Engineering chief basks in project's smooth flow

Because Douglas Selby is responsible for ensuring that Las Vegas Valley water can reach nearly twice as many people as now, one could excuse him if he were feeling overwhelmed.

As engineering director for the Southern Nevada Water Authority, Selby is overseeing the most expensive nonfederally funded public-works project in state history. At a price tag of $2.02 billion, it is also the largest ongoing water project of its kind in the nation.

If Selby feels pressure, he doesn't show it. He's smiling because the project so far has come in under budget estimates and has a labor safety record much better than the national average.

"It's pretty challenging construction," Selby said. "It has a lot of complexities. It's not just straight earth work. There's underground construction and marine construction.

"The underground work at Lake Mead has the most unknowns. That's the one that concerns me the most in terms of things beyond our control and beyond the contractors' control. We've encountered things underground that we did not expect to see. In one case the geology was allowing more water to seep into the underground system than we anticipated."

The project has attracted some of the nation's largest engineering and construction firms since the water authority began awarding contracts for the work in late 1993.

One of the first contracts was awarded to Parsons Infrastructure & Technology, the construction and design manager hired to make sure the project is built on time and within budget.

A subsidiary of Parsons Corp., a privately held company in Pasadena, Calif., Parsons Infrastructure has overseen improvements in water and sewer systems in Tampa, Fla., and San Diego and is managing construction of the Eastside Reservoir near Hemet, Calif.

The company, selected by a panel of local public-works officials from a field of three finalists, will have been paid about $73.1 million through June 30.

Company Vice President Jess Yoder, who works out of the water authority office on East Flamingo Road, reports to Selby. Yoder's staff includes about 80 employees, most of whom inspect the construction, negotiate change orders and review the contractors' work schedules.

"There has not been any instance yet when work didn't get done when it was supposed to," Yoder said. "The contractors haven't had trouble getting supplies or labor."

Parsons also supplies biologists to monitor construction sites for desert tortoises, which are an endangered species. So far more than 50 tortoises have been found and moved to protected areas. The workers who discover tortoises are rewarded with T-shirts that read "Preserving Nevada's Desert."

Selby said the relatively smooth progress of the project, along with plentiful competition for most of the construction contracts, translates to cost savings.

One might question the authority's claim given the fact that the original estimated cost of the project, $1.7 billion in 1995 dollars, has now grown to $2.02 billion. But Selby said most of the difference was caused by inflation, which he calculated at 3.7 percent compounded annually over the past four years.

The water authority also amended its original plans by budgeting more than $73 million for an ozone treatment process designed to kill harmful bacteria in water more effectively than the current chlorination system.

There also has been a net addition of $19.3 million in change orders to the $802.8 million in construction contracts already awarded, a 2.4 percent difference. But Selby said change orders for such public-works projects generally run about 5 percent.

The project has not been without controversy. There have been union vs. nonunion squabbles and a dispute over the state law that gives preference to local contractors.

But the authority asserts that the water project's current $2.02 billion cost estimate is actually more than $122 million below what it should be at the midpoint of construction when factoring in such variables as 1995 dollars vs. 1999 dollars and changes in construction plans. That's why Selby boasted of cost savings.

"We're pretty happy that we've gotten good contractors," Selby said. "They know what they're doing and executing their work on schedule. We're also paying our bills promptly and have a reputation for that."

The construction work also has been exceptionally safe compared to national standards for large engineering projects. Through 1998 the water project suffered only about one-eighth the number of lost work days typical of these projects.

There also have been only 2.7 injury-related incidents per 200,000 man-hours worked, compared to the national average of 9.6 incidents. Parsons takes some credit for that because company employees monitor the safety of job sites, but the construction workers also must pass drug and alcohol tests as a condition of employment.

The most treacherous work so far has been performed by Lake Mead Constructors, the leading contractor on the project. The company is a partnership of Kiewit Western Co. and Gilbert Western Corp., two subsidiaries of construction giant Peter Kiewit Sons' Inc. of Omaha, Neb.

