ECI - Panacea or Pipedream?

25th November 2015

Introduction

2

Presenters• Steve Rowsell CIHT

• Angus Walker Bircham Dyson Bell

• Shaun Pidcock TfL

• Mark Borland Surrey County Council

• Geoff Fawkes Tarmac

ECI - Panacea or Pipedream?

Steve Rowsell

Early Contractor Involvement (ECI)

STEVE ROWSELLDirector, Rowsell Wright Limited

Question§ Who holds the monopoly of wisdom

regards the development of best solutions and delivery methods?Ø Client?Ø Designer?Ø Contractor?Ø Stakeholders?Ø 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 costs

Drivers 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 research

New ApproachKey principles:§ Early creation of integrated teams. § Collaborative and longer-term relationships. § Fair allocation of risk.§ Incentivised delivery. § Selection of suppliers based on best value.§ Measure performance/ continuous improvement.

ECI 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 Government

ECI 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 construction.

Benefits 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 quicker

Challenges 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.

§ The team needs to demonstrate the right culture and behaviours.

§ Some commercial elements established in competition.

§ Best value not lowest price.

Commercial 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 Report

ECI - Panacea or Pipedream?

Angus Walker

Merits of ECI in the DCO processAngus Walker

Highways UK, 25 November 2015

WHAT IS ‘THE DCO PROCESS’?

DCO = Development Consent OrderA permission under the Planning Act 2008The Act that brought you:

Hinkley Point C nuclear power stationThames Tideway TunnelHeysham to M6 Link RoadA556 improvement

The Act that will bring you:Some more nuclear power stationsA new runwayA14 improvementsThe Lower Thames Crossing

The Act that may bring you:Crossrail 2

WHY LISTEN TO ME?

A160 - A180 Port of Immingham Improvement Highways AgencyA30 Temple to Higher Carblake Improvement Cornwall CouncilA556 Knutsford to Bowdon Scheme Highways AgencyHeysham to M6 Link Road Lancashire CCM1 Junction 10a Grade Separation - Luton Luton Borough CouncilMorpeth Northern Bypass Northumberland CCNorwich Northern Distributor Road (NDR) Norfolk County CouncilWoodside Link Houghton Regis Bedfordshire Central Beds Council

IN A NUTSHELL

Pre-application consultationComplex applicationSix-month examinationSix-month recommendation/decision

MERITS OF ECI

Although a DCO can be flexible…Value engineering inevitably leads to changesInspectors often press for more detail than the developer wants

DEMERITS OF ECI

Depends on timingAppointment during consent process can be disruptiveBetter before or after

CONCLUSION

Just as a DCO is granted if the benefits outweigh the adverse impacts… on balance, the merits of ECI outweigh the demerits

ECI - Panacea or Pipedream?

Shaun Pidcock

Hammersmith Flyover

Shaun PidcockHead of Projects and ProgrammesTransport for London

Structures & Tunnels Investment Programme – 8 Projects c.£250m

History of the Flyover

Construction of the bridge 1959-1962

Designed by G. Maunsell and Palmers

Built by Marples Ridgeway and Partners

Cost approximately £1.2M

Elevated length 16 spans - 622.7 metres

Length with approach ramps is 862.9metres

Dual 2 lane carriageways

Overall width 18.6 metres

History of the Flyover

Pre-cast segmental construction

Construction of the Flyover

Each tendon group continuous over 2 spans (3 piers)

Tendons anchored in deck slab adjacent to piers

Schematic diagram of post – tensioning tendon

arrangementTendons encased in grout boxes ‘external’ to box section

Acoustic Monitoring

Graphical representation of output from the acoustic monitoring system

Inspection & FindingsSurvey findings – Cable Failure

Corroded Bearings

The Old Delivery Approach

TfL’s traditional major projects delivery model used was

Procure-Design-Procure-Build. ØNo contractor input into design

ØNo economies of scaleØIncreased programme

ØInefficient

We wanted to move away from this to a new delivery model.

New Delivery Approach

TfL’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

Construction

ECI 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 requirement

Setting 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 granted.

Designer Novation – Design & Build

1. Contract for delivery of the works awarded at the outset.

2. Designer novated over to the contractor to take responsibility for build and detailed design.

3. Main works begin, final detailed design still to be finalised

4. Works on site.

Contracts

Stage 1 Contracts:

∗ NEC3 Professional Services Contract Option E Time Based

Contract

Stage 2 Contracts:

TfL is considered a number of options:

1. NEC3 ECC Option A Lump Sum with Activity Schedule

2. NEC3 ECC Option C Target Cost with Activity Schedule

3. NEC3 ECC Option D Target Cost with Bill of Quantities

Framework agreement Structure and operation

Work Package Call-off contract award

ECI & Construction Framework Agreement

Call-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: Target Price or Lump Sum proposal from contractor for consideration by TfL

Call-Off Contract: Stage 2•Novation of design contract to Contractor•Completion of detailed design•Delivery of works

Mini-competition between Contractors awarded a Framework Agreement for

the specific work package

PriceAcceptedbyTfL PricenotacceptedbyTfL

• 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 Timescales

Successful ECI PhaseWorking together

Working and cooperating with local authorities

Keeping London Moving –Roads, Buses and Underground affected

Early contractor Involvement (ECI):

Early involvement and co-location of Costain with Transport for London and Ramboll & Parsons Brinkerhoff

Successful use of BIM

InnovationUse of Mock Up at Sipson Road – For Pouring Concrete

Successful Well Managed Delivery

Hammersmith FlyoverA Successful Project for TfL

ECI - Panacea or Pipedream?

Mark Borland

Creating 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

q Integration- working with all supply chain partners from Main Contractor to Specialist, recognise the value of all partners

q Embedded in project- Enable time and space for ECI to breath, can’t be rushed or seen as an “add on” to the overall process

q Clear Targets & Definition from what you want to achieve from ECI

� Improved Risk Management� Reduced cost through Value Engineering � Enhanced Construction Programme � Improved Quality & Design Benefits

Effective ECI requires six core components

qIncentivised – all parties need to see the benefit and reward of engaging in ECI process

qControlled – documents, 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:

ü £20m savings in construction of new Walton Bridge with Costain’s

ü £20m savings over 5 years in road maintenance with Kier

ü £10m in delivery of street lighting PFI with Skanska

ü £5m across various projects

Questions

ECI - Panacea or Pipedream?

Geoff Fawkes

HEYSHAM COLLABORATIVE PARTNERSHIP WITH COSTAIN

WORKING TOGETHER PRESENTATION

ImprovedServiceLevels

SERVICE LEVEL AGREEMENT STRUCTURE

MEASURING PERFORMANCE

• Using a project created dashboard compassing KPI’s that drive service levels across the BU’s

MEASURING PERFORMANCE

Tonnes CO2e Project to Date Forecast VE Design Initial Design

AGGREGATES 2,441 4,059 6,054

ASPHALT 2,246 7,180 10,197

CONCRETE 5,577 4,584 7,014

CBGM 1,279 2,496

GRAND TOTAL 11,542 18,248 23,265

OUR OBJECTIVES

BS11000 VALUE CREATION HIGHLIGHTS

• Health and Safety – All Hauliers Inducted, 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 – e.g. Forecasting and Communication

BS11000 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 accreditation

ONE TEAM, ONE AIM, DELIVERING A GREAT PROJECT BY DOING THE RIGHT THINGS AT THE RIGHT TIME.

..... LEAVING A LASTING LEGACY

ECI - Panacea or Pipedream?

25th November 2015