Project Alliance - Finnish Transport Agency's pilot projects Magnus Nygård
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1 Project Alliance - Finnish Transport Agency's pilot projects Magnus Nygård
2 Content of the presentation Finnish Transport Agency s objective to improve productivity About using Allaince contracting within EU legislation Pilot projects: 1) Railway renovation project 2) Tunnel construction in Tampere city area Magnus Nygård 2 Infrastructure Management
3 FTA s strategic targets for using procurement models which improve productivity Background: Increase in productivity has been much lower in construction industry than in other industries Productivity potential has been recognized and a significant part of it is connected to the way of acquiring services and cooperating during the project FTA has been obliged to develop the industry in cooperation with Finnish infrastructure builders to be the most effective in Europe by 2015 Strategical targets for Alliance and Lean models by Public procurements To improve productivity of the entire industry To change the culture into a more open and trusting way of working To improve the customer satisfaction for end products faster, better quality and cheaper To develop innovativeness and knowledge Infrastructure Management
4 Alliancing versus European union procurement legislation The Alliance contracting model in Australia has two aspects, which are not in line with European Union legislation: There is no need to use price in comparison There is no need to write out verbal comparison about every comparison criteria 4 Infrastructure Management
5 We need price component in EU No price component, pure alliance and Single TOC Full price competition between two NOPs (Dual TOC) Budget critique and quality of pricing methods Fee as a price component Price is made up of unit prices and fee % 5Infrastructure Management
6 Alliancing versus European union procurement legislation According to the EU directives and Finnish legislation The price should be used, when contracting authority is making comparison of tenders Two possible selection criteria: The lowest price or the most economically advantageous tender (so-called quality and price) In our case, we are going to use limb 2 as a price element. Contracting entities should write out justifications for every comparison criteria 6 Infrastructure Management
7 Compensation Model Everyone's financial result depends on the result of the Alliance, not just on their own performance Compensation model Direct costs are reimbursable (project costs) Corporation overheads and the profit (Fee) are maximum risk for the proponents Gainshare / Painshare regime is common and will be shared in rations that are agreed in advance Profit Corporation overheads Project-specific overheads Direct project costs Fee Limb 2 Gainshare/ Painshare Regime (limb3) Reimburseable costs (limb1) Infrastructure Management
8 Alliance project as a process 11/25/ Infrastructure Management
9 Establish the alliance/ selecting the NOPs Expression of Interest Request for Expression of Interest issued in Hilma Stage 1 RFP response stage Competitive Request for Proposals negotiation process phase 3-stage selection process Stage 2 Stage 3 Stage 4 PDA The Alliance under Alliance way under way Intersted companies submit written Expression of Interest FTA assesses submissions and selects suitable Proponenst to RFP process Info-meeting with the proponents Request for proposals Selection of the Proponents Request for Proposals issued to Proponents Proponents prepare and submit RFP responses and prepare their teams for the selection process and eventual alliance. Evaluate written submissions Proponents submit RFP responses Evaluattion and preliminary scoring of written submissions Final scoring of the RFP responses and selection of the two best proponents Establishment Audits Estimate Systems Audits 9 Infrastructure Management Workshops with 4 proponents Interview with each Proponent Drop to two proponents Selection to stage 3 Development workshop with each Proponent Workshops with 2 proponents Commercial discussions with each Proponent Proponents tender their Fee The proponent selected Procurement decision and Memorandum Final evaluation of RFP of responses explanation and scoring Final agreement on PDA and all relevant aspects of PAA Sign Project Development Agreement (PDA) Selection of preferred Proponent
10 Selection criteria Weight Evaluation criterion Stage2 Stage3 total sub total sub A. Capability 100 % 75 % A1. Project implementation plan and organsation 25 % 10 % A1.1 Project implementation plan and organisation 25,00 % 10,00 % A2. Track Record 35 % 10 % A2.1 Track record in Key Result Areas 25,00 % 10,00 % A2.2 Learning from mistakes 10,00 % no evaluation A3. Value for Money 40 % 30 % A3.1 Setting the target outturn cost 25,00 % 15,00 % A3.2 The budjet critique 15,00 % 15,00 % A4. Alliance ability and leadership 0 % 25 % A5.1 Alliance understanding and demonstrated leadership capabilities no evaluation 25,00 % B Price 25 % B1 Fee % no evaluation 25,00 % A+B Total 100,00 % 100,00 % 10 Infrastructure Management
11 Challenges Contract tendering takes time and resources maybe more than other procurement models Very hectic 6 months period for competitive bidding Many participants to coordinate No chance to modify the time table So far the Alliance model is new to everyone Liikennevirasto 11 Infrastructure Management
12 First pilot: Railway renovation project Lielahti Kokemäki alliance
13 Lielahti Kokemäki renovation project in short First Public sector Alliance Pilot in Europe Project time , used 70% PTU Current phase Implementation phase Railway renovation project, total length 90 km Project budget 106,4 M Goal for the renovation is to: - NOP s TOC 85,6 M - OP s 20,8 M materials not included in TOC Improve safety for railway section and reduce maintenance costs by renewing and repairing constructions (railway sleepers, rails, ballast, culverts, bridges, drainage, build new and tear down old platforms) Besides the renovation there are needs for improvements, such as: Removal of railway level crossings. Reinforce surface and bench structures of the railway track so that it is possible to operate on 250 kn in km/h. Infrastructure Management
