Managing NEC3 on the M25 DBFO Contract
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1 Managing NEC3 on the M25 DBFO Contract Chris Richardson - Director, Asset Contracts & Procurement Tuesday 26 June 2012 Introduction The M25 DBFO Contract is the largest DBFO road contract awarded by the Highways Agency since the start of the PFI programme during the mid 1990s. is the Jewel in the Crown project for the Highways Agency deals with the key motorway network around London, connecting all major UK roads it s the hub
2 Scope Operating and maintaining 400 km of motorway: 200 km of M km of connecting roads the Dartford crossing Widening of 58 km of M25 Refurbishment of the Hatfield Tunnel Renewing major assets Contract Structure Secretary of State Lenders Shareholders Skanska 40% Balfour Beatty 40% Atkins 10% Egis 10% Finance Agreements Shareholder Agreement DBFO Contract Connect Plus (SPC) Agreements SPC Advisors D&C Contract NEC3 Contracts O&M Contract Construction JV Skanska 50%, Balfour Beatty 50% Widening Works Phase 1&2 Tunnel Improvements Lifecycle / Renewals & Improvements O&M JV Connect Plus Services Balfour Beatty 52.5%, Atkins 32.5%, Egis 15% Highway O&M Dartford Crossings 4
3 Contract Structure 5 Programme May 2009: Financial Close May 2009: Start of upgraded sections phase 1 September 2009: Start of operations and maintenance including renewals work September 2011: Completion of Condition Survey June 2012: Completion of construction phase I Late 2012: Start of upgraded sections phase 2 September 2039: End of concession
4 The Split of Works Life Cycle Renewals Scope Annual spend around 30 m Non routine includes Pavements Geotechnics Safety Barrier Structures QEII Bridge Tunnels Traffic Management
5 The long term challenge A busy network - 200,000 vehicles a day and rising M25 25 years old on average Renewing and maintaining the infrastructure Other roads and many structures much older Tackling accidents and improving safety Developing improvements with the HA Managing stakeholder relationships Finding and evaluating the best whole life cost solutions Improving efficiency and finding innovation Creating a sustainable community Lifecycle Financial Model Basics 21 banks plus the European Investment Bank Funding is predetermined for the 30 years The cumulative spend cannot exceed this amount No annual cycle money isn t lost each March HA payments subject to performance adjustments
6 DBFO Contractual Obligations Performance Points Payment adjustments Handback criteria 45 year obligation Lifecycle Renewals Key Issues Minimum lane availability during Widening Works Optimise work done in lane closures Work carried out during night time Surveys and inspection techniques to minimise impact on traffic Avoid working in adverse weather Optimise quality of materials and workmanship Whole life cost
7 Years 1 & 2 Renewals Strategy Build up to steady state and review the asset Approx 50m of work Use of NEC contracts (ECC and PSC) Develop the procurement strategy for year 3 and beyond Opportunity to engage and test supply chain Works package average value of c. 1m Mix of mini-bids, ECI, D&B and STA Years 1 & 2 Lessons Learnt Inefficiency linked to lack of understanding and interface management - not technical capability We have only scratched the surface on innovation Education required on whole life requirements More than 2 Framework Contractors per Lot needed General Civils and Surfacing Lots are an adequate split The construction industry aligned better to lowest initial capital cost, than to longevity of asset life More aligned leadership is required Effective contract administration is critical
