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SUPERSTRUCTURE CONTRACTS: Procurement and contract strategy

SUPERSTRUCTURE CONTRACTS: Procurement and contract strategy. April 20th 2009 Benno Stoiber Arjen de Boer Thijs van Steen. Agenda. Scope Contract strategy (creation process) Contract form Procurement procedure Planning Risks and challenges Propositions for discussion.

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SUPERSTRUCTURE CONTRACTS: Procurement and contract strategy

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  1. SUPERSTRUCTURE CONTRACTS: Procurement and contract strategy April 20th 2009Benno StoiberArjen de BoerThijs van Steen

  2. Agenda • Scope • Contract strategy (creation process) • Contract form • Procurement procedure • Planning • Risks and challenges • Propositions for discussion

  3. Scope superstructure contracts

  4. Scope e.g. • Escalators (99) and elevators (26) • Architectural outfitting stations (8): walls, glass panels, tiles, etc. • Lighting • Ventilation systems • Substations and switching devices • Camera’s and dynamic passenger information system • Rail system (except signalling and equipment) - 9.5 km, mostly ballast-free

  5. Contracting Strategy: Completion • Workshop in May 2008  determining priorities (key risks) • Realization concept Contracting Plan • Comparison of variants • Preparation preferred variant • Review variant(s) in interviews with experts • September 2008 in Board of Directors NZL  discussion with Director Public Works Amsterdam  the Alderman was informed

  6. Contract Form: Choices • Balancing Contract Forms: traditional versus integrated (E&C / D&C / DB(M) / DBFM) • Multi-criteria analysis on criteria such as: time/planning, interfaces, market, environment, etc. • Results discussed in exploratory talks with (potential) candidates

  7. Contract Form: Market analysis • Market wants to integrate disciplines • Market is eager for quick selection procedures (reduce to 2 or 3 competitors) • ‘Rail’ market is ‘hungry’ because of declining workload ProRail (September 2008) • Telecom/installation market is selective regarding selection of projects • Outfitting market: positive nor negative image • Progressive insights  Effects of credit crunch, economic situation in the construction market  results in ?

  8. Choice: D&C contract Dominant arguments: • Planning advantages (integration of disciplines) • Interfaces • Coordination • Flexibility • Technical specifications based on Systems Engineering (Safety Case)

  9. Procurement: Choice of procedure • Competitive dialogue: technical and logistical complexity of the work • Focus: quick selection procedure based on ‘Critical Success Factors’ (CSF‘s): • Management system • System integration • Minimize Environmental Nuisance • Use of ‘Maximum Value of Bids’

  10. Maximum Value of Bids • Maximum amount the Authority has available for the project • Published early in the procurement process • Validity criteria • Price is still an important criterion

  11. Prequalification phase Dialogue Final Tender Phase Business Plan Consultation phase Dialogue phase Publication Contract Award n Participants 3 Participants 1 Participant Application for participation Business Plan Definitive Bid • Grounds of Exclusion • Eligibility Requirements Award Criteria: - Rating preparation Critical Success Factors (CSF‘s) Award Criteria: NCW valuation of Options

  12. Procurement phase: Prequalification Relatively "light" criteria on the candidate companies: • Exclusion criteria • Financial economic standing • Project management experience • Experience in 'rail' market

  13. Procurement phase: Business Plan (Critical Success Factors) Three Critical Success Factors (CSF): CSF 1: Management system CSF 2: System integration CSF 3: Minimize environmental nuisance

  14. CSF 1 Management system Purpose: ‘In Control’ in aspects time, quality and budget in realization process Questions • Vision on cooperation and flexibility? • Organization regarding the management systems? • Selection of critical processes for the project? • How are these processes arranged? Process • Categorize at strategic level (vision, top risks, opportunities, etc) • Assessment focused on controlling risk cq. size residual risks for the Authority during contract period

  15. CSF 2 System integration Purpose: a controlled test, system integration, Test run and commissioning of the North / South line Questions relating to: • Testing System • Acceptance and transfer • Test run Process: • Categorize in consultation with AMSYS (coordinator / 'system integrator') • Assessment focused on residual risks for the future operator

