Stakeholders and project delivery methods

Transcription

1 Stakeholders and project delivery methods CIV-E.1040 Construction Management Lecture II 8 th November 2016 Antti Peltokorpi Assistant Professor Department of Civil Engineering, Aalto University antti.peltokorpi@aalto.fi

2 Previous lecture Construction sectors Production, project, organization, and industry levels Special characteristics of construction Production modes: project vs. process Three viewpoints on performance: 1) transformation, 2) flow & 3) value Construction project phases

3 Agenda Construction project stakeholders and their tasks Project delivery methods Introduction to a team work about project delivery methods

4 Construction project stakeholders and their tasks

5 Project stakeholder Project stakeholder = An individual, group, or organization, who may affect, be affected by, or perceive itself to be affected by a decision, activity, or outcome of a project (Project Management Institute, 2013)

6 Project organizations are typically complex Source:

7 Different perspectives on project stakeholders Contractual agreements Information flow

8 Main stakeholders in construction projects Sponsor wner/ Customer User Engineers Architect Designers Construction project manager Construction company Trade s ther consultants Material suppliers

9 Tasks of construction project management (CPM) Project management = the art of directing and coordinating human and material resources throughout the life of a project by using modern management techniques to achieve predetermined objectives of scope, cost, time, quality, and participating objectives. (Project Management Institute, PMI) Construction project management = rakennuttaminen Construction project manager = rakennuttaja

10 Tasks of construction project management (CPM) Set quality, scope, time and cost objectives for the project, and monitor their fulfillment Select designers and prepare needed design contracts Control costs of the project or recruit cost consultant Make needed decisions and acquire construction permits Select project delivery method, organize competitive biddings, and prepare contracts Control construction work, and make necessary changes in the contracts Manage tasks related to start-up of operations and commitments during guarantee period In Finnish: Construction project management = rakennuttaminen Construction project manager = rakennuttaja

11 Division of the CPM tasks Construction project management tasks can be performed by a skilled individual, management group, committee, or consult organization wner/customer conducts typically only part of the CPM tasks Division of CPM tasks and roles into decision-making and implementation Decision-making: Construction committee or person in charge (owner heavily involved) Implementation: Project manager together with project team (often outsourced)

12 Role of other stakeholders may vary a lot from project to project Investors Product suppliers End-users Public Authorities thers Maintenance Each stakeholder has an own viewpoint on project, and own project!

13 Frameworks and tools to manage stakeholders

14 Typical involvement of main stakeholders during project phases 1. Needs assessment wner/customer 2. Program planning P A P Project manager 3. Design proposals A P A Architect 4. Master plan design A P E Engineers 5. Construction permit tasks P A A A Authorities 6. Detailed design E P A C Construction 7. Production planning P C E 8. Construction C P E 9. Start-up of operations C P 10. Period of guarantee C P

15 Project delivery methods

16 Delivery method answers to the questions about 1. How project tasks and responsibilities are distributed? Project management, design & procurements 2. How risks are distributed between different stakeholders? Quality, cost & schedule risk 3. What are the contractual relationships between the stakeholders? Project owner has to decide the delivery method based on: What are the target priorities of the project? Cost, schedule, quality, functionality, flexibility during the project What are owner s own resources and capabilities for the project? What are the available external stakeholders and resources? How complex the project is technically?

