Practical experiences with Best Value Procurement of the engineering services for the Blankenburgtunnel in Rotterdam Area

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1 Practical experiences with Best Value Procurement of the engineering services for the Blankenburgtunnel in Rotterdam Area Wim Leendertse Carlita Vis 19 november 2013 Ministry of Infrastructure and Environment Department of The Netherlands

2 Program Introduction ( ) Refreshing Best Value Procurement ( ) The Blankenburgtunnel project, a special case! ( ) Experiences Blankenburgtunnel ( ) Discussion ( ) 2

3 Agency of Ministry of Infrastructure and Environment (and spatial planning) Around 9,000 employees (in 2003: 15,000!) Annual budget: 5 billion euros (1 billion in maintenance) About 10 large (over 60 million) projects a year

4 Tasks Maintenance, extension and traffic management of main road network Maintenance, extensions and traffic management of main waterways network Water qualiy of open waters Safety (sea and river defense): Coastal defense River flooding National spatial planning policy Environmental policy 4

5 Procurement Strategy Standard contracts: D&B for all new projects Outcome based maintenance contracts (service level) PPP (DBFM) for selected list of projects Doing more with less employees: More and earlier market involvement Focussing on core tasks (network management) New ways of market approach: BVP

6 Best Value Procurement Basics Carlita Vis

7 Planning / Programming Designer Contracting Contractors Suppliers Clients Supply Chain: We work in Silos 30K Foot Level Technical Details

8 Minimizing risks from the beginning! Use of information and logic Project Risk Time Risk Risk Manage and minimize from the beginning, by monitoring risks 8

9 Vendor is an Expert Vendor is an Expert CLARIFICATION / PRE-AWARD CLARIFICATION Dominant Simple Differential (non-technical performance measurements) BV proposal must be acceptable to user Clarification Technical review Detailed technical schedule Risk Management Quality Control Quality Assurance 9

10 Filters Tijd Kwaliteit van de gegadigden 1 Selectie -, inschrijvings - en beoordelingsfase Filter 1 Past performance Selection Phase Filters Filter 2 Filter 3 Filter 4 Interviews Identify MEAT -Project Capability (PC) -Risk Assessment (RA) -Value Added (VA) -Cost 2011, Arizona State University, PBSRG EMVI MEAT 2a 2b 3 Pre - Award Phase fase Clarification Filter 5 Clarification gunning Award WRR en and DR DR Uit - voering By Risk Management Minimization Filter 6 Weekly Report

11 Evaluation Criteria Risk Plan (rated) Project Capability Plan (rated) Value Added Plan (rated) [Milestone Schedule (not rated/not weighted)] Cost / Financial Proposal (not rated) Interviews (rated)

12 Weekly Reporting System Excel Spreadsheet that tracks only unforeseen risks on a project Client will setup and send to vendor once Award/NTP issued Vendor must submit the report every week (Friday). The final project rating will be impacted by the accuracy and timely submittal of the WRS 12

13 effort 20 BV-procurements (31 projects/contracts): 7 engineering services 1 highway maintainance 14 Design-Build including biggest BVP program worldwide Total spend: 580 mln. 15 projects delivered Droog NWO Planstudie PLUG 2/3 PLUG 1 A27/28 RKDK Realisatie B A C D spoedaanpak A12 WV F E A9 B dorp Spitsstroken A1 en A8 Prestatiecontract DON Ophogen brug A50 Twentekanalen 3e Kolk Hemelrijkse waard Nat Nederrijn Winner of Dutch Sourcing Awards 2012 Houtribdijk ESA Zuid-Willemsvaart opgeleverd in aanbesteding/uitvoering contractvoorbereiding BV-leads

14 Lessons Learned BVP works in context European legislation BVP ensures tenderers keep interest of the client in mind (goal alignement) Paradigm change is needed, this takes time to implement: core team Transparant communication and thorough preparation (training!) is essential

15 Strategic Plan BVP Focus on engineering services and Design-Build Approximately 10 projects per year until 2015 Coordination by central core-team Measure, measure, measure

16 Planning the Blankenburgtunnel, (Nieuwe Westerlijke Oeververbinding Rotterdam) Wim Leendertse Project director NWO Ministry of Infrastructure and Environment

17 17

18 18 Nieuwe Westelijke Oeververbinding

19 19 Nieuwe Westelijke Oeververbinding

20 Why a new river crossing? Providing a robust infrastructure connection for the western part of Rotterdam Harbour complex; Providing a traffic solution for the growing rivercrossing traffic up to 2024/2040 in addition to the Beneluxtunnels and the Brienenoord bridge; Providing a through river crossing connection for the A4 corridor (under construction Midden-Delftland) to connect the Randstad to the south in addition to the Beneluxtunnels; Improving the connection of Greenport Westlandt o international infrastructure connections (A15 to Germany and A16/A4 to Belgium). 20 Nieuwe Westelijke Oeververbinding

