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Project Neon contractors share gain, pain

When the Nevada Department of Transportation opens bids for the massive Project Neon overhaul of the Spaghetti Bowl interchange of Interstate 15 and U.S. Highway 95 in a few weeks, even the losing bidders will have something to look forward to.

The biggest prize will go to the bid winner on the largest highway project in state history. State engineers have estimated the final cost of the 3.7-mile effort on the state’s busiest freeway interchange south to be $1.5 billion.

But the bidders that finish second and third won’t go away empty-handed. Through a bid process used in large design-build programs, the No. 2 and 3 bidders will receive $1.5 million each and the state can keep the intellectual property the bidders submit.

Dale Keller, the Department of Transportation manager for Project Neon, said as a result, it’s possible that a portion of a construction plan submitted by a losing bidder would be used by the winning bidder after contracts are modified and approved.

The process assures the public gets the best possible design for a project that will impact millions of motorists over three to four years of construction. It also minimizes the impact not only on motorists, but on residents of the neighborhoods surrounding the project and businesses that will have to weather a lengthy period of difficult access to their properties.

“The reality is that these contractors put together proposals at their own cost,” said Tony Illia, a spokesman for the Transportation Department. “The compensation they’ll receive doesn’t come close to covering the cost of developing the proposal, but at least it covers a small portion of their costs.”

The processes and procedures submitted by bidders become the property of the state. While some of those processes are project-specific, it’s possible that some portion of the plans could be used on other projects in the future since the state is offering a stipend for the intellectual property.

When the state opens the bids at the end of July, it gets a package that will include proposals for design concepts, engineering and construction. There are multiple layers to the project and each bidding project team will have its own ideas on the best way to complete the work with the least impact on the traveling public.

“We’ll get the soup-to-nuts details about everything that goes into completing the project,” Illia said.

The design-build program and the plan to compensate losing bidders for their work came about a year ago when the economy began rebounding and the bond market turned favorably for the state.

“Under design-build, we would own and finance the project ourselves,” Illia said. “It gives us more control.”

Initially, Project Neon was to be completed in the more traditional design-bid-build process which adds a few lengthy steps to get the work completed because certain details within the project would have to go to bid. Illia estimated that about one-third of the time it would take to complete the project under the traditional model would be eliminated under the design-build plan. And, since the financing of the project had turned favorable to the state, why not get it done faster?

Illia said the concept of compensating losing bidders for their intellectual property was used years ago in the construction of a telecommunications building on the College of Southern Nevada’s Cheyenne campus. It’s also commonly used in big projects undertaken in the private sector.

Under the Project Neon timeline, bids for the project will be evaluated through the end of this month and a general contractor will be selected by the State Transportation board of directors in September.

A final contract will be negotiated by the end of 2015. By then, the contractor will be able to provide specific details on what detours are going to be necessary on the streets surrounding Project Neon and prospective lane blockages on the freeways.

Transportation Department officials already are guaranteeing there will be some painful traffic times ahead when construction begins in March.

But the department has already begun preparing for one of the most complex building projects ever undertaken in the state.

For months, crews have been acquiring property — some of it through time-intensive condemnation proceedings — and relocating utilities.

Some of those are underground — water and sewer and gas lines, for example — while others are above ground, such as power lines.

Every line movement goes through a series of reviews and sign-offs. The state is working with its Project Neon partner, the City of Las Vegas, and every aspect of the plan is reviewed by city and county departments as well as utility companies.

Although Project Neon is high-profile, it’s not the only construction project in town. That means it could take several days for a sign-off to occur or a decision to be reached.

Once a contractor is on the job, though, the process should become a lot smoother as employees dedicated to certain aspects of a job are identified.

Project Neon is a four-phase operation. It won’t be determined until the contractor is chosen as to when the high-profile aspects of the work begin.

Some of the biggest changes ahead are construction of a new flyover ramp linking the north- and southbound high-occupancy-vehicle lanes on U.S. 95 to one of I-15’s express lanes, which will be converted to high-occupancy-vehicle use. The Charleston Boulevard exit on I-15 will be redesigned and the project also calls for the state’s first HOV exit, between Charleston and Oakey boulevards, accessing a network of roads on both sides of I-15 and called “the Neon Gateway.”

The state’s contract will be filled with incentives to reward the contractor for work completed early and disincentives to penalize the contractor for work completed late.

The contractor could qualify for a $20 million bonus if work is done ahead of schedule. But the contractor would be docked $73,000 a day for every day the project is late, $13,300 for every 10 minutes of freeway lane closures and $2,300 for every 10 minutes of local street closures.

Yes, there will be pain. But at least those vying for the job will have an incentive to make it less painful.

Follow @RickVelotta on Twitter. Contact reporter Richard N. Velotta at rvelotta@reviewjournal.com or 702-477-3893.

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