Lake Mead Constructors is building the second intake "straw" in Lake Mead that will help deliver Colorado River water to the Las Vegas Valley beginning in 2002. The company also was awarded $146.5 million, the largest single nonfederally funded public-works contract in state history, to build the River Mountains water-treatment facility that will supplement the existing Alfred Merritt Smith treatment plant.

Dennis Davis, Las Vegas manager for the Kiewit companies, declined to comment on the profit his company expects to make, but he said the industry standard is about 3 percent of the contract amount. With nearly $400 million in contracts so far, the company's profit on the water project should exceed $10 million. But as Davis noted, the work also involves high risk, especially the tunneling beneath the lake at depths exceeding 200 feet.

"Tunneling is always a risk, and the authority also wants the work done in a quick time frame," Davis said. "Since it's under the lake the water floods into the tunnel. Before we can advance, we have to drill into the cracks and plug them up. It's time-consuming to do that."

Kiewit is used to working on large projects. The company is a lead contractor in the reconstruction of Interstate 15 in Salt Lake City. At $1.3 billion, it is the largest highway reconstruction contract in the nation. The company also has built some of the world's largest offshore oil platforms.

But Davis said the work at Lake Mead also is drawing national attention among the construction trades.

"It's generating a lot of interest in the pipeline trades because of the amount of steel pipe going in," Davis said. "Normally you don't see these types of lake taps. The authority has done a very good job designing it."

Part of the reason the project is so expensive is that the water in the lake, where the elevation is about 1,200 feet above sea level, must be pumped about 1,000 feet higher in order to serve the valley.

"It makes a system like this more costly because we have to build more pumping stations, and we have to pay for the electricity," Selby said.

Like Parsons, lead project designers Montgomery Watson of Pasadena and CH2M Hill of Greenwood Village, Colo., were selected by a water authority panel of local public-works officials. Combined they will have been paid $68.4 million through June 30. Both companies have had considerable experience with water projects.

The water authority also hired public-relations firm Katz & Associates of La Jolla, Calif., to conduct town hall meetings as the water system's expansion moves through various neighborhoods throughout the valley. Disruptions to neighborhoods by the placement of underground water pipes typically hasn't lasted more than two weeks.

"We try to do our best to minimize these, but you can't put in pipeline that is 7 feet in diameter without disturbing some people," Selby said.

Some aspects of the project have resulted in litigation, however. The Nevada Supreme Court is considering an appeal by the Associated Builders and Contractors Association challenging the water authority's project labor agreement that requires union workers to be used. The appeal is based on a 1997 ruling by Clark County District Judge Jeff Sobel that the policy was legal.

The authority has argued that the policy provides a consistent labor pool at a time when construction is booming in Southern Nevada. The nonunion contractors counter, however, that the policy drives up their costs.

The authority already won another legal battle when Clark County District Judge Mark Gibbons ruled last year that it was proper to award a $109 million contract to Lake Mead Constructors to build the new water intake system in the lake.

Sletten Construction of Las Vegas, which offered a $113 million bid, argued that it should have won the contract under a state law that gives local contractors preference when they're within 5 percent of the low bid. But Gibbons agreed with State Hearing Officer Brian Nix, who ruled that Lake Mead Constructors was a joint venture formed to comply with Nevada law.

Selby conceded the law wasn't written clearly. He noted that the companies forming the joint venture had worked on other Nevada projects and paid taxes in this state for at least the past five years.

"The local-preference law has been written to benefit local contractors over out-of-state contractors, but it has been written where it can be interpreted in different ways," he said. "I would like to see the law clarified, and I believe other public agencies have come up with similar problems."

Davis said his own preference would be to eliminate the state law altogether.

"My personal opinion is that any of these preference laws are restraint of trade across state lines and drive the price up," he said.

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