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Procurement and Delivery for Mega Tunnel Projects.ppt

The document discusses procurement and delivery methods for mega tunnel projects. Several governments have studied how to reduce infrastructure costs. Traditional procurement methods that use adversarial contracting and lowest price bidding were found to increase costs by around 10%. Alternative approaches recommended include early contractor involvement, relationship contracting with shared risk and reward, and selecting contractors based on value for money rather than just lowest price. Proper consultant selection focusing on experience rather than lowest cost is also important to avoid design errors and cost overruns.

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BRIDGES  AND  TUNNELS  ASIA  2014 20th March  2014 Procurement  and  Delivery  for   Mega  Tunnel  Projects © Steve TennantConsultancy Ltd2014 1
Procurementand Delivery for Mega Tunnel Projects OVERVIEW § Introduction § Some  Governments  have  been   concerned  at  cost  of  infrastructure   procurement     § Findings? § Some  Experiences  and  Thoughts § Questions © Steve TennantConsultancy Ltd2014 2
Procurementand Delivery for Mega Tunnel Projects Introduction § Can  Procurement  and  Delivery  of   Infrastructure  be  improved? § A  question  poised  by  more  and  more   Governments  in  21st Century © Steve TennantConsultancy Ltd2014 3
Procurementand Delivery for Mega Tunnel Projects Introduction § Application  to  Mega  Tunnels? § Improved  Tunneling  Technology § Water,  Sewage,  Road,  Utilities § Resurgence  of  Rail: • Freight • Urban  Mass  Transit • High  Speed  etc.   © Steve TennantConsultancy Ltd2014 4
Procurementand Delivery for Mega Tunnel Projects UK  Government § “1.15  The   conclusion  of  the   review  is  that   infrastructure  costs   can  be  reduced  by   at  least  15  per  cent.” Infrastructure  UK,   ‘Infrastructure  Cost   Review:  Main  Report   December  2010 © Steve TennantConsultancy Ltd2014 5
Procurementand Delivery for Mega Tunnel Projects UK  Government § “There  is  no  single   overriding  factor  driving   higher  costs.  However,   the  investigation  has   identified  that  higher   costs  are  mainly   generated  in  the  early   project  formulation  and   pre-­construction  phases   …” © Steve TennantConsultancy Ltd2014 6
Procurementand Delivery for Mega Tunnel Projects Australian  Government Similar  Studies  by § New  Zealand § Germany § United  States § Canada § Hong  Kong © Steve TennantConsultancy Ltd2014 7
Procurementand Delivery for Mega Tunnel Projects Findings? § Traditional   Procurement § Engineer  Design  /   Contractor  Build  or   D&B § Based  on  adversarial   contracting  methods § Not  focused  on   lowest  outturn  cost § Promotes  (or   responds  to?)  risk   averse  attitude  by   public  sector  clients § Box  ticking  culture § Evaluation  criteria   favour  lower  price   bid,  rather  than   lowest  cost  outcome § Does  not  promote   innovation © Steve TennantConsultancy Ltd2014 8
Procurementand Delivery for Mega Tunnel Projects Findings?  cont’d § Traditional   Procurement  cont’d § Client  and  business   needs  not  at  core  of   process § Projects  /   programmes  within   quoted  budget,  not   lowest  price  for   required  performance § Insufficient   consideration  given   to  assessment,   placement  &   management  of   contingency  &  risk   budgets § Over  specification  to   detriment  of  cost © Steve TennantConsultancy Ltd2014 9
Procurementand Delivery for Mega Tunnel Projects Findings?  cont’d § Traditional  procurement  methodology  ‘…   estimated  to  cost  around  10%  of  annual   construction  capital  spending  …  could  be   saved’ UK  National  Audit  Office,  Improving  Public  Services   through  better  construction, 15  March  2005,  p6 © Steve TennantConsultancy Ltd2014 10
