Partnerships Taking Off

By William J. Angelo.

Pushed by a growing school population of 23,000 kids and facing schedule and budget constraints, Stafford County, Va., has signed a design-build deal for three schools and several community facilities that could top $150 million. And many other localities seem to be headed in that direction with help from a new state law allowing public-private partnerships for infrastructure development.

The county’s board of supervisors and school board struck a deal in July with Haskell/Hess P3 Schools Joint Venture to build a new 950-student elementary school by fall 2004 and a 1,800-student high school by fall 2005. Combined, the projects cost an estimated $52 million. But the package deal also includes another 950-student elementary school and a day-care center, regional branch library, YMCA and 200-unit senior citizen community. By mixing public and private components, Haskell/Hess can sell or lease the private facilities to help fund the public part.

Haskell/Hess P3 is a joint venture of Haskell Co., Jacksonville, Fla., Grimm+Parker Architects, McLean, Va., and Hess Construction Co, Gaithersburg, Md. “Everything will be done by 2006 assuming the component contracts are successfully negotiated within the next six months,” says Kathleen A. Langan, Hess vice president. “And when it’s all in place, it will reduce the school system debt service by $10 million over 25 years—the life of the facilities.”

The team will develop two Stafford sites with 150 acres and 20 acres that are owned by the school board. “We get paid as we build,” says Langan. “This is a first for us because we typically do a single facility on one site. Now we have three schools on two sites and a large private component.”

Virginia has had positive experiences with such partnerships, known as P3s. In 1995, the legislature passed a law allowing P3’s to be used for highway projects. Design-build project delivery took off. With enactment of the Public-Private Educational Facilities and Infrastructure Act of 2002, design-build now can be used for virtually any public structure. Activity is picking up.

According to Langan, the city of Falls Church has just used the new law to award a design-build school contract and Winchester and Chesterfield Counties have received unsolicited school proposals, which are allowed under the law. The city of Fredricksberg also has put out a request for proposals for two schools, which Haskell/Hess will pursue.

“A lot of jurisdictions are looking into this law and requesting proposals,” says Langan. “It’s a great opportunity for school systems working under budget constraints.”

Alberici and Hoffman Team Up on Design-Build

Hoffman Corp., Appleton, Wis., and the Alberici Group, St Louis, Mo., are betting that design-build project delivery is not just a passing fad. Together, they have created a new firm, Hoffman LLC, which is devoted exclusively to design-build.

The two firms bring different capabilities to the venture. Hoffman is known for its project management and business development, while Alberici is famous for its construction expertise and financial muscle. Last year, Alberici had $176 million in design-build work, accounting for about 20% of its revenue, and Hoffman had $132 million in design-build work.

Hoffman LLC will be based in Appleton and assume all of Hoffman Corp.’s backlog. That firm will not disappear and owns 50% of the new firm, says Paul J. Hoffman, president of both firms. Hoffman LLC will not assume any of Alberici’s design-build jobs, but Alberici invested cash in it to double its size.

“We don’t anticipate any significant changes in the near future, “says Robert F. McCoole, Alberici president and CEO. “Hoffman LLC will function substantially independently from Alberici in its operations and continue to grow in northern Illinois and focus on projects in the upper Midwest. However, the two companies will immediately begin capitalizing on the geographic, project and operational opportunities that will strengthen both firms.”

Using tested tactics, the new firm will try to assume total project responsibility early in the project and focus on partnering with owners to make key decisions ahead of the design stage. “In our projects, we strive to team with owners to help with project vision, market research, feasibility, planning, financing and permitting, as well as design and construction,” says Hoffman. “Where Alberici helps is through their expanded owner contacts, project management resources and financing.” Hoffman LLC will continue to pursue Hoffman Corp.’s traditional education and senior living markets but will add health care and corporate commercial projects. “We’ve doubled our muscle,” says Hoffman.

The move is a major shift for Alberici. “Design-build facilitates relationships,” says McCoole. “It’s a real force in the marketplace and we are interested in improving our expertise.”