Key Words: Flood Reconstruction, Resource Contracts, Coal Seam Gas, Contract Management, Project Management, Relationship Contracting

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1 Rebuilding Flood Damaged Roads in South East Queensland in the middle of the Coal Seam Gas Expansion/Explosion - A Local Governments Experience and Learning's David Pemberton Mobile Flood & Resource Program Manager - Western Downs Regional Council Abstract Local Government in Queensland, Australia over the past few years has been subjected to some of the most challenging engineering and infrastructure management issues ever encountered. Commencing in 2010 through to 2014 Queensland has been subjected to Flooding Disasters costing $13.6B in repairs. While the flood events were occurring, the state was also undergoing gas explosion with the development of the CSG - Coal Seam Gas Exploration and Development Boom in South West Queensland. Coal Seam Gas supplies 27% of the nations reserve and is expanding. This paper provides an overview of some of the challenges that Local Government has faced in repairing its Roads Infrastructure, whilst negotiating and accommodating the significant increased demand, impact and access on its roads caused by the CSG Gas Industry at the same time. Managing these complex challenges required a team that was committed and competent in delivering projects, contract and services in a proactive, positive and collaborative way. This paper presents an overview of the systems and processes that were established in meeting these challenges and shares some experiences, highlights and learnings to apply for the future Simplicity is the key and good relationships are pivotal. Sharing the experiences and lessons learned helps everyone plan for a better and brighter future. Key Words: Flood Reconstruction, Resource Contracts, Coal Seam Gas, Contract Management, Project Management, Relationship Contracting Pemberton Dave.docx Page 1 of 9

2 Introduction Western Downs Regional Council (WDRC) in 2010 encountered an era that will never be repeated in a lifetime of Local Government. Coal Seam Gas extraction was in its early infancy of being developed and the region began a prolonged and repeated experience of flooding across the region for a number of years. This paper shares the experiences, the challenges and the learnings that have evolved over time and provides some recommendations for the future should similar situations be encountered again. Background Western Downs Regional Council Statistics Size Area: = 38,000 sq.km Road Network Federal Roads: = 230 km State Roads: = 1,719 km Local Government o Sealed: = 2,103 km o Gravelled: = 4,320 km o Formed: = 953 km o Unformed: = 147 km Capacity Council Workforce: = 750 Staff Engineering Department: = 450 Staff Localities Regions (5) - Dalby, Tara, Chinchilla, Miles, Wandoan Year Capital & Maint. Flood Works Resource Works 2010 $18.6M $5.3M $0.8M 2011 $25.3M $96.6M $48.7M 2012 $87.2M $5.9M $61.0M 2013 $91.5M $69.0M $14.2M 2014 $22.1M $5.0M $5.0M The Challenges Delivery of such a significant program was beyond the capacity and capability of the Council. Options were considered about how to deliver Flood & Resource Works across the region. One of the major issues and risks for delivery was competing for contractors and skilled personnel against the high demand and salaries that was being paid across the region by the Resource Industries. Council was supposed to deliver the 2011 Flood works by June This was very quickly identified as not being achievable or practicable whilst achieving value for money. Early discussions were held with the Queensland Reconstruction Authority (QRA) to advise of Councils situation and its plan to deliver the 2011 Flood works by June Little did we know that we would then be flooded again in 2012, 2013 & 2014!!. Framework for WDRC established a contract Program Managers role who in turn established Two (2) Contractor Panels for delivery: - 1. Panel of Civil Contractors 2. Panel of Project Coordinators In order to deliver the actual works, Council explored a number of Contract delivery models. After much review, discussion and debate, Council established a relationship contract arrangement whereby incentives were provided by way of: - Removing Risk (Where known) Implementing Day Rates Pricing - Linked to Package Estimates Two Weekly Progress Claims & Payments Simplified Project Management Simplified Project Records Smaller Project Packaging Supporting & Developing Local Contractor Capacity Pemberton Dave.docx Page 2 of 9