Procurementand Delivery for Mega Tunnel Projects Findings?  cont’d § Recommended  ways  forward: § PPP/BOT  – Has  its  place  but  not  for  every   project,  project  owner  or  contractor   § Early  Contractor  Involvement  Design  &   Build  – Two  stage  tendering § Relationship  Contracting  – Contractual   partnering,  no  blame  culture,  project  wide   insurance,  fair  payments;;  shared  pain  /   shared  gain © Steve TennantConsultancy Ltd2014 11
Procurementand Delivery for Mega Tunnel Projects Findings?  cont’d § Recommended  ways  forward: § Target  Cost  Contract,  not  Cost  Plus  – All   parties  have  to  earn  their  reward § Replace  strict  lowest-­tender  selection   criteria  to  value  for  money  -­ Contractor   past  performance;;  whole  of  life  costs;;  Local   development  and  value  adding;;   Timeliness;;  Capacity;;  Innovation © Steve TennantConsultancy Ltd2014 12
Procurementand Delivery for Mega Tunnel Projects Findings?  cont’d § Recommended  ways  forward: § Improved  construction  project   management  capability  – Employer;; Consultant;; Contractor;;  Sub-­contractor;;   Supplier  sides § Keep  competitive  tension  during  project   delivery,  not  just  tender  – benchmarking;;   KPI’s;;  sanctions © Steve TennantConsultancy Ltd2014 13
Procurementand Delivery for Mega Tunnel Projects Findings?  cont’d § Recommended  ways  forward: § Post  completion  and  occupancy   performance  evaluations  – Not  just   performance  during  construction © Steve TennantConsultancy Ltd2014 14
Procurementand Delivery for Mega Tunnel Projects Some  Experiences  and  Thoughts § Procurement § Remember,  generally  the  Client  does  not   want  the  Project  process,  only  the  end   result. § Given  a  choice,  the  Client  would  always   like  the  end  result  without  the  birthing   process. © Steve TennantConsultancy Ltd2014 15
Procurementand Delivery for Mega Tunnel Projects Some  Experiences  and  Thoughts § Procurement § “I  want  the  world’s  best  new  5  year  old   railway” Russell  Black  HK  MTR  Project  Director  1992-­ 2010 § Innovation  yes,  untested  no © Steve TennantConsultancy Ltd2014 16
Procurementand Delivery for Mega Tunnel Projects Some  Experiences  and  Thoughts § Procurement • ‘Evidence  from  European  and  Australian   studies  suggests  that,  when  governments   use  lowest-­price  tender  methods,  around   70%  of  projects  are  late  and  a  similar   percentage  are  over  budget…  This  does  not   necessarily  mean  that  procurement  by   tender  is  the  problem.’ Regan M,  Smith J,  Love P,  ‘Infrastructure  procurement:  learning  from   private – public  partnership  experiences   ‘down  under’’ (2011)  29(2) Environment  and  Planning  C:  Government   and  Policy  363,  366 © Steve TennantConsultancy Ltd2014 17
Procurementand Delivery for Mega Tunnel Projects Some  Experiences  and  Thoughts § Procurement  -­ Consultants § Consultant  appointment  decisions  should   not  be  cost  based § As  part  of  selection  process  have   workshops  between  proposed  consultant   and  employer  teams § Look  for  experience,  competency,   creativity  and  above  all  chemistry © Steve TennantConsultancy Ltd2014 18
Procurementand Delivery for Mega Tunnel Projects Some  Experiences  and  Thoughts § Procurement-­ Consultants § Consultant  fees  a  small  %  of  CAPEX  but   deterministic  of  project  outcome § Fee  must  be  enough  to  provide  required   service § ‘…competitive  tendering  stimulates  design   firms  to  opportunistic  and  unethical   behaviors’  P.E.D.  Love  ‘’Plugging  the  Gaps’  Between  Optimum   Bias  and  Strategic  Misrepresentation   and  Infrastructure  Cost   Overruns’  EASEC12,  (January  2011)  Vol 14,  1197,  1203.   © Steve TennantConsultancy Ltd2014 19