8 Conject dashboard Conject portfolio report Project EW NCE PMI PMGC CEQ Totals Tota Totals E Totals ls Totals CEQ Total Proposed Cost ( ) CEQ PMC PMC Total PMC Proposed Totals Accepted Accepted Completion Costs ( ) Completion Date Date Contract Sum ( ) Planned Total Proposed Completion Proposed CEQ Date CEQ Completion Costs( ) Date Total Accepted Cost ( ) Accepted Forecast Completion Final Date Cost ( ) Package /11/ /07/ /11/ /11/ /07/ Package /02/ /05/ /11/ /01/ /05/ Package /10/ /02/ /09/ /01/ /02/ Package /09/ /02/ /09/ /01/ /02/ Package /09/ /10/ /10/ /09/ /10/ Package /03/ /03/ /01/ /01/ /03/ Package /11/ /02/ /11/ /01/ /02/ Package /01/ /02/ /12/ /01/ /02/ Package /10/ /05/ /11/ /01/ /05/ Package /01/ /05/ /01/ /01/ /05/ Package /03/ /03/ /01/ /01/ /03/ Package /04/ /04/ /11/ /01/ /04/ Package /02/ /03/ /12/ /01/ /03/ Package /10/ /10/ /12/ /01/ /10/ Package /10/ /05/ /11/ /10/ /05/ Package /01/ /02/ /09/ /01/ /02/ Package /05/ /04/ /03/ /05/ /04/ Package /05/ /04/ /04/ /01/ /04/ Package /01/ /02/ /01/ /01/ /02/ Package /03/ /03/ /12/ /03/ /03/ Package /03/ /03/ /03/ /01/ /03/ Package /10/ /11/ /04/ /01/ /11/ Package /04/ /04/ /01/ /01/ /04/ Package /05/ /05/ /03/ /01/ /05/ Package /08/ /12/ /04/ /01/ /12/ Package /07/ /01/ /01/ /07/ /01/ Package /05/ /01/ /03/ /01/ /01/
9 Years 1 & 2 Lessons Learnt There are many factors that could affect the success of the project Contractors need to be utilised as more than just a contractor The contractors and the wider community need to work together We can t keep doing what we ve always done (we ll get what we always got...) The different parties need to look out for each other s backs, not just looking out for number one Whilst it s vital that we innovate, collaborate and challenge what we do, we must do the day job, such as good contract administration Regular workshops and training sessions are important Years 1 & 2 Lessons Learnt When things went badly A works package was awarded following mini competition Start date October 2010, two month programme Target price c. 300k Bad weather Package poorly designed, resulting in large amount of change Weak project management Poor contract administration by Contractor, PM and Supervisor Works completed late, programme not updated CEs notified by Contractor several weeks after completion CEQs totalling c. 800k Called meeting with contractor s senior team...
10 Project detail report Years 1 & 2 Lessons Learnt When things went badly Able to quickly pull together all notices from BIW EWNs, CEs, PMIs, PMCs, SCs, SIs etc Quickly established with the contractor the one version of the truth Use of BIW for all notices a clear contract requirement. Who notified what and when what the current total of the Prices was Final account agreed within a month of the meeting Lessons learnt captured and rolled out
11 Condition Report & Asset Strategy Conditions score for the whole of the project road Approximately 130,000 assets Condition Report used for Asset Management Forward Plan Enables us to break the in year cycle Known asset condition and hand back criteria Condition Report & Asset Strategy
12 Timing of Involvement influence R & D - R & D - Programme Programme R & D R - & Schedule D - Scheme Feasibility Feasibility Detailed Design Detailed Design Mobilisation & Delivery Mobilisation & Delivery time Sustainable Business Culture Commercial Capability Technical Capability
13 Vision: To create a sustainable business culture for the Connect Plus community Option X20 and the free pass Option X20 KPIs Used not just to measure performance (traditional KPIs), but also to measure behaviours and relationships Scores may be used to determine allocation of subsequent schemes A cornerstone of the collaborative transformation that the Connect Plus community is undergoing Learning from each scheme will be incorporated into future packages Improvement actions triggered by the scores and supporting evidence Highest scoring contractor gets a free pass to the next framework Good contract administration is essential to enable the effective use of Option X20
14 Early days of the framework Connect Plus and Connect Plus Services teams engaged and workshops held January 2012, followed up with further workshops in May. Collaborative Transformation Steering Group set up and two day workshop held, which includes directors from all framework contractors Framework Facilitators trained to carry out facilitated dialogue at the end of each package, from contractors and Connect Plus Services Contractors have reacted positively and mobilised effectively Collaboration isn t easy! The secret is to gang up on the problem, rather than each other Thomas Stallkamp
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