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CHP Plant Saves Energy and Money For Penn State

HCO News Staff — Wed, 29 Nov 2017 17:53:49 +0000

By Rachel Leber

HERSHEY, Pa. — The Penn State Health Milton S. Hershey Medical Center is in the midst of building a combined heat and power system — or, CHP plant — that is expected to save the facility an estimated $2.5 million a year.

In addition to significant financial savings, the installation of the CHP plant is expected to reduce greenhouse gas emissions by about 44,000 tons per year. The initial investment of the plant is expected to cost about $19 million, and is projected to be finished by October 2018.

Bette & Cring headquartered out of Latham, N.Y. in collaboration with Cogen Power Technologies — also based out of Latham — have been contracted to design and construct the new CHP plant on the Penn State Milton S. Hershey Medical Center Campus.

The project will include construction of a ground level structural steel frame building housing the gas turbine generator (GTG), HRSG (boiler), electrical gear and other necessary ancillary equipment. The natural gas compressor and black start diesel generator will be located outside, just south of the structure. The new CHP building will be constructed as an addition to the existing central plant, just west of the existing chiller room.

The project scope will include site work, geotech improvements, new concrete foundations, structural steel framework, concrete building and equipment foundations, exterior insulated metal wall panels, membrane roofing system, limited interior renovations for offices, and installation of equipment provided for a complete mechanical and electrical installation.

In addition, Penn State made the switch from coal to natural gas 18 months ago to heat the buildings on its University Park campus. The “Last Day of Coal” celebration that took place in March, 2016 began a new era for Penn State when the switch was made to natural gas on March 30.

The switch was about making the air quality in the state college better, as well as complying with the Boiler MACT (Maximum Achievable Control Technology) Standards that the EPA established in 2012. MACT is aimed at reducing hazardous air-pollutant emissions, and Penn State was required to be in compliance by the end of 2016. In the end, not only did Penn State comply with the requirements, but the project also cut carbon emissions almost in half and lowered all other pollutants.

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Design-Build Growing, Study Finds

WASHINGTON – A new study analyzing the design-build project delivery method in the United States shows it was used, on average, in more than 40 percent of non-residential construction projects in 2010.

The study, which was commissioned by the Design-Build Institute of America (DBIA) and conducted by RSMeans Reed Construction Data Market Intelligence, shows slightly more than 40 percent of market share for design-build, with a 10 percent increase in the use of the delivery method since 2005. Usage rates and market size were calculated for projects bid between 2005 and 2010. The research team estimates that 95 percent of public projects and 75 percent of private projects were captured for the analysis.

For purposes of comparison, the delivery methods analyzed include design-bid-build and CM-at-Risk in addition to design-build.

What Is Design Build?: Design-build is an integrated approach that delivers design and construction services under one contract with a single point of responsibility.

“This report reinforces that design-build is a growing and popular method of project delivery and is becoming more commonplace across the country,” said Lisa Washington, executive director of DBIA. “As an educational resource for the industry, we can help owners learn more about the merits of design-build and help them to make informed contracting decisions.”

In addition to analyzing market share, the report further breaks down the percentage of design-build projects within nine non-residential building categories. Data shows that design-build is most popular in the military sector, where it holds 80 percent of market share by dollar value. Many investors buy shares in the sector because they know it’s a reliable investment due to the massive market share it holds. The design-build method is also widely used in the medical, industrial and commercial sectors, holding more than 38 percent of market share in each category.

The analysis also found that design-build is more likely to be used on larger projects. Between 2005 and 2010, the use of design-build advanced on project values above and below $10 million, although its rise was particularly marked on projects valued above $10 million, where design-build was the delivery method on more than half of the projects.

“Anecdotal evidence, including significantly increased demand by owners for DBIA education, pointed to design-build’s rising market share,” said Washington. “The desire for both hard data and third-party validation of the growth of design-build, as well as data to support where DBIA educational efforts need to be focused, prompted us to commission the research.”

Geographically, the report shows that the design-build delivery method is used most frequently in the Pacific Census Regional Division (Alaska, California, Hawaii, Oregon and Washington) and the South Atlantic Division (Delaware, Florida, Georgia, Maryland, North Carolina, South Carolina, Virginia, West Virginia and the District of Columbia).

Design-build is least likely to be used in the New England Division (Connecticut, Maine, Massachusetts, New Hampshire, Rhode Island and Vermont) and the West North Central Division (Iowa, Kansas, Minnesota, Missouri, Nebraska, North Dakota and South Dakota) regions.

The fact that some divisions lag behind the rest of the country in adopting design-build project delivery comes as no surprise to DBIA and its members. Officials at the state level in these areas of the country have been slow to authorize their agencies to use the delivery method for building projects, although Minnesota and Missouri, for example, have allowed the use of design-build for transportation projects.

“This report makes clear that design-build is an established and proven method of project delivery and is becoming commonplace in much of the country,” said Richard Thomas, DBIA’s vice president of advocacy and external affairs. “It is our hope that public owners in states that limit use of design-build among their agencies will reconsider their policies now that hard data shows design-build is increasing market share.”

The research team used RCD RSMeans’ proprietary database of historical and planning construction projects data as the basis for the study. In addition, the study incorporated other publicly and privately available data sources.

Detailed data on nearly one million construction projects, 300,000 plans and specifications, historical and current material, and labor construction costs and historical and projected demographic data was integrated for valid comparisons.