3 Relationship Contract Delivery Low Project Management Overhead Framework for In order to meet increased QRA administrative and reporting requirements together with increased Council and community expectations, WDRC enhanced the previous model by: - Moving to Schedules of Rates Contracts Increasing Scope Verification Processes Increasing Scope Change Management, reporting and Approvals Processes. Increasing Quality Testing, Inspections and Reporting Implementing Contractors All Risk Insurance Increasing Project Management Team Contracts Framework The contractual frameworks were developed to meet reporting and management requirements set out by the Qld Disaster Relief & Recovery Arrangements - Guidelines & QRA Submission Guide. We started with the end reporting requirements in mind and then worked backwards to develop a simplified and streamlined system to meet all party s needs. The framework model comprised 3 spheres: - Project Management, Contract Management & overarching Relationship Management PM RM Civil Contractor Panel This panel system was established to enable Council to meet legislative procurement requirements. It enabled Council to engage contractors directly from this panel for project packages. Contractors were assessed based on price, skills, experience and track record. Project Coordination Panel CM This panel system was established to enable Council to meet legislative procurement requirements. It enabled Council to engage relevant project management staff with suitable skills, experience and reasonable charges to undertake project management and delivery, Project Packages Contracts Approved Contractors were invited to submit prices and programs to undertake Project Packages. Packages were compiled into groups based on locations, similar scope and approximately 3 months work. The Contracts were based on a AS 2124 Contractual Framework. The Technical Specification used for the works was NATSPEC. In 2014/15 Main Roads Specifications were also considered. Schedules used for pricing were a modified Form 4 - The form used by QRA in approving the scope of works for the projects. Allocation of packages were assessed by a panel and allocated based on price, performance, current workload whilst ensuring reasonable momentum was being maintained in overall program delivery Frameworks Contractors submitted package prices on a day rates schedule and packaged duration, delivery arrangement Frameworks Contractors submitted package prices on schedules of rates basis and packaged duration delivery arrangement. Contract Management Frameworks The main project team managing this project comprised of 5 staff:- Program Manager - 1 Project Coordinators - 3 Finance Officer - 1 Internal Operations Staff provided input and managed the delivery by internal day labour. Pemberton Dave.docx Page 3 of 9

4 Contract management systems were developed using 4 - IT tools: - 1. MS Word (Specifications), 2. MS Excel (Schedules, Claims, Monitoring & Reporting) 3. MS Project (Gantt Charting Projects Progress) 4. MS Outlook (All Communications) Pivot tables were used to summarise package information, roads registers, gravel demand production schedules, overall project and program performance. Project Packaging comprised similar projects within a region with an estimated duration of around 3 months work. This limited Councils exposure to risk on Contractors performance Successful contractors were selected based on price, skills, capability and availability. Monitoring on price, quality and performance was undertaken as part of progress claim process which occurred on a fortnightly basis. Any variances were addressed promptly to minimise disruption or ongoing issue or dispute. Contractors were required to take a minimum of 2 photos daily to record works in progress and also any variations or issues that arose on site. Photos were collected on a fortnightly basis with progress claims. Inspections were undertaken by project Coordinators a minimum of one site visit per week Frameworks Project packaging was similar to that model used for works, with the exception that the contracts were now a schedule of rates and higher risk projects had defects liability periods and retentions applied. Progress claims were undertaken on a monthly basis. Increased requirement for quality testing and reporting were implemented. Future contracts considered contractors past performance and relationships Inspections were undertaken by project Coordinators every two to three days maximum. Daily site inspection records were also implemented and utilised as a site instruction record if required. Contract Monitoring Contract Monitoring involved micro and macro management. At a micro level, each project and package was monitored on a fortnightly basis against tendered programs and price. Clear scheduling and project scoping together with on site prestart meetings assisted in keeping variations to a minimum. At a macro level the overall program delivery was monitored using MS project and Excel Pivot Tables to ensure that the overall program was being delivered within allocated timeframes and milestone targets. Monthly Progress Reports and Claims were being made to QRA. This was also supported by a quarterly review report on overall program delivery. These reports enable all parties to clearly see the state of play on program delivery. As issues arose during delivery, these were quickly addressed with the relevant parties to ensure that momentum was being maintained. Dalby Urban Works Delivering $27M worth of 2011 flood reconstruction works in an 18 month period was a mammoth task. Historically Dalby town undertook a capital spend of $1 to 1.5M per annum. This project comprised; lowering roads by 300 to 450mm, installation of stormwater drainage systems, relocation of services, installation of kerb and channel and rebuilding the roads. Council contributed $8M towards the complimentary works which comprised the drainage and kerb works. This area of town had no kerb and channel or stormwater systems. Under a normal works program this project would have taken decades to achieve. Pemberton Dave.docx Page 4 of 9