Procurementand Delivery for Mega Tunnel Projects A  Nomological  Framework  of   Design  Error  and  Project   Overruns   From P.E.D.  Love,  ‘’Plugging   the  Gaps’   Between  Optimum  Bias  and   Strategic  Misrepresentation   and   Infrastructure  Cost  Overruns’  (The   Twelfth  East  Asia-­Pacific   Conference  on  Structural   Engineering   and  Construction,   EASEC12,  (January  2011)  Vol 14,   1197,  1203.   <www.sciencedirect.com/science/ar ticle/pii/S1877705811012276>   accessed  10  March  2014 NOTE:  Optimum  Bias  may  perhaps   be  more  readily  understood  as   ‘Optimism  Bias’.  Larger  image  of   graphic  on  next  slide. © Steve TennantConsultancy Ltd2014 20   OPTIMUM  BIAS     PROJECT     ORGANIZATION Schedule Pressure Project Governance Issue  of erroneous   documents Project Dissonance Design  audits &  reviews Design Co-­‐ordination Response  for   requests For  information    Error Identification   Schedule Pressure Organization Circumstance Practice (omissions) Task (mistakes,  mishaps,   slips,  lapses) Fee  LevelFee  Level Time  BoxingTime  Boxing Turn  overTurn  overStaff  MoraleStaff  Morale ProductivityProductivity Design  audits   and  reviews Design  audits   and  reviews Production  of   erroneous   documents Production  of   erroneous   documents Resource   availability Resource   availability Cognitive   dissonance Cognitive   dissonance Additional   time Additional   time Multi  taskingMulti  tasking Skill  &   experience Skill  &   experience ReworkRework Contractual   variation/ claim Contractual   variation/ claim Cost/schedule   increase Cost/schedule   increase Reduced   profits Reduced   profits DisputeDispute
Procurementand Delivery for Mega Tunnel Projects © Steve TennantConsultancy Ltd2014 21   OPTIMUM  BIAS     PROJECT     ORGANIZATION Schedule Pressure Project Governance Issue  of erroneous   documents Project Dissonance Design  audits &  reviews Design Co-­‐ordination Response  for   requests For  information    Error Identification   Schedule Pressure Organization Circumstance Practice (omissions) Task (mistakes,  mishaps,   slips,  lapses) Fee  LevelFee  Level Time  BoxingTime  Boxing Turn  overTurn  overStaff  MoraleStaff  Morale ProductivityProductivity Design  audits   and  reviews Design  audits   and  reviews Production  of   erroneous   documents Production  of   erroneous   documents Resource   availability Resource   availability Cognitive   dissonance Cognitive   dissonance Additional   time Additional   time Multi  taskingMulti  tasking Skill  &   experience Skill  &   experience ReworkRework Contractual   variation/ claim Contractual   variation/ claim Cost/schedule   increase Cost/schedule   increase Reduced   profits Reduced   profits DisputeDispute
Procurementand Delivery for Mega Tunnel Projects Some  Experiences  and  Thoughts § Procurement  -­ Contractors § Relationship  Contracting  – One  Size  fits   all? § HKG  Government  apparently  yes.  NEC3  to   be  preferred  Conditions  of  Contract  by   2016   § HKG  MTR  No.  They  use  Target  Cost,   Lump  Sum  D&B,  Eng Design  Lump  Sum/   Remeasurement © Steve TennantConsultancy Ltd2014 22
Procurementand Delivery for Mega Tunnel Projects Some  Experiences  and  Thoughts § Procurement  -­ Contractors § Pros  and  Cons? • Eng Design  Lump  Sum/  Remeasurement Adversarial  if  (when?)  things  go  wrong • Lump  Sum  D&B Lose  benefit  of  on  going  design  development Design  development  vs  changed  requirement © Steve TennantConsultancy Ltd2014 23
Procurementand Delivery for Mega Tunnel Projects Some  Experiences  and  Thoughts § Procurement  -­ Contractors § Pros  and  Cons? • Target  Cost Greater  PM  input  from  Owner,  Consultant,   Contractor,  cost,  availability  of  resources Different  way  of  thinking  &  acting.  True  Partnering Can  still  have  disagreements  and  disputes Shared  pain  shared  gain,  but  need  to  wary  of  cost   manipulation  in  open  book  accounting Bench  marking,  KPIs  to  maintain  competition     © Steve TennantConsultancy Ltd2014 24
Procurementand Delivery for Mega Tunnel Projects Some  Experiences  and  Thoughts § Tate’s  Cairn  Tunnel,  Hong  Kong § 4  lanes,  twin  tube  4km  road  tunnel.  30  year   BOT  franchise  awarded  July  1988,  opened   June  1991 © Steve TennantConsultancy Ltd2014 25
Procurementand Delivery for Mega Tunnel Projects © Steve TennantConsultancy Ltd2014 26