  16. Learning from other experiences ....

  17. CSF 3 Minimize nuisance on surrounding environment Objective: to reduce environmental nuisance  strengthen image of the Noord/Zuidlijn in the surrounding environment Questions • Through what measures will nuisance for the environment be minimized? • How is the duration of the disturbances minimized? • Elaborate risk analysis (identifying bottlenecks, formulating measures) • Targeted cases on several bottlenecks identified in advance

  18. Logistics process • Logistic accesses in Sixhaven and South • Relieve disturbance in sensitive areas (inner city, canal area) Sixhaven South

  19. Assessment Methodology CSF • Qualitative assessment and valuation by external Advisory Committee for each CSF • Per CSF the Advisory Committee will give a score between 0 and 5 points Optimal interpretation, Very significant improvements Compared to minimum requirements Minimum completion, Only just complies to the minimum requirements 0 1 2 3 4 5

  20. Advisory Committee • Composed of experts in relevant fields / disciplines (professors, recognized experts and local experts) • Appointed early in the process and involved in final drafting of the CSF

  21. Relation Business Plan – Final Bid • Final Bid must build on Business Plan (validity criterion) • Parts Plan (drawing CSF) are further developed in Options Option A CSF 1 Option B Option C CSF 2 Option D “new” topics Business Plan Option E

  22. Options • The Authority has defined ‘Options’, in addition to the minimum requirements • To (partially) not fulfill these Options results in a fictitious increment of the NCW • Options will be translated into ‘Dialogue Products’ • Final valuation of Options will take place in the Dialogue Phase

  23. Options • Option A: Management System • Option B: System integration • Option C: Minimize environmental nuisances • Option D: Fast delivery • Option E: Elevators / Escalators (Quality levels) • Option F: Maintenance Concept (LCC) • Option A: effect CSF 1 • Option B: effect CSF 2 • Option C: effect CSF 3

  24. Dialogue Products • Options: • Management Plan • Acceptance Plan, System integration, Safety Case, Installation and Test run • Logistics plan • Planning • Analysis Failure mechanisms Elevators and Escalators • Maintenance Concept

  25. (Other) Dialogue Products • Sample Preparation regarding Systems Engineering • Verification matrix (on risky design elements such as the vibration reduction systems in the rail track)

  26. Planning • Prequalification: July 2009 - Nov 2009 • First phase of the Dialogue – Business Plan (n Participants) Nov 2009 - Feb 2010 • Second phase of the Dialogue – Consultation phase (3 Participants) Mar 2010 - Apr 2010 • Third phase of the Dialogue – Dialogue phase (3 Participants) May 2010 - Oct 2010 • End of Dialogue – Definitive Bid (3 Participants) Nov 2010 - Dec 2010 • Completion – Contract Award (1 Participant) Dec 2010

  27. Key risks • Capacity of the internal NZL organization (quantity and quality) for drafting the contract, the process of contracting and contract management • Complexity of the project: none or (too) few interested parties • Unstable scope • Implementation planning is not feasible • Appeals of candidates or participants • Bidding over budget • Realisation of substructure contracts will take longer than planned • The building time frame (superstructure) will take longer than planned

  28. Challenges: coordination and input External stakeholders • Managing ‘the Law of the inhibitory ahead’ • Discussion Maintain component (DIVV Management) • Signalling, Integration test, Test run (AMSYS) • Frames for Acceptance and Transfer (DIVV Management) Internal stakeholders • Interfaces file substructure ('as built' or 'as designed ‘ including non conformities)

  29. Questions?

  30. Propositions for Discussion

  31. Proposition 1 If large infrastructural projects are contracted traditionally*, public authorities are incapable of keeping project control. *choices in design and methods of construction made under responsibility of the Authority, with directive supervision by the Authority

  32. Proposition 2 The characteristics and the key risks of the project, for instance: • Capacity of the internal organization • Unstable scope • Uncertainty in timeframes of substructure contracts make the project highly suitable for a form of alliancing

  33. Proposition 3 To transfer design responsibility is like a boomerang: it will inevitably return to the Authority.

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