17 Project delivery method as project owner s tool to achieve targets and control risks

18 Main project delivery methods 1. Design-Bid-Build (DBB) Single prime contract / multiple prime contracts 2. Construction Management at Risk (CMR) 3. Design-Build (DB) 4. Collaborative delivery methods Alliance and Integrated project delivery (IPD) 5. Lifecycle delivery methods Design-Build-perate-Maintain (DBM), Build-perate-Transfer (BT), Public- Private-Partnership (PPP)

19 Delivery method procurements contract format What project delivery method? What procurement method? What contract format? Project delivery method Procurement method Contract formats Design-Bid-Build (DBB) Construction Management at Risk (CMR) Design-Build (DB) Alliance and Integrated project delivery (IPD) Lifecycle delivery methods Best Value Low Bid Negotiated Qualifications-based Sole source (direct select) Cost Plus Fee Guaranteed maximum price Lump sum (fixed price) Target price Unit price

20 Bidding process: procurement methods and contract forms Bidding process Competition Negotiation pen Preselected Closed ne candidate Several candidates Evaluation of bids: price, quality, time, service, scope, financing Preliminary agreement Final contract

21 Risk and contract format Basis for payment Service Cost Fixed price Unit price Target cost Cost-plus wner Contractor Price risk Scope risk Scope risk Price risk Price risk Scope risk Price risk Scope risk

22 Project delivery methods and design responsibilities wner manages design Design-Bid-Build (DBB) Construction management at risk (CMR) (content) Collaborative design management Alliance and Integrated project delivery (IPD) Public-Private-Partnership (PPP) Contractor manages design Construction management at risk (CMR) (coordination) Design-Build (DB) DBM & BT

23 Project delivery methods and procurement responsibilities wner manages procurements Design-Bid-Build (DBB) multiple prime contracts (Construction management as service) Construction management at risk (CMR) (partly) Collaborative procurements Alliance and Integrated project delivery (IPD) Public-Private-Partnership (PPP) Contractor manages procurements Design-Bid-Build (DBB) single prime contract Construction management at risk (CMR) Design-Build (DB) DBM & BT

24 Design-Bid-Build (DBB) single prime contract The traditional project delivery method typically involves three sequential project phases: 1. Design phase, which requires the services of a designer who will be the designer of record for the project; 2. Bid phase, when a is selected; 3. Build or construction phase, when the project is built by the selected (typically low bid) This sequence usually leads to a sealed bid, fixed-price contract 1. Needs assessment 2. Program planning 3. Design proposals 4. Master plan design 5. Construction permit tasks 6. Detailed design 7. Production planning 8. Construction 9. Start-up of operations 10. Period of guarantee Select Architect, Engineer Design consultants Bidding Trade wner Trade General Specialty

25 Design-Bid-Build (DBB) multiple prime contracts Although similar to DBB relative to the three sequential project phases, with multiple prime contracts the owner contracts directly with separate specialty s for specific and designated elements of the work, rather than with a single general or prime 1. Needs assessment 2. Program planning 3. Design proposals 4. Master plan design 5. Construction permit tasks 6. Detailed design 7. Production planning 8. Construction Select Architect, Engineer Design consultants Bidding Trade wner Trade Trade 9. Start-up of operations Specialty 10. Period of guarantee

26 Example: Länsimetro Project divided into huge number of sub-projects Mining projects Station projects System projects Delivery methods vary between sub-projects (e.g. DBB, CM at Risk) Construction management consultant support owner as a service to manage contracts, shedule, quality and costs Plenty of problems with shedule and integration of different technical systems

27 Construction Management at Risk (CMR) Entails a commitment by the CMR for construction performance to deliver the project within a defined schedule and price, either a fixed lump sum or a guaranteed maximum price (GMP) The CMR provides construction input to the owner during the design phases and becomes the general during the construction phase 1. Needs assessment 2. Program planning 3. Design proposals 4. Master plan design 5. Construction permit tasks 6. Detailed design 7. Production planning 8. Construction Select Architect, Engineer Design consultants Bidding Specialty wner Key trade Specialty CMR Key trade Specialty 9. Start-up of operations 10. Period of guarantee

28 CMR with target price and maximum price Contractor s realized costs + fee Customer s part of cost savings Maximum price Target price Contractor s part of exceeded target price Customer s paid costs + fee + bonus Customer s part of exceeded target price Contractor s part of cost savings A B Realized costs

