The following article is presented by Great Lakes RCAP, the Great Lakes region's affiliate of the Rural Community Assistance Partnership. Great Lakes RCAP serves the states of Illinois, Indiana, Ohio, Kentucky, West Virginia, Michigan and Wisconsin.

Designing a Project, Part 1: The Owner’s Role
(Part one of a two-part article)
Kristin Woodall, Great Lakes RCAP; based upon “Project Development - Design” coursework developed by Kurtis Strickland, Ohio RCAP

An engineer has been hired. The Preliminary Engineering Report is complete. A project schedule is in place. The planning for your project is done. What’s the next step in moving a project forward? The answer is Design.

Design is one of the three major phases involved in project development. Project design follows the planning phase and is implemented before the construction phase. A water or wastewater project is a big undertaking for communities. It is critical that the community continues to be aware of its responsibilities throughout the entire project.

As the owner of the project, it is your job to ensure that the design of the project meets your needs, is affordable to your customers, involves infrastructure that you can successfully operate and maintain, and is intended to exceed its useful life.

Before beginning the design, 10 important questions need to be asked:

1. Do we have financing approved to pay for engineering design?
2. Is there construction financing available to pay for the system we’re designing, or do we have a financing plan?
3. Have we coordinated with funding agencies to make sure our financing plan and grant expectations are realistic?
4. Can we afford what is being designed?
5. Will the state EPA approve and permit what is being designed?
6. Is there more growth or capacity being included in the design than funding agencies will allow?
7. Can we operate and maintain what is being designed?
8. Does the public understand what will be designed and why?
9. Is the land that needs to be acquired for the infrastructure available and affordable?
10. Can the system be constructed within the required time period?

Often times owners will need to acquire financing for the costs to design the project. To obtain the financing necessary the owner will need to have a sufficient revenue stream to pay back the loan. For existing systems current revenue needs to be adequate or an increase in user rates needs to be implemented to ensure adequate repayment. For new systems, a user charge system needs to be implemented or sponsorship from the county can be obtained.

Regardless of the source, it is important to note that there is a certain amount of risk when incurring costs for design without a clear commitment of funds for construction. However, this risk can be minimized by making sure that you have done all of your homework and questions (note the 10 questions above) have been answered to your satisfaction.

Community input during design is inherent in making sure that the design meets the community’s needs and abilities. It is also important to explain the need to implement user rates to the public as early as possible. This will help prevent unpleasant surprises that could delay the project.  The available financing for design projects varies from state to state. All resources need to be researched to determine the funding source terms and requirements to see which is the best option for your community needs.

Monitoring the engineer’s work, conducting periodic design review meetings and public meetings are the responsibility of the owner. The engineer’s cost estimate should be continually monitored to ensure the infrastructure is within the budget at the end of the design period. Review meetings should be held at 30, 60, and 90% completion levels. If you have an existing system, your operator should be utilized for technical opinions and knowledge. The owner of a start up system needs to involve the state’s primacy agency for technical expertise and guidance.

At the same time that design is taking place, the construction financing plan should be worked on. Often times water and wastewater projects are very costly and one funding source is not enough. It is typical for projects to be financed by a variety of federal and state agencies that have different fiscal years, accept applications at different times of the year, and make funds available for construction at different times as well.

Therefore, timing becomes a critical issue in funding your project and preparing for construction, and is something you will need to think through before beginning the application process. It is helpful to consult with RCAP or other organizations knowledgeable of financing sources in order to decide which funding program or programs best fit your project type. Once the design is complete, it is important to make any final adjustments in your financing strategy, which includes updating your sources and uses of funds (estimated project cost, itemized operation/maintenance costs, expected financing sources, loan terms and interest rates, annual debt payments, and average user costs).

Once the design is substantially completed the engineer will submit the permit-to-install application to your primacy agency, who charges a fee (typically estimated at .0065), which is a percentage of the total estimated project cost. The owner is responsible for this fee, which needs to be included within the total project cost to be financed. Review of the permit takes approximately 3-6 months. The primacy agency will typically have comments and may require changes. You need to make sure that your engineer consults you before making any recommended changes by the primacy agency to your plans and specifications.

After the design is complete and a construction financing plan is developed, the owner needs to hold a public meeting. The meeting’s agenda needs to include the following:

• Project Design – the engineer needs to attend, explain, and answer questions related to the capacity, operation and maintenance requirements, location of infrastructure, and how the project resolves the water or wastewater problem.
  
• Land acquisition, user agreements, and required easements – the owner needs to discuss and be prepared to answer questions related to these items (more detail will be provided on these items in our part 2 of our Design series within the next RCAP Connections newsletter).
  
• Project financing and customer costs – the owner should discuss the sources and uses of funds and be prepared to answer questions about project costs, financing, customer costs (i.e. hookup fees, assessments, and estimated user rate impact).
  
• Project schedule – the owner needs to provide an estimated schedule on when the project is expected to be completed, when financing is expected to be approved, when the project will be advertised to bid, when contracts will be signed, when construction will begin and end, and when customer connections will occur.

RCAP has been assisting rural communities with project development for over 25 years through our technical assistance providers. For more information on MAP or the RCAP nearest you visit www.glrcap.org and click on your applicable state or contact the MAP regional office at 1-800-775-9767.

The next issue of eBulletin  will conclude MAP Inc.’s  two-part series on the Design of a Project. Land acquisition, user agreements, permits, bidding, and pre-construction activities will be the topics.