Procurementand Delivery for Mega Tunnel Projects Some  Experiences  and  Thoughts § Tate’s  Cairn  Tunnel,  Hong  Kong § 4  lanes,  twin  tube  4km  road  tunnel.  30  year   BOT  franchise  awarded  July  1988,  opened   June  1991 § Inclined  ventilation  adits § Overhead  ventilation  slab © Steve TennantConsultancy Ltd2014 27
Procurementand Delivery for Mega Tunnel Projects Some  Experiences  and  Thoughts § HEC  Nam  Fung  Road  to  Parker  Cable   Tunnel § 4.8m  dia,  5.7km  single  tube  TBM  driven   tunnel © Steve TennantConsultancy Ltd2014 28
Procurementand Delivery for Mega Tunnel Projects © Steve TennantConsultancy Ltd2014 29
Procurementand Delivery for Mega Tunnel Projects Some  Experiences  and  Thoughts § HEC  Nam  Fung  Road  to  Parker  Cable   Tunnel § 4.8m  dia,  5.7km  single  tube  TBM  driven   tunnel § Offered  as  alternative  (more  expensive)   D&B  tender  to  trenched  cable  route § Why  did  HEC  accept  the  more  expensive   alternative? © Steve TennantConsultancy Ltd2014 30
Procurementand Delivery for Mega Tunnel Projects Some  Experiences  and  Thoughts § Route  3  Country  Park  Section § Dual  tube  3  lane  Road  tunnel.  3.8km  long § BOT  Concession © Steve TennantConsultancy Ltd2014 31
Procurementand Delivery for Mega Tunnel Projects © Steve TennantConsultancy Ltd2014 32
Procurementand Delivery for Mega Tunnel Projects Some  Experiences  and  Thoughts § Route  3  Country  Park  Section § Dual  tube  3  lane  Road  tunnel.  3.8km  long § BOT  Concession § Ability  to  submit  alternative  engineering   proposals  in  additional  to  minimum   conforming  bid § Resulted  in  further  two  rounds  of  proposals   being  invited! © Steve TennantConsultancy Ltd2014 33
Procurementand Delivery for Mega Tunnel Projects Questions § As  a  Project  Owner,  do  you  procure   tunnels  by  the  “Traditional  Method”  and   if  so,  why? § As  a  Consultant,  do  you  recommend   procurement  of  tunnels  by  the   “Traditional  Method”  and  if  so,  why? © Steve TennantConsultancy Ltd2014 34
Procurementand Delivery for Mega Tunnel Projects Thank  You © Steve TennantConsultancy Ltd2014 35

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Procurement and Delivery for Mega Tunnel Projects.ppt

  • 1.
    BRIDGES  AND  TUNNELS ASIA  2014 20th March  2014 Procurement  and  Delivery  for   Mega  Tunnel  Projects © Steve TennantConsultancy Ltd2014 1
  • 2.
    Procurementand Delivery for MegaTunnel Projects OVERVIEW § Introduction § Some  Governments  have  been   concerned  at  cost  of  infrastructure   procurement     § Findings? § Some  Experiences  and  Thoughts § Questions © Steve TennantConsultancy Ltd2014 2
  • 3.
    Procurementand Delivery for MegaTunnel Projects Introduction § Can  Procurement  and  Delivery  of   Infrastructure  be  improved? § A  question  poised  by  more  and  more   Governments  in  21st Century © Steve TennantConsultancy Ltd2014 3
  • 4.
    Procurementand Delivery for MegaTunnel Projects Introduction § Application  to  Mega  Tunnels? § Improved  Tunneling  Technology § Water,  Sewage,  Road,  Utilities § Resurgence  of  Rail: • Freight • Urban  Mass  Transit • High  Speed  etc.   © Steve TennantConsultancy Ltd2014 4
  • 5.
    Procurementand Delivery for MegaTunnel Projects UK  Government § “1.15  The   conclusion  of  the   review  is  that   infrastructure  costs   can  be  reduced  by   at  least  15  per  cent.” Infrastructure  UK,   ‘Infrastructure  Cost   Review:  Main  Report   December  2010 © Steve TennantConsultancy Ltd2014 5
  • 6.
    Procurementand Delivery for MegaTunnel Projects UK  Government § “There  is  no  single   overriding  factor  driving   higher  costs.  However,   the  investigation  has   identified  that  higher   costs  are  mainly   generated  in  the  early   project  formulation  and   pre-­construction  phases   …” © Steve TennantConsultancy Ltd2014 6
  • 7.
    Procurementand Delivery for MegaTunnel Projects Australian  Government Similar  Studies  by § New  Zealand § Germany § United  States § Canada § Hong  Kong © Steve TennantConsultancy Ltd2014 7
  • 8.