29 Example: Koivusaari metro station Tight schedule, challenging structure of building CMR was selected to get desing and management innovations from Contractor s initial project plan has big role in selection process Challenges in design and schedule were able to tackle with good design management and innovative structural design solutions

30 Design-Build (DB) Includes one entity (design-builder) and a single contract with the owner to provide both architectural/engineering design services and construction Project targets and functional objectives as primary content of call for bids material Architectural competition Fixed lump sum, a guaranteed maximum price (GMP) or target price 1. Needs assessment 2. Program planning 3. Design proposals 4. Master plan design 5. Construction permit tasks 6. Detailed design 7. Production planning 8. Construction 9. Start-up of operations 10. Period of guarantee Select Architect, Engineer Design consultants wner Design-Build Entity Trade Trade Trade Trade

31 Variation of targets in DB projects Quality Quality Quality competition Price Affordability competition Max price Max price Min quality Quality Quality Quality competition (reverse) Fixed price Price Price competition Min quality Price Price

32 Example: Espoo Hospital 270 single patient rooms, day-hospital, geriatric clinic, dental service clinic Costs around 150 m Contractor-led Design-Build consortium was selected based on negotiations Includes also maintenance service for 10 years Set maximum price and schedule were exceeded due to claims about extra work and quality targets

33 Collaborative delivery methods Competitive selection is integrated with collaborative and early selection of service providers from the viewpoint of design in a novel way Three phases: 1. Bidding phase 2. Development phase 3. Implementation phase In the development phase initial plans are collaboratively developed and target cost is defined verruns and underruns from the target price are allotted to the alliance parties Collaborative way to manage challenges and opportunities during implementation 1. Needs assessment 2. Program planning 3. Design proposals 4. Master plan design 5. Construction permit tasks 6. Detailed design 7. Production planning 8. Construction 9. Start-up of operations 10. Period of guarantee Bidding Architect, Engineer Design consultants wner Project alliance wner Trade Trade Trade Trade

34 Alliance vs. Integrated Project Delivery (IPD) No big differences in organization, process, or contracts Collaborative decision-making, open book, no blame culture, identity Alliance was originally developed in infrastructure projects in Australia Managing complexity of public-funded large infrastructure projects IPD was originally developed in hospital projects in California, USA Finding innovations to technically and functionally compext hospital investments

35 Commercial model of Alliance and IPD Target price Fee (%, ) Indirect project costs Direct costs (=open book) Penalty Bonus Maximum bonus and penalty for designers and s are limited to the amount of fee (vs. non-limited in CM at Risk) Bonus / penalty often divided 50/50 between owner and other parties Non-monetary key performance indicators essential in commercial model (-100/+100) Schedule, Quality, Safety, Environment, Durability, Stakeholder management Connected to the share of penalty/bonus

36 Example: Tampere Strand tunnel Alliance organization including City of Tampere, Traffic Authority, Lemminkäinen Infra, A-Insinöörit and Engineering ffice Saanio & Riekkola No big surprises in schedule or budget, estimated opening time in May 2017 Six months in advance 1 million under target price of 180,3 M During the project, 39 innovations that decrease estimated costs have been identified and implemented E.g how to organize quarrying work

37 Lifecycle delivery methods An integrated partnership that combines the design and construction responsibilities of designbuild procurements with operations and maintenance A private entity is responsible for design and construction as well as long-term operation and/or maintenance services The public sector can secure the project's financing and retains the operating revenue risk 1. Needs assessment 2. Program planning 3. Design proposals 4. Master plan design 5. Construction permit tasks 6. Detailed design 7. Production planning 8. Construction 9. Start-up of operations 10. Period of guarantee Select wner Design-Build-perate-Maintain Entity (company) Architect, Engineer Design consultants Finance Trade Trade perators Trade Trade Maintenance 11. perations