21 21 Nieuwe Westelijke Oeververbinding

22 22 Nieuwe Westelijke Oeververbinding 14 maart 2013

23 23 Blankenburgverbinding 13 november 2013

24 Special characteristics Intense political discussion (environmental integration) Toll financed project (integration toll and DBFM) Political discussion about toll Design Build Finance and Maintain Two adjoining DBFM contracts (interaction) BVP consultancy pilot (planning phase) Rotterdam Harbour Authority very powerful player Close crossing of cable artery Rotterdam Europort Crossing Nature 2000 area (legislatioin, compensation) Crossing of railroad 24

25 Planning Route decision phase 1: October 2013 (end of orientation phase) Route decision phase two Februari 2015 Final route decision December 2015 (end of planning phase) Contract BVP August 2013 till final route decision Start contracting DBFM Februari 2015 Contract close DBFM Februari 2016 Road open December 2021 Contract end DBFM 2041 (20 years maintain) 25

26 Experiences Best Value Procurement Blankenburgtunnel

27 Best Value Procurement Blankenburgtunnel 27 Nieuwe Westelijke Oeververbinding

28 BVP: what s in/ what s out IN: Preliminary design, pre-design and detailed design Architectural and environmental integration plan Preparation of route decision (two phases), complete with all necessary effect studies Terms of reference for DBFM contract Cost calculations and contract value estimate Conditioning field studies Preparation land aquisition (paperwork) Preparation cable and pipe diversions (paperwork) OUT: Stakeholder management and communication DBFM contract Tolling system Obliged reviews for decision making 28

29 Assumptions regarding BVP (ex-ante): Objectives related award, not product delivery Incentive based payment system EMAT award leading to the best partner for project The best partner is an expert in his tasks Clear role division between client and consultant: consultant is initiator and leading for his tasks and controls the clients activities in his planning Consultant organises his tasks conform a clear project oriented quality system (project management plan) 29

30 Assumption 1:objectives orientation. Experience:products are leading, tendency to translate changes in claims Business model of most consultants is based on production through working time Engineering approach is production oriented, this conflicts with project in dynamic environment Objectives are dependent on client processen. Public clients are not very good in controlling their own processen Decision making is out of project control Fixed price for specified delivery => Difficult for consultant to take objective oriented risks! 30

31 Objectives Signed route decision on 31 December 2015 or as early as possible An efficient and effective design that can be realized within available budget A signed pre route decision on 15 December 2014 or as early as possible Contracting of DBFM: contract close directly after the signed route decision. 31

32 Assumption 2:Incentive based payment system. Experience: none. Actual progress is paid according to accorded planning A 20% garanty hold-back on every payment This will be paid at reaching milestones For reaching the milestones sufficient quality has to be delivered Very difficult to describe (ex-ante) sufficient quality => Basic idea is that reaching the milestones includes sufficient quality 32

33 Assumption 3:getting the best partner for project. Experience:yes, we did! EMAT system works well Rating has to be done by project members Project members have to be open for new ideas and approaches Very intense period, asking a lot of time from the team Only extreme rating works, but hard to explain afterwards Interviews were the most discriminating For complex project you have to give enough time and information possibilities to enlive the project => Basic idea was that investing time upfront would lead to reduction of clients effort later. 33

34 EMAT award Clients risks (Does consultant show empathy for clients processes?) Consultants risks (Does consultant show expertise on his main tasks?) Team (Interviews with key personnel of consultantant team) Possibilities for improvement (Does consultant see chances for improvement of client task?) Price (25%, pricecap) 34

35 Assumption 4:clear role division. Experience:acting according to BVP principles is difficult.. for both parties! BVP expert is not the only expert in the project We have a high quality team, overlapping with consultant and in some fields more expert than the consultant The expert is not in every field an expert Hesitation to take initiative. Consultant is not formal conversation partner for stakeholders Hesitation to cooperate with client => In projects where role of client is reviewing there is tendency for action-reaction. This costs time and leads to frustration 35

36 Assumption 5:clear project management plan. Experience:due to (ex-ante) fixed price pmp tends to be too detailed and complicated. Tendency in pre-award is to describe exactly products and processes correlated tot the fixed price Tends to be too detailed and too complicated to follow Control in payment system is based on risk based reviewing. A essential shortcoming results in payment stop.in the moment every test shows shortcomings Result is payment discussion Result is many change claims => We started to decomplex the pmp (together). 36

37 Discussion 37

38 Discussion 1: With BVP the client can go on holiday. 38

39 Discussion 2: The more quality aspects you put in the awarding mechanism, the more expensive projects become. 39

40 Discussion 3 An expert that can oversee the future does not exist. 40

41 Discussion 4: BVP is just a tric. Knowing the tric is the essence, instead of being the expert. 41

42 Thank you for your attention! Further infromation: 42

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