ECI - panacea or pipedream - Highways UK

1 ECI - panacea or pipedream ?25thNovember 2015 Introduction2 Presenters Steve RowsellCIHT Angus Walker BirchamDyson Bell Shaun PidcockTfL Mark Borland Surrey County council Geoff Fawkes TarmacECI - panacea or pipedream ?Steve RowsellEarly Contractor Involvement (ECI)STEVE ROWSELLD irector, Rowsell Wright LimitedQuestion Who holds the monopoly of wisdom regards the development of best solutions and delivery methods? Client? Designer? Contractor? Stakeholders? Others in the supply chain?The Old Approach Separate design and construction contracts 10 years or more to deliver projects Awarded on lowest price rather than best value Poor buildability, little innovation Confrontational relationships 40% average cost overruns, most delivered late Adversarial claims culture legal costsDrivers for ChangeDrivers for change have included: NAO Reports into cost overruns Latham / Egan / Wolstenholme Reports OGC / Cabinet Office / IUK advice NAO Modernising Construction HMT Infrastructure Routemap Various academic researchNew ApproachKey principles: Early creation of integrated teams.

2 Collaborative and longer-term relationships. Fair allocation of risk. Incentivised delivery. Selection of suppliers based on best value. Measure performance/ continuous as a principle The principle of ECI is applied to different forms of contract by different clients. Highways England / Crossrail / Thames Tideway Tunnels / HS2 / TfL -London Underground / Network Rail / Water Companies / Northern Ireland Roads Service / Welsh GovernmentECI Stages ECI Stage 1 develop design to allow target price for Phase 2 to be agreed. Transition from Stage 1 to Stage 2 subject to performance and affordable target price contingency plan. Stage 2 Complete detailed design and of ECI More scope for innovation and buildability Skills of the supply chain input earlier Better skills and resource planning Improved H&S planning & risk management Earlier relationships with stakeholders Better cost estimating & budgeting Projects delivered quickerChallenges of ECI approach Design maturity Selecting and building the team Developing the target price Risk allocation and pricing Moving from Stage 1 to Stage 2 Cost controls, checks and balances Appropriate incentivisation Selecting the Supplier Identify the best team who can develop the optimal solution and deliver it efficiently.

3 The team needs to demonstrate the right culture and behaviours. Some commercial elements established in competition. Best value not lowest Controls Stage 1 price tendered. NEC3 fees and percentages tendered. People rates tendered. Benchmarked prices. NEC3 controls. Open book accounting. Incentivisation. ECI increases innovation which was being lost on D&B contracts; and facilitates value management and value engineering which can result in major cost and time savings . I recommend continued use of ECI as the principal form of procurement . Quotes Nichols ReportECI - panacea or pipedream ?Angus WalkerMerits of ECI in the DCO processAngus WalkerHighways UK, 25 November 2015 WHAT IS THE DCO PROCESS ?DCO = Development Consent OrderA permission under the Planning Act 2008 The Act that brought you:Hinkley Point C nuclear power stationThames Tideway TunnelHeysham to M6 Link RoadA556 improvementThe Act that will bring you:Some more nuclear power stationsA new runwayA14 improvementsThe Lower Thames CrossingThe Act that may bring you:Crossrail 2 WHY LISTEN TO ME?

4 A160 -A180 Port of Immingham ImprovementHighways AgencyA30 Temple to Higher CarblakeImprovementCornwall CouncilA556 Knutsford to Bowdon SchemeHighways AgencyHeysham to M6 Link RoadLancashire CCM1 Junction 10a Grade Separation -LutonLuton Borough CouncilMorpeth Northern BypassNorthumberland CCNorwich Northern Distributor Road (NDR)Norfolk County CouncilWoodside Link Houghton Regis BedfordshireCentral Beds CouncilIN A NUTSHELLPre-application consultationComplex applicationSix-month examinationSix-month recommendation/decisionMERITS OF ECIA lthough a DCO can be engineering inevitably leads to changesInspectors often press for more detail than the developer wantsDEMERITS OF ECID epends on timingAppointment during consent process can be disruptiveBetter before or afterCONCLUSIONJust as a DCO is granted if the benefits outweigh the adverse on balance, the merits of ECI outweigh the demeritsECI - panacea or pipedream ?

5 Shaun PidcockHammersmith FlyoverShaun PidcockHead of Projects and ProgrammesTransport for LondonStructures & Tunnels Investment Programme 8 Projects c. 250mHistory of the FlyoverConstruction of the bridge 1959-1962 Designed by G. Maunselland Palmers Built by MarplesRidgeway and PartnersCost approximately length 16 spans metresLength with approach ramps is 2 lane carriageways Overall width metresHistory of the FlyoverPre-cast segmental constructionConstruction of the FlyoverEach tendon group continuous over 2 spans (3 piers)Tendons anchored in deck slab adjacent to piersSchematic diagram of post tensioning tendon arrangementTendons encased in grout boxes external to box sectionAcoustic MonitoringGraphical representation of output from the acoustic monitoring systemInspection & FindingsSurvey findings Cable FailureCorroded BearingsThe Old Delivery ApproachTfL s traditional major projects delivery model used was Procure-Design-Procure-Build.

