Business Area: Early Contractor Involvement
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1 The European Infrastructure Procurement Symposium 2012 Business Area: Early Contractor Involvement Dr. Konrad Spang Professor Chair of Project Management University of Kassel Germany
2 Definition: Early Contractor Involvement (ECI) Is an approach to use the knowledge of the contractor during the design phase 2
3 Practice ECI is used in: Australia in the Alliance contracting Client and Contractor form an Alliance and are responsible for planning and construction in one team Pain and gain is shared Australia, UK, Germany, Netherlands pure form of ECI 2-phase model, where client and contractor are responsible for planning and construction in one team in the first phase If both agree on a fixed price, the contractor gets the contract for the construction the USA in the Construction Management Model (CM) The Construction Manager advices the client in the designing and in the construction phase. 3
4 Advantages and disadvantages Advantages Higher cost certainty (joint design (client + contractor) Cost reduction (suggestions of the contractor) Higher schedule certainty (joint design (client + contractor) Faster project delivery (innovative suggestions of contractor Better knowledge exchange design and construction Higher design quality because of joint design Minor potential for conflicts because of joint design Optimization of the whole project because of innovative suggestions of the contractor Disadvantages: Maybe more expensive tender phase because of extra payment to the contractor Different interests (client contractor) in the design phase ( no independent consultant ) 4
5 ECI in Germany not possible, because of public regulations such as: Tendering Regulations for public projects (D, EU) Budgetary Regulations (Treasury) Legal approval process for public infrastructure projects And also important: Acceptance by the Ministry of Transport Acceptance by client organisations Acceptance by construction companies Alternative: incentives for optimization in the construction phase 5
6 Partnering Guideline for infrastructure projects in Germany Preamble Element 1: Clear project specifications Element 2: Processes and regulations for project changes Element 3: Fair risk handling Element 4: Joint data systems Element 5: Clear responsibilities Element 6: Conflict Management Element 7: Contractual incentive regulations 6
7 Element 7: Contractual incentive regulations Optimization after contract closure as a compensation for the missing early involvement of the contractors. Contractors can make suggestions for optimising the project If the suggested version is cheaper and the technical equality is proofed, client and contractor share the saved money (e.g. 50 / 50) If the quality of the suggested version is better, the contractor gets a bonus If the contractor can reduce the construction time, he gets a bonus In each case the client can reject suggestions if he doesn t want them 7
8 Element 7: Experiences Slight problems in the startup-phase unfamiliarity with the procedure begin construction and optimization at the same time Definition and the way to proof the equality is important Less conflicts (contractors need consent of client for their suggestions) Higher Quality could be achieved Currently savings of about 2.5 % 8
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