Session 37 Pekka Pakkala

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Session 37 Pekka Pakkala

  1. 1. Innovative Contracting Practices for Capital Projects<br />Pekka Pakkala - Aalto University, School of Engineering<br />Department of Civil & Environmental Engineering<br />January 13, 2011<br />
  2. 2. Overview<br /><ul><li>CAPITAL INVESTMENT MODELS
  3. 3. FAST TRACKING & DESIGN-BUILD
  4. 4. INTERNATIONAL EXAMPLES
  5. 5. CONCLUSIONS</li></ul>January 13, 2010<br />2<br />
  6. 6. Capital Project Delivery Methods<br /><ul><li>Traditional Project Delivery Methods:
  7. 7. Design-Bid-Build (DBB)
  8. 8. Construction Management At-Fee
  9. 9. Construction Management At-Risk (Usually Rest Areas & Building structures)
  10. 10. Innovative Project Delivery Methods:
  11. 11. Design-Build (D-B)
  12. 12. Design-Build Operate Maintain (DBOM)
  13. 13. Design-Build Finance Operate (DBFO)
  14. 14. ECI (Early Contractor Involvement)
  15. 15. Alliance Model – (Australia & New Zealand)!</li></ul>Source: Pekka Pakkala - Finnra<br />January 13, 2010<br />3<br />
  16. 16. FINAL <br />DESIGN<br />CONSTRUC-<br />TION<br />MAINTENANCE<br />FEASIBILITY <br />STUDIES<br />PRE-PLANNING<br />& ENGINEERING<br />ACQUISITION<br />& COSTING<br />UPKEEP &<br />IMPROVEMENTS<br />PREPLANNING/ENGINEERING/ACQUISTION<br />D-B-B<br />FEASIBILITY<br />DESIGN- BUILD<br />REPLANNING/ACQUISTION<br />DESIGN-BUILD PLUS<br />FUNDING<br />FULL DELIVERY or PROGRAM MANAGEMENT<br />Capital Project Delivery Methods<br />ALLIANCE MODEL<br />ALLIANCE MODEL<br />&<br />DESIGN-BUILD-FINANCE-OPERATE (DBFO & DBOM)<br />Source: Pekka Pakkala - Finnra<br />January 13, 2010<br />4<br />
  17. 17. Procurement Progression – Towards LCC<br />DBFO<br />??? <br />DBOM<br />DB<br />Plus Financing<br />Design-Build<br />Plus Long-Term <br />Maintenance &<br />Upkeep<br />B<br />Design-Build<br />Integrated<br />Design &<br />Construction<br />(Public Funding)<br />Traditional <br />Design-Bid-Build<br />Life Cycle Consideration<br />Life Cycle Responsibility<br />January 13, 2010<br />Source: Pekka Pakkala & Finnra<br />5<br />
  18. 18. Design-Build Concept<br />TRADITIONAL<br />Initial Design & EIS<br />Design<br />ROW<br />Bid<br />Construction<br />DESIGN-BUILD <br />Initial Design & EIS<br />Bid<br />TIME<br />SAVINGS<br />Construction Starts at 30%<br />Design & Environmental <br />Clearances Completed<br />Design<br />ROW<br />COST<br />SAVINGS<br />Construction<br />Source:<br />January 13, 2010<br />6<br />
  19. 19. Design-Build Concept<br />Traditional Design-Bid-BuildDESIGN IS NOT CHALLENGED<br />Single Design/Eng.<br /> Solution<br />Construction<br />CLIENT<br />Evaluate Best Solution/Innovation?<br />Design-Build<br />Solution #1<br />Solution #2<br />Solution #3<br />Solution #4<br />Source: Pekka Pakkala - Finnra<br />January 13, 2010<br />7<br />
  20. 20. Design-Build Research Results<br /><ul><li>Conceptual Design Only - Maximum of about 25-30% Design
  21. 21. Use Design-Build For the Correct Reason
  22. 22. TIME
  23. 23. PREVENT COST GROWTH
  24. 24. INNOVATION POTENTIAL
  25. 25. (Not just to Transfer Risks)
  26. 26. Should Not Be Low Bid
  27. 27. Client Needs To Make Fast Decisions in “Design” Approval
  28. 28. Two Step Process for Medium/Large Projects – RFQ/RFP
  29. 29. Small Projects - One Step
  30. 30. Less Contract Administration According To Clients’
  31. 31. Potential to Make Mistakes in Fast Tracking</li></ul>Source: Pekka Pakkala - Finnra<br />January 13, 2010<br />8<br />