6 No contractor input into design No economies of scale Increased programme InefficientWe wanted to move away from this to a new delivery Delivery ApproachTfL s new delivery model: Programme based Deliver projects through integrated, collaborative project teams Benefit from early contractor involvement (ECI) Delivered through a competitive procurement process resulting in the award of a Framework Agreement for ECI and ConstructionECI Stage Objectives Integrated Project Team s -designer, a contractor and TfL Designing buildability Benefit from shared experiences + new techniques and opportunities Improved communications & decision making Reduced resource requirementSetting target cost Programme Management Team develop benchmarked cost plan for the scheme. Integrated delivery team prepares build price Price continuously refined as design progresses All major elements of design sized -final open book submission Review of proposed target Target cost agreed, build instruction Novation Design & for delivery of the works awarded at the novated over to the contractor to take responsibility for build and detailed design.

7 Works begin, final detailed design still to be on site. ContractsStage 1 Contracts: NEC3 Professional Services Contract Option E Time Based ContractStage 2 Contracts:TfL is considered a number of ECC Option A Lump Sum with Activity ECC Option C Target Cost with Activity ECC Option D Target Cost with Bill of Quantities Framework agreement Structure and operationWork Package Call-off contract awardECI & Construction Framework AgreementCall-Off Contract: Stage 1 NEC 3 PSC Option E: ECI NEC 3 Short Contract: Advanced works (if any) NEC 3 ECC Option A, B, C or D as instructed by TfL: Ta r g e t P r i c e o r L u mp Su m p r o p o s a l f r o m contractor for consideration by TfLCall-Off Contract: Stage 2 Novation of design contract to Contractor Completion of detailed design Delivery of worksMini-competition between Contractors awarded a Framework Agreement for the specific work packagePrice Accepted by TfLPrice not accepted by TfL Predicted failure August 2014 ECI Phase Started April 2013 Construction Start end October 2013 6 Month ECI Phase Needed to Establish: Stakeholder Buy In Construction Methodology Flyover Closures Risk Profile Target Price TfL Business Approval Construction complete August 2015 Hammersmith TimescalesSuccessful ECI PhaseWorking togetherWorking and cooperating with local authoritiesKeeping London Moving Roads, Buses and Underground affectedEarly contractor Involvement (ECI).

8 Early involvement and co-location of Costain with Transport for London and Ramboll& Parsons BrinkerhoffSuccessful use of BIMI nnovationUse of Mock Up at Sipson Road For Pouring ConcreteSuccessful Well Managed Delivery Hammersmith FlyoverA Successful Project for TfLECI - panacea or pipedream ?Mark BorlandCreating a culture of Effective ECI}Early Contractor Involvement (ECI) as a term is continually over used by Clients and Contractors, however, good intentions do not always create effective impact }Effective ECI (rather than token ECI) takes commitment, hard work, due diligence and creativity and thus needs to be earned rather than given}Due to the level of commitment its not suitable for all projects and should be deployed strategically rather than automatically Effective ECI requires six core components qIntegration-working with all supply chain partners from Main Contractor to Specialist, recognise the value of all partnersqEmbedded in project-Enable time and space for ECI to breath, can t be rushed or seen as an add on to the overall processqClear Targets & Definition from what you want to achieve from ECI Improved Risk Management Reduced cost through Value Engineering Enhanced Construction Programme Improved Quality & Design BenefitsEffective ECI requires six core components qIncentivised all parties need to see the benefit and reward of engaging in ECI process qControlled documents.

9 Decisions and actions need to be effectively managed and assessed to remove hot decisions qAdded Value to business not just project ensuring innovation is shared and embedded in future projects }Effective ECI has been a panacea to Surrey Highways programme delivering 55m saving over last 5 years through: 20m savings in construction of new Walton Bridge with Costain s 20m savings over 5 years in road maintenance with Kier 10m in delivery of street lighting PFI with Skanska 5m across various projectsQuestionsECI - panacea or pipedream ?Geoff FawkesHEYSHAM COLLABORATIVE PARTNERSHIP WITH COSTAINWORKING TOGETHER PRESENTATIONI mproved Service LevelsSERVICE LEVEL AGREEMENT STRUCTUREMEASURING PERFORMANCE Using a project created dashboard compassing KPI s that drive service levels across the BU sMEASURING PERFORMANCET onnes CO2eProject to DateForecast VE DesignInitial DesignAGGREGATES2,4414,0596,054 ASPHALT2,2467,18010,197 CONCRETE5,5774,5847,014 CBGM1,2792,496 GRAND TOTAL11,54218,24823,265 OUR OBJECTIVESBS11000 VALUE CREATION HIGHLIGHTS Health and Safety All Hauliers Inducted.

10 Sharing SHE Best Practice Quality 100% Product Compliance Carbon Footprint 25% reduction Part Loads -< 2% of concrete spend on part loads 2m total spend to date Shared Technician Resources Concrete Testing and CBGM Testing Shared KPI Performance Data Improve Fleet management Improve Costain Programme Reliability Reducing Our Businesses Cost Base Shared Community Initiatives Drive Individual Business Performance Forecasting and CommunicationBS11000 NEXT STEPS Disseminate H2M6 PSSLA within Costain Highways Sector and Tarmac business Internal validation of value creation in Costain and Tarmac Staying together -Evaluation of relationship health Formulate exit plan for project Support Tarmac in BS11000 accreditationONE TEAM, ONE AIM, DELIVERING A GREAT PROJECT BY DOING THE RIGHT THINGS AT THE RIGHT LEAVING A LASTING LEGACYECI - panacea or pipedream ?25thNovember 2015