14 Achievements, Collaboration is efficiency Total management of construction works, construction plans and owner s administrative procedures. All decisions are made best for project Taking lean-principles to practice: Close collaboration in safety issues. Everyone works together with jointly agreed goals and common rules. Collaboration in work coordination, management of change and innovative problem solving create efficiency. Training and guiding play a key role New way of collaboration requires constant learning during the project Infrastructure Management
15 Achievements Compensation model works Open book principles are adopted and taken to practice -> builds trust Openness in costs and cost management have been successful despite many separate cost controlling systems. Compensation model has worked as planned: as an incentive and a controlling element of the project Cost monitoring is systematic and auditing is done rutinely and reliably TOC has not been modified -> risk assessment and pricing have been successful Budget estimate was cut down from 106 M to 104M while project completion (time and cost) about 70% Project has succeeded well due to innovative solutions and key result areas. NOP s estimated reward has increased +8 % from original estimate Infrastructure Management
16 Achievements, Key Result Areas EXPERIENCES Key performance indicators are tangible and easily measurable KRA s effect is guiding and incentive STATUS KRA estimate is 65 (while project completion 70 %) Infrastructure Management
17 Project Implementation Phase, Key Performance Indicators status Key Performance Indicators Lielahti-Kokemäki alliance, project implementation phase Key Result Area Performance Indicator Performance levels Usability and interference Poor Minimum Excellent Performance Passenger traffic precision(%) ,59 Freight traffic precision(%) ,95 Schedule Project completed (including commissioning and all necessary documentation) * *expected Traffic and work safety Railway traffic safety defects ,5 Work safety indicator (%) ,5 Accident frequency ,3 Liikennevirasto 17 Infrastructure Management
18 Achievements, schedule Traditional Alliance project Schedule Railway planning Construction planning Construction Commissioning Alliance model enables more efficient lead times by overlapping project phases (goal is to complete three years in advance compared to traditional models) In particular, managing administrative procedures and doing actual construction works simultaneously has been efficient Infrastructure Management
19 Summary of Liekki alliance Work safety on a good level Schedule under control Costs under control Risks and project scope under control Pilot project has succeeded so far and outcomes are evident Liekki Alliance pilot was recognized as Construction site of the year 2012 in Finland WE Infrastructure Management
20 Second Pilot: The tunnel of Rantaväylä
21 2 pieces of one-way 2,3 km road tunnels in Tampere city center Interchange in both ends and provision for one in the middle Daily traffic volume now > In the future 2030: The estimated costs 185 M Development period July 2012 autumn 2013 Liikennevirasto 21 Infrastructure Management
22 Tampere Onshore Road Rantaväylä Is located in the centre of Tampere. Between the city centre and Lake Näsijärvi in the middle of the urban structure. Is a part of the nationwide road network and the main road 12. Tampere Rantaväylä serves national, regional and urban traffic. Tunnel of Rantaväylä - planned location - Infrastructure Management
23 The Tunnel of Rantaväylä The tunnel is planned to be sited under built environment It will also underpass The Tammerkoski Rapids Length of the tunnel is approx. 2,3 km Tunnel will generate possibilities to evolve land use at the city centre 23 Infrastructure Management
24 The Tunnel Structure Infrastructure Management
25 The same overall process as in Australia Administrative decisions have been very complicated 11/25/ Infrastructure Management
26 Lessons learnt Clear evidence of innovation promotion Explode the ideas and innovations systematically Direct costs and fees will always be paid for the service providers We can plan and prepare right things in the right time Time table is not stretching because of the changes One and only Big room is better Rather workshop than meeting Idea Research APPROVED UNFINISHED FROZEN CAST OFF If there is value for the money Innovation More than 50 ideas More than 20 innovations ROAD BRIDGE TUNNEL TECNICAL SYSTEMS Tecnology groups takes Liikennevirasto 26 Infrastructure responsibility Management to explode the ideas
27 Exploding the innovations systematically brings results Liikennevirasto 27 Infrastructure Management
28 Ongoing Alliance project in Finland Vuolukiventie 1b Helsinki University, SRV Oy ja Arkkitehtitoimisto SARC Oy Implementation phase 06/ /2013 TOC 18million Järvenpää Hospital Establish the alliance 05-08/2013 Project developing phase 09/2013- Target estimate cost 50 million Tampere Tunnel City of Tampere, FTA NOP: Lemminkäinen Infra Oy, A-insinöörit Oy ja Saanio & Riekkola Oy Project developing phase 08/ /2013 Target Outcome Cost 180,3 million Terveyden ja hyvinvoinnin laitos Senaatti Properties, NCC Developing phase TOC 18 million hybrid Helsinki-Vantaa Airport pavement services Finavia ja Lemminkäinen Infra Oy TCE 20 million Hybrid Lielahti-Kokemäki rail 6/ FTA & VR Track Oy TOC 106 million Strategy decision Establish the alliance Project developing phase Implementation Phase Defect correction period Infrastructure Management
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