38 Special characteristics of Lifecycle methods What is the primary reason for Lifecycle delivery method? Value for money, innovations, improved quality How to finance investment? (partners, lenders) What is the scope of the contract? e.g. design of technical systems How to define basis for payment? (operability vs. demand) How to define operability? (e.g. no of lanes, speed limits, quality and timing of maintenance work) Motivation to speed up project time Motivation to find innovations such as in DB or collaborative methods

39 Early phase decisions have long-term impacts on costs Costs Possibility to affect lifecycle costs Accumulation of lifecycle costs Design Construction Use & Maintenance Demolition Source: Kosonen, 1999

40 How decisions on different systems contribute on life-cycle costs? Potential cost impact High Low Simple analysis III I Electrical systems Energy systems Mechanical systems Building envelope Structural systems Complex analysis Siting / massing II IV Source:

41 Life Cycle Cost ffice Building - $200 / SF Initial Cost perational Cost Uniformat Categories: 01 Foundation 02 Substructure 03 Superstructure 04 Exterior Closure 05 Roofing 06 Interior Construc. 07 Conveying System 08 Mechanical: Plumbing HVAC Fire Protection 09 Electrical 11 Equipment 12 Sitework Life Cycle Cost Present Value $ / ft 2 $2 $4 $6 $8 $10 $12 $14 $16 $18 $20 Source: Means Life Cycle Costing For Facilities 41

42 Example: Koskenkylä-Kotka Highway (53 km) bjectives Improved safety (avoid three deaths / year) Speed up driving time (8 min) Aesthetical and natural values Road was opened in 2013 Design, build, finance & maintenance contract until 2026 Total value of service 623 M Partners: YIT, Destia, Ilmarinen etc.

43 Pros and Cons of the delivery methods Project delivery method Design-Bid-Build (DBB) single prime Design-Bid-Build (DBB) multiple primes Construction Management at Risk (CMR) Advantages Design is defined prior to bidding Allows owner to be hands-off Ideally, low risk to owner wner has control over the entire process Construction professionality can be utilized in the design phase Shorter durations compared to DBB Challenges Minimal input from constructors, building operators Expect longer durations Adversarial relationships formed Needs plenty of coordination effort from owner wner has a coordinator tole between designers and CMR Heavy administration Unclear cost estimations in the early phase Design-Build (DB) Input from constructors early in design Improved quality and shorter durations expected compared to DBB Collaborative methods Less claims, more innovations, better circumstances and culture Lifecycle methods Increased emphasis on a reduction of long term operating costs Reduces gap between construction and maintenance wner needs to set clear performance standards wner loses some control of design Requires a project team experienced with DB To find suitable teams and members Development phase might be long How open actors are in early phase? Further reduction of owner control over design and operation of the building Requires additional planning from the owner in the conceptual stage

44 Group assignment

45 Group assignment I: Team work about project delivery methods Form a team of 3-4 students Send me about your group s names You will get your case project description in the response Your group s task is 1. Analyze starting points for the selection of delivery method 2. Analyze pros and cons of each project delivery method (at least all five presented in this lecture) in your project 3. Select the most promising delivery method and basis for payment for your project and justify your selection 4. Prepare a short pdf/word-document (around 5 pages) of the analysis and conclusions 5. Prepare a short (max 10 min/10 slides) PP-presentation about your analysis and conclusions for the presentation session ( at 12-2 pm) 6. Deadline for both reports is (send in MyCourses)

46 Group assignment I: Team work about project delivery methods The pdf/word-document must include: References at least to two scientific articles/books about project delivery methods or similar projects (you can use Scopus, Google Scholar etc.) At least two real-life examples of delivery methods of similar investment projects (you cannot use examples presented in this lecture) Search for relevant information about similar projects and their delivery methods from the scientific literature and the web! Great part of the evaluation is based on your (critical) use of available information sources!

47 Case Projects 1. Supermarket 2. Swimming hall 3. Shopping centre 4. Hospital 5. Road building 6. Renovation and repair of drains and sewers