planned infrastructure.
and safety, including transit and commercial
vehicle priority access: WHY A NEW, SINGLE BRIDGE DESIGN?
Sixteen new structures will be constructed or
Significant rehabilitation required for the old
rebuilt at the Cape Horn interchange;
bridge
Seven Highway 1 overpasses are being widened
Overall lower life cycle cost
(First Avenue, Lougheed Highway, BNSF
Greater efficiency and traffic safety through
Railway near Boundary Road and BNSF Railway
the use of through-lanes and local-connection
near Cariboo Road, Boundary Road, Brunette
lanes between Surrey and Coquitlam
River and North Road);
Nine Highway 1 interchanges are being
replaced (Willingdon Avenue, Sprott Street,
Kensington Avenue, Gaglardi Way, Cariboo
Road, King Edward Street, 152nd Street, 160th
Street and 176th Street); and

15
 PORT MANN/HIGHWAY 1 IMPROVEMENT PROJECT

Performance-based Principles Due to increased economic and financial market

The DB agreement entered into with Kiewit/ instability after procurement commenced, the
Flatiron protects the public interest by specifying Province made the decision to cease negotiations
performance standards, and providing completion and proceed with the DB agreement. As a result
incentives and penalties based on performance. of proceeding with a DB agreement rather than a
DBFO, some risks that were originally transferred to
Key terms of the agreement include: the private partner were retained by the Province.
Significant liquidated damages for late These include: risks related to tolling revenue, toll
completion; collection and the tolling system. The Province also
Penalties to be applied for: retained responsibility for operations, maintenance
Non-adherence to the traffic management plan and rehabilitation for the Project.
set out in the agreement; However, the risk transfer associated with the DB
Non-compliance measured against delivery of agreement for the Project is an enhancement to
all contractual requirements; and the historic approach to DB agreements because
Unsatisfactory quality management it transfers risks in a manner consistent with typical
performance. DBFO agreements. For example, the majority of
Requirement to participate in an interface the construction schedule and construction cost risk
agreement between the DB contractor, the tolling remained the responsibility of the DB partner.
contractor and operations and maintenance
contractor. This agreement requires the direct The DB agreement has been structured to pay the
cooperation between all parties to jointly manage DB partner through construction milestones based
the construction interfaces with the Province on progress of the work, and the Province has
providing oversight associated with these capped its annual expenditure exposure by having
interfaces. maximum annual payment amounts.

Risk Allocation Summary Construction Schedule

Throughout the competitive selection process, the Kiewit/Flatiron is responsible for meeting the
Province allocated risks according to which party following construction schedule:
would be best able to effectively manage those MILESTONES DATE
risks. For example, the DB partner is responsible
Construction start March 2009
for risks associated with design and construction,
utilities, traffic management, environmental New Port Mann crossing December 2012
management and quality assurance. The Province is opens with eight lanes and
tolling begins (will provide
responsible for risks related to property acquisition all movements to and from
and some off-corridor environmental work. There the bridge that are currently
are also risks that are shared between the two available)
parties, including events such as earthquakes and
Substantial completion December 2013
floods.
Final completion including December 2014
removal of existing bridge

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PORT MANN/HIGHWAY 1 IMPROVEMENT PROJECT

6. Final Project Structure

While maintaining government oversight, the Transportation Investment Corporation (TI Corp) will manage
all components of project delivery, including design, construction, financing and operations. TI Corp
will act as the authority and concessionaire for the Project and will be in charge of overseeing the
implementation of the Project. The final DB agreement is a contractual arrangement between Kiewit/
Flatiron General Partnership and TI Corp that spans from March 2009 (when the agreement was signed)
to December 2014 when final construction is completed and the old bridge is removed. Kiewit/Flatiron is
responsible for the design and construction of the Port Mann/Highway 1 Improvement Project as outlined
in the DB agreement. In addition to the scope provided under the DB agreement with Kiewit/Flatiron,
TI Corp is also responsible for the provision and consideration of additional improvements throughout the
Projects corridor to be completed when warranted by traffic volumes.

TI Corp will be responsible for operations, maintenance and the tolling infrastructure related to the Project
through separate agreements.

The organization chart below depicts the overall project structure, including the relationship between the
signatories to the final DB agreement.

Province of British Columbia

Transportation Investment
Corporation
(TI Corp.)

