Moody's: Florida I-4 P3 filed $100M claim for extra costs, wants 245 extra schedule days
- In its latest analysis of the $2.3 billion I-4 Ultimate project through Orlando, Moody's Investors Service affirmed the Baa1, moderate-risk rating on I-4 Mobility Partners' $1.4 million in construction loans, but changed its outlook from "stable" to "negative" because of the potential impact of a 245-day delay and extra cost claims of $100 million submitted to the Florida Department of Transportation (FDOT). The FDOT has a public-private partnership agreement for the 21-mile, toll-lane project with I-4 Mobility Partners, which is comprised of Skanska Infrastructure Development and John Laing, but the prime contractor is SGL Constructors, a joint venture between Skanska, Granite Construction and Lane Construction Corp.
- I-4 Mobility Partners' claims for additional schedule time and more money are related to the failure of drilled shafts, the reported result of subsurface geological conditions and design elements that increased that risk. Moody's said the number of noncompliance points that I-4 Mobility Partners accumulated in May due to minor flooding that necessitated lane closures and triggered increased state oversight also support the decision to lower its outlook to negative. According to contract documents for the project, noncompliance points are issued upon failure of the concessionaire, I-4 Mobility Partners, to operate and maintain assets in compliance with the contract requirements. I-4 Mobility Partners has disputed the number of noncompliance points and is expected to be in talks about points, delays and extra costs during the coming months.
- FDOT's review of I-4 Mobility Partners' claims could take as many as 120 days. Moody's could stabilize its outlook if the state reaches a decision favorable to I-4 Mobility Partners and even upgrade it if construction is completed successfully and the concession team can demonstrate it can carry out operations and maintenance with limited noncompliance points. A positive factor for the project is the depth of experience and financial stability of all the private partners, who could be able to reduce the schedule by 100 days through other strategies and efficiencies, according to the Orlando Sentinel.
Despite the inevitable hiccups on projects the size of the massive I-4 job, partnerships with the private sector are something that more transportation agencies are exploring as a way to transfer risk and take advantage of the industry expertise that comes along with the involvement of companies like Skanska, Granite and Lane.
Nevertheless, there hasn't yet been an overwhelming number of transportation-related P3s in the U.S. According to the Federal Highway Administration, there have been 37 such projects classified as P3s completed or underway, although there are many others that have benefited from elements that can be found in a P3, like design-build delivery or value capture.
Maryland Gov. Larry Hogan has proposed an ambitious highway project that would reduce congestion around the Washington DC metro area — a $9 billion congestion-relief plan that would include adding lanes to Interstate 270, Interstate 495 and the Baltimore–Washington Parkway in Maryland. Hogan has suggested that at least the I-495 and Capital Beltway portions of the projects be delivered as P3s, with private partners providing the design, finance, building, operations and maintenance components.
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