Although both water, wastewater and transportation are areas in which design-build is growing rapidly, the DBIA study focused exclusively on vertical construction markets.

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Single Source Model Said to Eliminate Cost Overruns

It’s no secret that the recession has had a major impact on virtually all segments of the construction industry, including the institutional market. But one property developer’s model for hospitals, colleges and other institutions is proving to be especially cost-effective — a welcome relief in these tough times.

Scarborough Properties, which is based in Gibbsboro, N.J., developed a single-source model that essentially ensures that institutions are not on the hook for cost overruns.

“The budget set at the beginning is the total amount paid,” explains Sean Scarborough, president of Scarborough Properties. “The model works because we understand the risk and create value for the institution by insulating it from cost overruns and unnecessary delays. A construction manager would not be financially liable until several months before construction started, long after decisions about budget and design had been made.”

Founded in 1945, Scarborough Properties has developed and owned its own residential and commercial properties, working every element of the development process, marshalling design professionals, construction specialists and banks to build a project the company would own. The firm now owns a wide variety of income-producing properties, such as marinas, retail shopping centers, freestanding pad sites, and single-tenant office buildings.

“We approached (a) project as if we were going to own the building,” recalls Scarborough. “We hire and supervise a professional team including land use lawyers, civil engineers, traffic engineers, architects and structural engineers.

Upon completing the land entitlement process, which typically takes twice the time of actual construction, he says the plans were sent to a variety of contractors for competitive bidding. Following selection of the contractors, Scarborough supervised all aspects of the construction process and simultaneously provided financial management and processed draw requests, lien releases, payment of real estate taxes and various financial reports. Upon completion of the construction, all occupancy permits were secured and the building was ready to go into service.

The single-source model appealed to Shore Memorial Hospital, also in Somers Point, which hired the firm in 2004 to build its cancer center.

Scarborough had contacted the hospital a number of years previous to see if it would consider selling a small piece of property adjacent to a property the hospital owned. Following that meeting, the hospital CEO invited Scarborough back to discuss ideas concerning aspirations for their entire campus.

“The concept grew into a master campus plan, including the development of a new cancer center, surgical pavilion and medical office,” Scarborough says.

Construction began on a $125-million campus expansion in early 2009 with Scarborough overseeing all design, permitting and construction activities. Project improvements include a new hospital entrance, state-of-the-art operating and recovery rooms, a 130,000-square-foot surgical pavilion, 30,000-square-foot medical office building and 650-stall parking garage, connected via an elevated concourse across a public street.

“It will also house the entire Shore Memorial Surgical Services Department, including endoscopy services, cardiovascular imaging and all pre-admission testing services,” says Bob Robertson, Shore Memorial’s administrative director of logistics.

“The project was necessary to replace our current operating rooms, which were constructed in 1976 and in need of upgrades to improve efficiency,” he says. “The new operating rooms will be capable of supporting the latest technology, as well as future surgical advances.”

“The entire process [would normally] be ten years from the planning stage to completion,” Scarborough says. “Actual construction will be approximately 30 months. The rest of the time was consumed by the entitlement process. At this time, the project is expected to be completed in the summer of 2011.”

Performance-Based Approach

Scarborough performed its services under a “pay-for-performance” model where compensation is built around performance milestones. For example, a pre-set fee based upon the magnitude and scope of the project was set. The fee is earned as follows: 25 percent at the completion of submission of governmental approvals, 25 percent upon receipt of approvals, and the balance, 50 percent, earned over the course of construction.

Other benefits of this model include allowing the hospital CEO and top management to regularly sit in on meetings for unvarnished project updates.

“The single-source model is an effective and efficient method of communication in that it eliminates multiple points of contact,” says Robertson. “The hospital’s main communication is with Scarborough Properties, and they in turn communicate with the contractor and subcontractors.”

The single-source model has proven to be successful, Scarborough says, largely because the company manages the team of professionals from the outset. Global costs remain in the forefront of the decision-making process during approvals, design and construction.

“There are many trained competent professionals involved in delivering a complex real estate development project,” says Scarborough. “They all serve a role, but none have global responsibility.”

While some might point to the construction management model as an answer, Scarborough adds that it falls short in terms of managing a global budget.

“For instance, the construction manager is not responsible for the entitlement process or design — often under way for years prior to the ground breaking,” he says.

Future of Model

It would appear that with so many positives pointing towards the single-source model, it would soon become commonplace. But Scarborough doesn’t see this happening any time soon.

“There are few industry professionals that have the skill-set to replicate the model,” he says. “The marketplace — architects, construction managers, attorneys and engineers — to name a few — consider it a disincentive to be controlled in the front end of the process by a professional developer. Too often they want to have control of the owner without financial risk.”

In emphasizing this point, he says construction professionals often work on an hourly basis and expect to be paid whether or not the project is a success. Construction managers often operate on a cost-plus model.

As to why this model has not been thought of before, Scarborough says it is because real estate advisory and development services are often made on a consultancy basis and not a performance-based approach. Scarborough manages the process from the owner’s perspective, just as it does for its own developments.

“The single-source model stands this concept on its head because our entire team works for Scarborough Properties, which is paid based upon performance.”

Lisa Kopochinski is a freelance writer and can be reached at lisakop@sbcglobal.net.

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