    Procurementand Delivery for MegaTunnel Projects Findings? § Traditional   Procurement § Engineer  Design  /   Contractor  Build  or   D&B § Based  on  adversarial   contracting  methods § Not  focused  on   lowest  outturn  cost § Promotes  (or   responds  to?)  risk   averse  attitude  by   public  sector  clients § Box  ticking  culture § Evaluation  criteria   favour  lower  price   bid,  rather  than   lowest  cost  outcome § Does  not  promote   innovation © Steve TennantConsultancy Ltd2014 8
  • 9.
    Procurementand Delivery for MegaTunnel Projects Findings?  cont’d § Traditional   Procurement  cont’d § Client  and  business   needs  not  at  core  of   process § Projects  /   programmes  within   quoted  budget,  not   lowest  price  for   required  performance § Insufficient   consideration  given   to  assessment,   placement  &   management  of   contingency  &  risk   budgets § Over  specification  to   detriment  of  cost © Steve TennantConsultancy Ltd2014 9
  • 10.
    Procurementand Delivery for MegaTunnel Projects Findings?  cont’d § Traditional  procurement  methodology  ‘…   estimated  to  cost  around  10%  of  annual   construction  capital  spending  …  could  be   saved’ UK  National  Audit  Office,  Improving  Public  Services   through  better  construction, 15  March  2005,  p6 © Steve TennantConsultancy Ltd2014 10
  • 11.
    Procurementand Delivery for MegaTunnel Projects Findings?  cont’d § Recommended  ways  forward: § PPP/BOT  – Has  its  place  but  not  for  every   project,  project  owner  or  contractor   § Early  Contractor  Involvement  Design  &   Build  – Two  stage  tendering § Relationship  Contracting  – Contractual   partnering,  no  blame  culture,  project  wide   insurance,  fair  payments;;  shared  pain  /   shared  gain © Steve TennantConsultancy Ltd2014 11
  • 12.
    Procurementand Delivery for MegaTunnel Projects Findings?  cont’d § Recommended  ways  forward: § Target  Cost  Contract,  not  Cost  Plus  – All   parties  have  to  earn  their  reward § Replace  strict  lowest-­tender  selection   criteria  to  value  for  money  -­ Contractor   past  performance;;  whole  of  life  costs;;  Local   development  and  value  adding;;   Timeliness;;  Capacity;;  Innovation © Steve TennantConsultancy Ltd2014 12
  • 13.
    Procurementand Delivery for MegaTunnel Projects Findings?  cont’d § Recommended  ways  forward: § Improved  construction  project   management  capability  – Employer;; Consultant;; Contractor;;  Sub-­contractor;;   Supplier  sides § Keep  competitive  tension  during  project   delivery,  not  just  tender  – benchmarking;;   KPI’s;;  sanctions © Steve TennantConsultancy Ltd2014 13
  • 14.
    Procurementand Delivery for MegaTunnel Projects Findings?  cont’d § Recommended  ways  forward: § Post  completion  and  occupancy   performance  evaluations  – Not  just   performance  during  construction © Steve TennantConsultancy Ltd2014 14
  • 15.
    Procurementand Delivery for MegaTunnel Projects Some  Experiences  and  Thoughts § Procurement § Remember,  generally  the  Client  does  not   want  the  Project  process,  only  the  end   result. § Given  a  choice,  the  Client  would  always   like  the  end  result  without  the  birthing   process. © Steve TennantConsultancy Ltd2014 15
  • 16.
    Procurementand Delivery for MegaTunnel Projects Some  Experiences  and  Thoughts § Procurement § “I  want  the  world’s  best  new  5  year  old   railway” Russell  Black  HK  MTR  Project  Director  1992-­ 2010 § Innovation  yes,  untested  no © Steve TennantConsultancy Ltd2014 16
  • 17.
    Procurementand Delivery for MegaTunnel Projects Some  Experiences  and  Thoughts § Procurement • ‘Evidence  from  European  and  Australian   studies  suggests  that,  when  governments   use  lowest-­price  tender  methods,  around   70%  of  projects  are  late  and  a  similar   percentage  are  over  budget…  This  does  not   necessarily  mean  that  procurement  by   tender  is  the  problem.’ Regan M,  Smith J,  Love P,  ‘Infrastructure  procurement:  learning  from   private – public  partnership  experiences   ‘down  under’’ (2011)  29(2) Environment  and  Planning  C:  Government   and  Policy  363,  366 © Steve TennantConsultancy Ltd2014 17
  • 18.
