Client’s flexibility in renovation projects with long-term DBFMO contracts M. Kuhlmann MSc Matthijs.Kuhlmann@Movares.nl ww...
Content <ul><li>DBFMO contracts in The Netherlands </li></ul><ul><li>Contract negotiation within DBFMO contracts </li></ul...
DBFMO contracts <ul><li>Designing, Building, Financing, Maintaining, Operating (=PFI…) </li></ul><ul><li>Public contracts ...
DBFMO contracts <ul><li>Long-term contracts, 15-30 years </li></ul><ul><li>Key features: </li></ul><ul><ul><li>Special pro...
Contract negotiation <ul><li>Typical clients face complex organizations within complex business environments </li></ul><ul...
Contract negotiation <ul><li>Modelling contract negotiation </li></ul><ul><li>Influences on a negotiation outcome </li></u...
Contract negotiation <ul><li>Variables to define negotiation power </li></ul><ul><ul><li>Time / patience </li></ul></ul><u...
Methodology <ul><li>Conjoint analysis </li></ul><ul><ul><li>Fictive case of significant contract change due to changed acc...
Results / department of architecture, building and planning / CMUD PAGE  October 2009
Conclusion <ul><ul><li>Uncertain future might not work well with DBFMO </li></ul></ul><ul><ul><ul><li>Allow for a thorough...
Thank you / department of architecture, building and planning / CMUD PAGE  October 2009 Source: Dilbert
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DBFMO contracts and client's flexibility

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Presentation on DBFMO (~PFI) contracts and client\'s flexibility, held at IAPS & CSBE Housing Conference 2009 in Istanbul.

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DBFMO contracts and client's flexibility

  1. 1. Client’s flexibility in renovation projects with long-term DBFMO contracts M. Kuhlmann MSc Matthijs.Kuhlmann@Movares.nl www.movares.com Engineering and consultancy: mobility, area development, infrastructure and transportation
  2. 2. Content <ul><li>DBFMO contracts in The Netherlands </li></ul><ul><li>Contract negotiation within DBFMO contracts </li></ul><ul><li>Methodology </li></ul><ul><li>Results </li></ul><ul><li>Conclusion </li></ul>/ department of architecture, building and planning / CMUD PAGE October 2009
  3. 3. DBFMO contracts <ul><li>Designing, Building, Financing, Maintaining, Operating (=PFI…) </li></ul><ul><li>Public contracts > €25m </li></ul><ul><li>Among others: </li></ul><ul><ul><li>Ministry of Finance, The Hague, €173m </li></ul></ul><ul><ul><li>Kromhout barracks, Utrecht, >€300m </li></ul></ul><ul><ul><li>Kempkensberg area, Groningen </li></ul></ul>/ department of architecture, building and planning / CMUD PAGE October 2009
  4. 4. DBFMO contracts <ul><li>Long-term contracts, 15-30 years </li></ul><ul><li>Key features: </li></ul><ul><ul><li>Special project consortia </li></ul></ul><ul><ul><li>Functional specifications </li></ul></ul><ul><ul><li>Payment on actual performance </li></ul></ul><ul><ul><li>“ more value for (public) money in terms </li></ul></ul><ul><ul><li>of time, quality and sustainability” </li></ul></ul>/ department of architecture, building and planning / CMUD PAGE October 2009
  5. 5. Contract negotiation <ul><li>Typical clients face complex organizations within complex business environments </li></ul><ul><li>Difference in client’s ‘contractual flexibility’, during the exploitation (MO) phase, between traditional procurement and DBFMO? </li></ul><ul><li>Defining contractual flexibility </li></ul><ul><ul><li>Consensus </li></ul></ul><ul><ul><li>Agreed terms </li></ul></ul><ul><ul><li>Speed of process </li></ul></ul>/ department of architecture, building and planning / CMUD PAGE October 2009
  6. 6. Contract negotiation <ul><li>Modelling contract negotiation </li></ul><ul><li>Influences on a negotiation outcome </li></ul><ul><ul><li>Formal procedure </li></ul></ul><ul><ul><li>Negotiation strategy </li></ul></ul><ul><ul><li>Negotiation power </li></ul></ul>/ department of architecture, building and planning / CMUD PAGE October 2009
  7. 7. Contract negotiation <ul><li>Variables to define negotiation power </li></ul><ul><ul><li>Time / patience </li></ul></ul><ul><ul><li>Commitment </li></ul></ul><ul><ul><li>Outside options </li></ul></ul><ul><ul><li>Risk of breakdown </li></ul></ul><ul><ul><li>Current value </li></ul></ul><ul><ul><li>Knowledge </li></ul></ul><ul><ul><li>Client’s market reputation </li></ul></ul><ul><ul><li>Client’s experience </li></ul></ul><ul><ul><li>Future concern </li></ul></ul><ul><ul><li>Type of contract </li></ul></ul>/ department of architecture, building and planning / CMUD PAGE October 2009
  8. 8. Methodology <ul><li>Conjoint analysis </li></ul><ul><ul><li>Fictive case of significant contract change due to changed accommodation needs of the client (i.e. owner and user) </li></ul></ul><ul><ul><li>Negotiation power variables defined client’s starting point </li></ul></ul><ul><ul><li>Respondents were asked to asses flexibility </li></ul></ul><ul><ul><li>Controlled for ‘realism’ and ‘certainty’ </li></ul></ul>/ department of architecture, building and planning / CMUD PAGE October 2009
  9. 9. Results / department of architecture, building and planning / CMUD PAGE October 2009
  10. 10. Conclusion <ul><ul><li>Uncertain future might not work well with DBFMO </li></ul></ul><ul><ul><ul><li>Allow for a thorough specification process </li></ul></ul></ul><ul><li>Safeguarding during contract formulation </li></ul><ul><ul><li>Allow for outside options (market testing, benchmarks) </li></ul></ul><ul><ul><li>Rooting a proper project organization </li></ul></ul><ul><li>Recommendation for exploitation phase </li></ul><ul><ul><li>Never end up in a hurry… </li></ul></ul>/ department of architecture, building and planning / CMUD PAGE October 2009
  11. 11. Thank you / department of architecture, building and planning / CMUD PAGE October 2009 Source: Dilbert

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