Design Build O&M

Contract
Agreement Contract

Kiewit/Flatiron Mainroad Infrastructure CS Systems Toll Operator

General Partnership Management Ltd. (Toll System Supplier) (TBD)

Interface Agreement

17
 PORT MANN/HIGHWAY 1 IMPROVEMENT PROJECT

Project Financing Additional Design and

TI Corp will finance the Project by borrowing money Construction Scope
from the Province using fiscal agency loans. The The agreement between the Province and TI Corp
interest rate to be paid by TI Corp on the fiscal includes consideration of additional design
agency loans is a flow-through of the Provinces cost and construction scope not included in the DB
of funding. agreement with Kiewit/Flatiron. This contemplated
scope will be considered further as traffic demand
Tolling, Operations and increases and the additional capital expenditures
Maintenance are warranted. The additional scope includes:
TI Corp will be responsible for procuring and
Construction of auxiliary lanes between
managing the following contracts:
Grandview Highway and Douglas Street as traffic
Routine operations and maintenance warrants;
during construction: Routine operations and Further reconstruction of the Brunette Avenue
maintenance during the construction period interchange above the interim safety and
are performed by Mainroad Infrastructure efficiency improvements that are included in the
Maintenance Ltd. DB agreement. The scope of the reconstruction
Routine operations and maintenance after will be influenced by future transportation plans
construction: The operator will manage currently under consideration by others;
the operations and maintenance of the Port 192nd Street interchange improvements; and
Mann/Highway 1 Improvement Project once Construction of the 216th Street interchange
construction is complete. The operator will be once agreements are reached with the local
determined by TI Corp in the future through a municipality.
competitive procurement process.
Tolling contractor: The tolling contractor will Accounting Treatment
collect tolls and manage tolling operations on B.C.s Office of the Comptroller General,
the new Port Mann Bridge. The tolling contractor responsible for the overall quality and integrity of
will be determined by TI Corp in the future. This the governments financial management and control
approach ensures that the readiness date for systems, has established accounting guidelines for
tolling implementation remains on schedule major capital projects. The total cost of the Project
while providing time to confirm and finalize including design and construction of the full project
tolling system and business rules. TI Corp intends scope, operations, maintenance and interest during
to proceed with a competitive selection process construction, for accounting purposes is $3.3 billion.
in 2011.

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PORT MANN/HIGHWAY 1 IMPROVEMENT PROJECT

7. Ongoing Design Build Agreement Monitoring

Under the DB agreement, Kiewit/Flatiron is required Monitoring by TI Corp
to register for, and maintain the standards of, the During the construction phase, TI Corp will provide
ISO 9001:2000 program, a program that focuses oversight and management of Kiewit/Flatiron
on maintaining established quality management activities throughout the term of the agreement.
standards. Elements of this function will include:
The DB agreement also includes checks and public Process monitoring and quality surveillance;
interest safeguards to ensure project delivery, Independent structural engineering review of the
performance and high quality standards. Close new Port Mann Bridge design and construction;
monitoring spans the design and construction Independent structural engineering review of the
phases of the Project and includes, but is not on-shore structures; and
limited to, the elements described below. Review of the monthly progress reports submitted
by Kiewit/Flatiron to ensure they accurately reflect
Self-Monitoring the work completed.
Kiewit/Flatiron is required to prepare monthly
quality management reports, undertake internal An independent certifier will monitor and report
and external audits, and host bi-annual quality on the construction progress to ensure that Kiewit/
management committee meetings throughout the Flatiron has met the obligations as set out in the
term of the agreement. DB agreement to reach both substantial completion
and final completion.
TI Corp will also be provided with open access to
the following: SCOPE OF WORK SUMMARY

Bi-annual Quality Management Committee On-shore

Meetings, Highway 1 Widening 37 kilometers
Regular Quality Task Force Meetings, Earthworks 3.1 million m3
Work plans, and Structures 30 new, 6 rehabilitated
Project Quality Managers Monthly Quality Retaining walls 100 m2
Report.
New Port Mann Bridge
New 10 lane, 850 m cable-stayed bridge
crossing the Fraser River
Structural Steel 12,000 tonnes
Concrete 157,000 m3
Approaches 1170 m
288 cables, 251 piles, 108 caissons
2 pylon towers, each 158 m high
Dedicated pedestrian and cycling facilities

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