    Procurementand Delivery for MegaTunnel Projects Some  Experiences  and  Thoughts § Procurement  -­ Consultants § Consultant  appointment  decisions  should   not  be  cost  based § As  part  of  selection  process  have   workshops  between  proposed  consultant   and  employer  teams § Look  for  experience,  competency,   creativity  and  above  all  chemistry © Steve TennantConsultancy Ltd2014 18
  • 19.
    Procurementand Delivery for MegaTunnel Projects Some  Experiences  and  Thoughts § Procurement-­ Consultants § Consultant  fees  a  small  %  of  CAPEX  but   deterministic  of  project  outcome § Fee  must  be  enough  to  provide  required   service § ‘…competitive  tendering  stimulates  design   firms  to  opportunistic  and  unethical   behaviors’  P.E.D.  Love  ‘’Plugging  the  Gaps’  Between  Optimum   Bias  and  Strategic  Misrepresentation   and  Infrastructure  Cost   Overruns’  EASEC12,  (January  2011)  Vol 14,  1197,  1203.   © Steve TennantConsultancy Ltd2014 19
  • 20.
    Procurementand Delivery for MegaTunnel Projects A  Nomological  Framework  of   Design  Error  and  Project   Overruns   From P.E.D.  Love,  ‘’Plugging   the  Gaps’   Between  Optimum  Bias  and   Strategic  Misrepresentation   and   Infrastructure  Cost  Overruns’  (The   Twelfth  East  Asia-­Pacific   Conference  on  Structural   Engineering   and  Construction,   EASEC12,  (January  2011)  Vol 14,   1197,  1203.   <www.sciencedirect.com/science/ar ticle/pii/S1877705811012276>   accessed  10  March  2014 NOTE:  Optimum  Bias  may  perhaps   be  more  readily  understood  as   ‘Optimism  Bias’.  Larger  image  of   graphic  on  next  slide. © Steve TennantConsultancy Ltd2014 20   OPTIMUM  BIAS     PROJECT     ORGANIZATION Schedule Pressure Project Governance Issue  of erroneous   documents Project Dissonance Design  audits &  reviews Design Co-­‐ordination Response  for   requests For  information    Error Identification   Schedule Pressure Organization Circumstance Practice (omissions) Task (mistakes,  mishaps,   slips,  lapses) Fee  LevelFee  Level Time  BoxingTime  Boxing Turn  overTurn  overStaff  MoraleStaff  Morale ProductivityProductivity Design  audits   and  reviews Design  audits   and  reviews Production  of   erroneous   documents Production  of   erroneous   documents Resource   availability Resource   availability Cognitive   dissonance Cognitive   dissonance Additional   time Additional   time Multi  taskingMulti  tasking Skill  &   experience Skill  &   experience ReworkRework Contractual   variation/ claim Contractual   variation/ claim Cost/schedule   increase Cost/schedule   increase Reduced   profits Reduced   profits DisputeDispute
  • 21.
    Procurementand Delivery for MegaTunnel Projects © Steve TennantConsultancy Ltd2014 21   OPTIMUM  BIAS     PROJECT     ORGANIZATION Schedule Pressure Project Governance Issue  of erroneous   documents Project Dissonance Design  audits &  reviews Design Co-­‐ordination Response  for   requests For  information    Error Identification   Schedule Pressure Organization Circumstance Practice (omissions) Task (mistakes,  mishaps,   slips,  lapses) Fee  LevelFee  Level Time  BoxingTime  Boxing Turn  overTurn  overStaff  MoraleStaff  Morale ProductivityProductivity Design  audits   and  reviews Design  audits   and  reviews Production  of   erroneous   documents Production  of   erroneous   documents Resource   availability Resource   availability Cognitive   dissonance Cognitive   dissonance Additional   time Additional   time Multi  taskingMulti  tasking Skill  &   experience Skill  &   experience ReworkRework Contractual   variation/ claim Contractual   variation/ claim Cost/schedule   increase Cost/schedule   increase Reduced   profits Reduced   profits DisputeDispute
  • 22.
    Procurementand Delivery for MegaTunnel Projects Some  Experiences  and  Thoughts § Procurement  -­ Contractors § Relationship  Contracting  – One  Size  fits   all? § HKG  Government  apparently  yes.  NEC3  to   be  preferred  Conditions  of  Contract  by   2016   § HKG  MTR  No.  They  use  Target  Cost,   Lump  Sum  D&B,  Eng Design  Lump  Sum/   Remeasurement © Steve TennantConsultancy Ltd2014 22
  • 23.