  32. 32. Competence & Learning<br /><ul><li>Designer & Contractor Learning Integrated
  33. 33. Competence:
  34. 34. Teamwork (Co-Located)
  35. 35. Using Each Others Strength
  36. 36. Streamlined approach - only designing needed tasks
  37. 37. Understanding the Real Costs of Design & Construction
  38. 38. Constructability optimized
  39. 39. Visibility - High Profile projects Using the "A" Team
  40. 40. Testing Innovation or Proprietary Technology
  41. 41. Downside:
  42. 42. Design Taken Too Far (Inhibits Innovative Solutions & Efficiency)
  43. 43. Partnering or Teamwork Needs to be Developed & Rewarded
  44. 44. People Process (Does not Fit All Cultures - individual work)
  45. 45. Lack of Know-how Throughout Client Organization </li></ul>Source: Pekka Pakkala - Finnra<br />January 13, 2010<br />9<br />
  46. 46. Applicability of Methods<br /><ul><li>All project delivery systems, including the best ones, are not, however, appropriate in all different cases</li></ul>Source: VTT - Pertti Lahdenperä<br />January 13, 2010<br />10<br />
  47. 47. International Examples<br />Source: Pekka Pakkala - Finnra<br />January 13, 2010<br />11<br />
  48. 48. International Examples<br />Source: Pekka Pakkala - Finnra<br />January 13, 2010<br />12<br />
  49. 49. Conclusion<br /><ul><li>All models work
  50. 50. Traditional Contracting Still Rules in most Countries (DBB)
  51. 51. Getting Design-Build model correctly implemented (Takes Time)
  52. 52. Teamwork Between Contractors & Designers
  53. 53. Proper Risk Analysis, Allocation & Putting into Contracts
  54. 54. Changes the Market (Integration & Bundling of Services)
  55. 55. Usually have Good Results & Experiences
  56. 56. PPP is not a solution  Another Potential Alternative – if done right!
  57. 57. Letting Go of Design Control – Increases Benefits
  58. 58. Low Bid & Unit Prices are being replaced by Best Value & Lump Sum
  59. 59. QC by Contractors is normal for Europe but difficult in USA & Down Under
  60. 60. Performance Specifications very slowly developing (Performance Specifications goes hand in hand with innovative contracting practices
  61. 61. Clients are not able to accept Alternative Solutions (innovations) easily
  62. 62. Essential to DevelopPartnering & Trust
  63. 63. Infrastructure Sector (Public Sector) is slow to change </li></ul>Source: Pekka Pakkala - Finnra<br />January 13, 2010<br />13<br />
  64. 64. Value Engineering<br />Source: Pekka Pakkala - Finnra<br />January 13, 2010<br />14<br />
  65. 65. New Productivity Studies<br /><ul><li>Benchmarking Seven Countries
  66. 66. Roads & Rail
  67. 67. Mainly Capital, But Also Including Maintenance
  68. 68. Challenges:
  69. 69. Different Approaches to Measuring Productivity
  70. 70. How Can Clients Influence Productivity
  71. 71. Are Lean Construction Practices Being Used
  72. 72. Any Indices for Measuring Productivity
  73. 73. Benefits:
  74. 74. Determine Better Practices
  75. 75. Improving Productivity & Efficiency </li></ul>January 13, 2010<br />15<br />
  76. 76. Questions?<br />Reports Available:<br />“Innovative Project Delivery Methods For Infrastructure - An International Perspective". <br />&<br />International Overview of Innovative Contracting <br />Practices for Roads <br />For More Information; Contact:<br />Pekka Pakkala – Aalto Univ.- pekka.pakkala@aalto.fi<br />January 13, 2010<br />16<br />

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