Effective procurement of construction and major investment projects: give your citizens 25% more while spending the same - Ian Hepinstall @ PSE 2013 Vilnius
Ian Hepinstall, MD of PMMS Middle East (UAE) @ TOCICO International Public Sector Effectiveness Conference 2013 Vilnius
- In order to significantly reduce project duration and cost the procurement approach also needs changing.
- The proven approaches to selection and procurement that really work.
- How to deliver projects on-time in less time, to budget for lower cost, and without compromising on scope and quality?
- What habits will need to be changed, and what suppliers will need to be coached and developed?
- How to spend the same as you do today, but giving your citizens 25% more improved roads, parks and systems that enhance their daily lives?
More information - http://pse.lt
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Effective procurement of construction and major investment projects: give your citizens 25% more while spending the same - Ian Hepinstall @ PSE 2013 Vilnius
1. Effective procurement
of major projects
Opportunities for major improvements in
speed, quality and value
Ian Heptinstall
MD PMMS Middle East
www.pmms.me
www.pmms-group.com
2. Success Equation for Capital Projects
Money
Time
+
=
Money
Time
CCPM
+
Collaborate
=
WOW!
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www.pmms-group.com
8. Why are large projects a problem?
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9. Why are large projects a problem?
www.pmms.me
www.pmms-group.com
10. Capital Projects
• Known & Defined methodology
• But….
• Inconsistent delivery dates
• Inconsistent budget performance
• Better & Faster means more expense
• Expensive Control
• The new kid on the block
• Critical Chain Project Management
• 1995
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www.pmms-group.com
16. % of Buffer Used
CCPM Rule 3:
Management Focus - Buffer
% of Buffer Used
% of Project Complete
Project D
Project A
Project F
Project E
Project H
Project G
Project B
Project C
% of Project Complete
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www.pmms-group.com
17. New Product Introduction
CCPM Users
IT Systems
Implementation
Major ProductConstruction
Public Works Engineering
Engineered Systems
“ Win-Win-Win” Project Workshop in Fukushima
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www.pmms-group.com
19. “Tell me how you measure me and I will
tell you how I will behave. If you measure
me in an illogical way... do not complain
about illogical behaviour.” Eli Goldratt, Business Guru & Inventor of CCPM
“Tell me how you pay me and I will
tell you how I will behave. If you pay
me in an illogical way... do not complain
about my illogical behaviour.”
Ian Heptinstall
www.pmms.me
www.pmms-group.com
20. Major obstacles to exploiting CCPM
Selection
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22. Collaboration on Capital Projects
• CCPM will not work on a traditionally-contracted project
• Partnering – many tried, many failed
• When done right collaborative sourcing can beat
competitive sourcing
• Not one-size-fits all
•
•
•
•
Together
Everyone
Achieves
More
“It is amazing what you can
accomplish if you do not care who
gets the credit.”
www.pmms.me
www.pmms-group.com
27. The Pay-off
-10% Cost
-20% Time
-65% Changes
+25% Profit
-83% Claims
+30%
Satisfaction
-99.8% LTA
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www.pmms-group.com
28. One size does not fit all
MARKET COMPLEXITY
AND RISK
3
2
4
1
VALUE
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www.pmms-group.com
29. Collaboration
Critical Success Factors
Aligning interests & sharing risk
Ensuring “doing the right thing” for the client is also
the “right thing” for the supplier
Behaviours + Selection + Contract
Contract is at the heart of the agreement – not in the back-office
Collective responsibility for overall contract management
Early selection of the team
Requirement and freedom to innovate and change
Negotiate the process/relationship
www.pmms.me
www.pmms-group.com
30. Being Collaborative on Projects
Competition
Collaboration
• Late-as-possible selection
• Detailed bids based on
scheme (Design-BidBuild)
• Select lowest/fastest bid
• A Chain selected one at a
time
• Conflicting commercials
• Early-as-possible selection
• Outline bids based on
capability (Bid-DesignBuild)
• Select best available team
• A team selected together
• Aligned commercials
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www.pmms-group.com
31. So why isn’t collaboration more
common?
It is unstable
It’s not how we were trained
Rare
Better the devil you know
We don’t know how to do it correctly
“It’s the rules”
www.pmms.me
www.pmms-group.com
Graph from Wall Street Journal July 2013 http://online.wsj.com/article/SB10001424127887324867904578593570111198546.htmlTable from report on SAP implementationshttp://www.zdnet.com/erp-implementation-benchmark-comparing-sap-oracle-and-microsoft-7000000971/FT: Sep 13 http://www.ft.com/intl/cms/s/2/794bbb56-1f8e-11e3-8861-00144feab7de.html#axzz2hg0uVYC8
Collaboration in itself can work…but not consistentlyThe Construction Industry Institute (CII) researched nearly 300 projects that were completed using the partnering approach and found significant benefits:• Total project costs were reduced by 10%• Profitability increased by 25%• Overall project completion time was reduced by 20%• Schedule changes were reduced by 48%• The number of claims were reduced by 83%• Lost-time accidents were 1/3rd of industry standard• Change orders were reduced by 80%• Job satisfaction increased by 30%
Simon Brown Suncor example$300M traditional technologyThere is another way – $60M, but it is no one’s interest to propose it!!
The Construction Industry Institute (CII) researched nearly 300 projects that were completed using the partnering approach and found significant benefits:• Total project costs were reduced by 10%• Profitability increased by 25%• Overall project completion time was reduced by 20%• Schedule changes were reduced by 48%• The number of claims were reduced by 83%• Lost-time accidents were 1/83rd of industry standard• Change orders were reduced by 80%• Job satisfaction increased by 30%
Collaboration in itself can work…but not consistentlyThe Construction Industry Institute (CII) researched nearly 300 projects that were completed using the partnering approach and found significant benefits:• Total project costs were reduced by 10%• Profitability increased by 25%• Overall project completion time was reduced by 20%• Schedule changes were reduced by 48%• The number of claims were reduced by 83%• Lost-time accidents were 1/83rd of industry standard• Change orders were reduced by 80%• Job satisfaction increased by 30%