    Procurementand Delivery for MegaTunnel Projects Some  Experiences  and  Thoughts § Procurement  -­ Contractors § Pros  and  Cons? • Eng Design  Lump  Sum/  Remeasurement Adversarial  if  (when?)  things  go  wrong • Lump  Sum  D&B Lose  benefit  of  on  going  design  development Design  development  vs  changed  requirement © Steve TennantConsultancy Ltd2014 23
  • 24.
    Procurementand Delivery for MegaTunnel Projects Some  Experiences  and  Thoughts § Procurement  -­ Contractors § Pros  and  Cons? • Target  Cost Greater  PM  input  from  Owner,  Consultant,   Contractor,  cost,  availability  of  resources Different  way  of  thinking  &  acting.  True  Partnering Can  still  have  disagreements  and  disputes Shared  pain  shared  gain,  but  need  to  wary  of  cost   manipulation  in  open  book  accounting Bench  marking,  KPIs  to  maintain  competition     © Steve TennantConsultancy Ltd2014 24
  • 25.
    Procurementand Delivery for MegaTunnel Projects Some  Experiences  and  Thoughts § Tate’s  Cairn  Tunnel,  Hong  Kong § 4  lanes,  twin  tube  4km  road  tunnel.  30  year   BOT  franchise  awarded  July  1988,  opened   June  1991 © Steve TennantConsultancy Ltd2014 25
  • 26.
    Procurementand Delivery for MegaTunnel Projects © Steve TennantConsultancy Ltd2014 26
  • 27.
    Procurementand Delivery for MegaTunnel Projects Some  Experiences  and  Thoughts § Tate’s  Cairn  Tunnel,  Hong  Kong § 4  lanes,  twin  tube  4km  road  tunnel.  30  year   BOT  franchise  awarded  July  1988,  opened   June  1991 § Inclined  ventilation  adits § Overhead  ventilation  slab © Steve TennantConsultancy Ltd2014 27
  • 28.
    Procurementand Delivery for MegaTunnel Projects Some  Experiences  and  Thoughts § HEC  Nam  Fung  Road  to  Parker  Cable   Tunnel § 4.8m  dia,  5.7km  single  tube  TBM  driven   tunnel © Steve TennantConsultancy Ltd2014 28
  • 29.
    Procurementand Delivery for MegaTunnel Projects © Steve TennantConsultancy Ltd2014 29
  • 30.
    Procurementand Delivery for MegaTunnel Projects Some  Experiences  and  Thoughts § HEC  Nam  Fung  Road  to  Parker  Cable   Tunnel § 4.8m  dia,  5.7km  single  tube  TBM  driven   tunnel § Offered  as  alternative  (more  expensive)   D&B  tender  to  trenched  cable  route § Why  did  HEC  accept  the  more  expensive   alternative? © Steve TennantConsultancy Ltd2014 30
  • 31.
    Procurementand Delivery for MegaTunnel Projects Some  Experiences  and  Thoughts § Route  3  Country  Park  Section § Dual  tube  3  lane  Road  tunnel.  3.8km  long § BOT  Concession © Steve TennantConsultancy Ltd2014 31
  • 32.
    Procurementand Delivery for MegaTunnel Projects © Steve TennantConsultancy Ltd2014 32
  • 33.
    Procurementand Delivery for MegaTunnel Projects Some  Experiences  and  Thoughts § Route  3  Country  Park  Section § Dual  tube  3  lane  Road  tunnel.  3.8km  long § BOT  Concession § Ability  to  submit  alternative  engineering   proposals  in  additional  to  minimum   conforming  bid § Resulted  in  further  two  rounds  of  proposals   being  invited! © Steve TennantConsultancy Ltd2014 33
  • 34.
    Procurementand Delivery for MegaTunnel Projects Questions § As  a  Project  Owner,  do  you  procure   tunnels  by  the  “Traditional  Method”  and   if  so,  why? § As  a  Consultant,  do  you  recommend   procurement  of  tunnels  by  the   “Traditional  Method”  and  if  so,  why? © Steve TennantConsultancy Ltd2014 34
  • 35.
    Procurementand Delivery for MegaTunnel Projects Thank  You © Steve TennantConsultancy Ltd2014 35