5 In order to undertake this project in such a short time extensive planning, design and community engagement had to be fast tracked. Designs were carried out internally within Council with external designers engaged on secondment. Three (3) External Contractors and two (2) Internal Construction Teams were established to deliver the works. Program delivery was centrally coordinated due to the significant number of road closures that had to occur. This resulted in a number of ongoing and changing detour routes on a two weekly basis. Community Engagement Delivering these major projects resulted in the establishment of a number of community engagement arrangements. The Dalby Urban Works involved a number of community displays and workshops with local residents to forewarn of the major impacts and disruptions that were going to occur. Council developed a section on its website where the community could be informed of up to date information. In addition to this, local residents received letter box drops advising of; Project Coordinator and Contractor contacts, together with details and impacts for access when their road was being closed to the public and how they could access their properties. This proactive approach resulted in minimal complaints and issues being raised during this works. Regionally Council published in the local papers details of the program delivery including the roads that were being reconstructed over the next 3 month period. Council Customer Service Centre were provided with regular updates of which contractors were working in the regions and how the Project Coordinator was to be contacted should an issue or a complaint be raised. Gravel & Water Resource Management Early on Council identified that supply of gravel and water would be an issue. Council considered options and decided that it would take control of the management and supply of these materials. A specialist environmental/gravel project officer was appointed to manage and coordinate the supply of gravel production and water supply. Gravel was either supplied as a crushed or uncrushed product depending on the pit and road works application. A number of gravel crushing contractors were established and engaged under the Contractor Panel. One of the main issues was securing access and approvals for the extraction of water and gravel from landholders. Council was competing against the resource industry demands that were prepared to pay significant royalties for gravel and water. Balancing Competing Issues Delivering both the Flood reconstruction works and the Resource Infrastructure upgrade works at the same time had a major impact on the roads and the community. Parts of the community were happy to see both occurring, other sections were not happy with the impact by the resource industry. Balancing the high demand from the resource industry which was prepared to pay a premium for delivery was challenging delivery of flood reconstruction works, where government were seeking to minimise costs and expenditure for flood works whilst still setting restricted timeframes for delivery. This was achieved through the delivery via relationship management. Lessons Learnt Overall, delivery of such a significant project was not without its challenges. What started out as relatively simple management process morphed into quite a complicated and detailed management and reporting process. This was mainly due to the ever changing and increased expectations being applied by the Federal and State Government. Pemberton Dave.docx Page 5 of 9

6 The underlying principal of keeping things simple and keeping the end outcomes in mind has been the success of delivering this program. Managing Risk, Scope & Issues needs to be at the forefront of any decision and process: - Setting up systems that can be easily understood and supported from all stakeholders is vital. Keep things simple. Do not get too prescriptive. Be more objective Be clear on what is expected at the end Be clear on how you wish to see things happen. Changes to process and systems can be achieved if communicated clearly. Often the experience encountered was the changes were communicated after the event or activity had passed. Identifying and communicating with your main stakeholders in these types of projects is critical. Stakeholders include: - The Government - Federal & State Your Local Government - Councillors, Executive and Operations Your Contractors Your Team; and most importantly Your Community - Businesses, Property Owners other Visitors In Summary 1. Quality is the Key 2. Communication is continuous & dynamic 3. Relationships are pivotal 4. Listen to all sides of the issue/s 5. Be prepared to change if needed. 6. Make a decision 7. Maintain a high standard 8. Keep long term impacts in mind 9. Developing skills within your organisation and with your local contractors provides an ongoing benefit The Way Forward Looking to the future, there has been a change in management requirements by QRA for delivering these types of projects. Some minor changes in delivery and systems management will be required to meet these changes. Having had the experience and hindsight of what has and has not worked WDRC would continue with its simplified and low project management delivery model for these types of projects. Conclusion Major Projects for medium sized Councils is quite a challenge. WDRC has adopted a low project management overhead, simplified process and relationship style contract approach in delivering its Major Flood & Resource Programs. Over the past 18 months, minor changes have been made to address issues as they arose, however this delivery model and the focus on relationship delivery of projects has been found to be very successful. References Nil Pemberton Dave.docx Page 6 of 9

7 Appendix A Project Delivery Trend Analysis Gravel Pit Demand Pivot Table Pemberton Dave.docx Page 7 of 9

8 Never underestimate the power of Pivot Tables!!! - Take up the Challenge and reap the Rewards. Pemberton Dave.docx Page 8 of 9

9 Author Biography David Pemberton David is a Consultant Engineering and Program Manager from LogIT Solutions that has been engaged by WDRC to assist in establishing, implementing and delivering the Major Project Works resulting from the Flood Reconstruction Damage of 2010, 2011, 2012, 2013 & the Resource Industry Expansion across the region. David has been a Director of Engineering within Local Government and has over 30 years of experience in Project Management, Design & Contract Management in Civil Engineering and Local Government. Postal Address: 424 West Street, Toowoomba, Qld Phone: Pemberton Dave.docx Page 9 of 9

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