Managing Risk through Contractor Selection: A Case Study

The Tarrant Regional Water District (TRWD), with its partner the City of Dallas Water Utilities (DWU), is currently engaged in the planning, design, and implementation of a 350 MGD raw water transmission system, which will run across north central Texas from Lake Palestine to Lake Benbrook, with connections to Cedar Creek Reservoir, Richland Chambers Reservoir, and a Dallas delivery point. Collectively, the system consists of approximately 145 mi. of 84- to 108-in. pipeline, a 5-mi 120-in. diameter tunnel, six 100-350 MGD pump stations, one 450 MG balancing reservoir, and ancillary facilities. The program developed by TRWD and DWU to accomplish these improvements is called the Integrated Pipeline Project (IPL). Procurement of over $845M in construction and $38M in owner furnished equipment has been a significant challenge for the IPL program. To date, 16 separate construction contracts and 10 contracts for owner furnished equipment have been awarded as part of the program. Selection of contractors and equipment manufacturers was one of the most significant risk factors identified in risk management workshops for the program. TRWD has used a competitive sealed proposal process, along with contractor prequalification, to select the best entities to construct the projects and provide key equipment as a way to mitigate this risk. This paper will discuss the procedures used for competitive sealed proposals, modifications made to the process to correct initial assumptions, and specific performance metrics used to compare the initial and final cost of projects to determine if these risk management strategies were effective.