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Project Delivery & Contract Strategy (PDCS) OVERVIEW.

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Presentation on theme: "Project Delivery & Contract Strategy (PDCS) OVERVIEW."— Presentation transcript:

1 Project Delivery & Contract Strategy (PDCS) OVERVIEW

2 Project Delivery and Contract Strategy Alternatives

3 PDCS Descriptions ID numbers were used in lieu of names Names were given to the PDCS options at the end of the research

4 12 PDCS Alternatives Each is unique Other options may exist but generally are variants or combinations of the 12

5 Criteria for Project Delivery and Contract Strategy Characterization Project Delivery & Contract Strategy (PDCS)

6 PDCS Alternatives Definition Criteria Phase sequence Project team relationships Compensation approach

7 Phase Sequencing The sequencing of the design, procurement, and construction project phases, relative to each other

8 Project Team Relationships Project team relationships are described in both contractual and functional terms

9 Compensation Approach The type of compensation approach that is used for each contractual relationship.

10 PDCS Development Eleven PDCS alternatives were identified based on the three criteria Survey of CII and non-CII companies was undertaken to examine the use of each PDCS alternative Data from 82 projects were collected Eleven PDCS alternatives are currently used in industry Twelfth alternative was added during development of tool

11 Traditional Design-Bid-Build - PDCS 01

12 Traditional with Early Procurement - PDCS 02

13 Traditional with Project Manager - PDCS 03

14 Traditional with Construction Manager - PDCS 04

15 Traditional with Early Procurement and Construction Manager - PDCS 05

16 Construction Manager-at-Risk - PDCS 06

17 Design-Build (or EPC) - PDCS 07

18 Multiple Design-Build (or EPC) - PDCS 08

19 Parallel Primes - PDCS 09

20 Traditional with Staged Development - PDCS 10

21 Turnkey - PDCS 11

22 Fast Track - PDCS 12

23 Key Assumptions Use tool during front end planning Safety goals/objectives can be achieved equally well by all PDCS alternatives Alliance/partnering relationships can be used with all PDCS alternatives Facility startup is excluded except under the Turnkey alternative Infrastructure projects were not adequately represented

24 Selection Factor Overview Project Delivery & Contract Strategy (PDCS)

25 Development of Selection Factors Research project 165: –Identified typical project objectives –Identified 30 selection factors –Confirmed use and level of importance –Reduced selection factors to 20 by eliminating redundancy and overlap Basic Premise: Project objectives are translated into selection factors that drive the choice of a PDCS alternative for a project

26 Factor Groupings Cost-related factors (5) Schedule-related factors (3) Other factors (12)

27 Cost-Related Factors Selection FactorFactor Action Statement 1.Completion within originalControl cost growth budget is critical to project success

28 Cost-Related Factors Selection FactorFactor Action Statement 2. Minimal cost is critical toEnsure lowest cost project success

29 Cost-Related Factors Selection FactorFactor Action Statement 3. Owner’s cash flow for theDelay or minimize project is constrained expenditure rate

30 Cost-Related Factors Selection Factor Factor Action Statement 4. Owner critically requires Facilitate early cost estimates early (and reliable) cost figures to facilitate financial planning and business decisions

31 Cost-Related Factors Selection Factor Factor Action Statement 5. Owner assumes minimalReduce risks or transfer financial risk on project risks to contractor(s)

32 Schedule-Related Factors Selection FactorFactor Action Statement 6. Completion within scheduleControl time growth is highly critical to project success

33 Schedule-Related Factors Selection FactorFactor Action Statement 7. Early completion is criticalEnsure shortest schedule to project success

34 Schedule-Related Factors Selection FactorFactor Action Statement 8. Early procurement of long-Promote early procurement lead equipment and/or materials is critical to project success

35 Other Factors Selection FactorFactor Action Statement 9. An above-normal level ofEase change incorporation changes is anticipated in the execution of the project

36 Other Factors Selection FactorFactor Action Statement 10. A below normal level ofCapitalize on expected low levels changes is anticipated inof changes the execution of the project

37 Other Factors Selection FactorFactor Action Statement 11. Confidentiality of business/Protect confidentiality engineering details of the project is critical to project success

38 Other Factors Selection FactorFactor Action Statement 12. Local conditions at projectCapitalize on familiar project site are favorable toconditions project execution

39 Other Factors Selection FactorFactor Action Statement 13. Owner desires a high Maximize owner’s controlling role degree of control/influence over project execution

40 Other Factors Selection FactorFactor Action Statement 14. Owner desires a minimalMinimize owner’s controlling role level of control/influence over project execution

41 Other Factors Selection FactorFactor Action Statement 15. Owner desires a substantialMaximize owner’s involvement use of its own resources in the execution of the project

42 Other Factors Selection FactorFactor Action Statement 16. Owner desires a minimalMinimize owner’s involvement use of its own resources in the execution of the project

43 Other Factors Selection FactorFactor Action Statement 17. Project features are well-Capitalize on well-defined scope defined at award of the design and/or construction contract

44 Other Factors Selection FactorFactor Action Statement 18. Project features are not Efficiently utilize poorly defined well-defined at award ofscope design and/or construction contract

45 Other Factors Selection FactorFactor Action Statement 19. Owner prefers minimalMinimize number of contracted number of parties to beparties accountable for project performance

46 Other Factors Selection FactorFactor Action Statement 20. Project design/engineeringEfficiently coordinate project or construction is complex,complexity or innovations innovative, or non-standard

47 Weighting Selection Factors Project Delivery & Contract Strategy (PDCS)

48 Weighting Selection Factors Preference Rank Up to six selection factors should be identified Selection factors should be ranked in ordered from most important to least important Preference rank order should be tied to priority of project objectives and other key project requirements

49 Weighting Selection Factors Preference Scores Preference scores quantify the relative importance of each selection factor Highest ranked selection factor is always assigned a preference score of 100 Other selection factors are assigned preference scores to reflecting the magnitude of their importance to the project relative to the first- ranked factor. Use increments of five (5) or ten (10) at a minimum

50 Weighting Selection Factors Illustration

51 Weighting Selection Factors Experienced Based Priorities of project objectives should be a guide Knowledge and experience of project managers and other team members should be tapped in weighting selection factors Preference ranking and scores are not totally objective but should not be totally subjective either

52 Weighting Selection Factors Relative Weighting Preference scores are used to calculate the relative weighting between factors Sum of relative weights always add to 1.00 Relative weights are used with effectiveness values to calculate a rating score for each PDCS alternative

53 Weighting Selection Factors Example Calculation

54 Effectiveness Values Project Delivery & Contract Strategy (PDCS)

55 Effectiveness Values Description Represent performance level of each PDCS alternative relative to the other PDCS alternatives for each selection factor Scores are between 0 and 100(increments of 5 or 10) Assessed on selection factor-by-factor basis Factors independent of each other PDCS alternative with highest level of performance for a selection factor is given a score of 100 PDCS alternative with lowest level of performance for a selection factor is given a score of 0

56 Effectiveness Values Illustration

57 Effectiveness Values Basis Developed using expertise of research team Confirmed through workshops with owner and contractor project manager representatives Documented rationale behind effectiveness values for each selection factor Ensured approach met requirements of decision theory analysis technique Tested validity of effectiveness values statistically

58 Effectiveness Values Examples

59 Effectiveness Values Rationale Factor 2Minimal cost is critical toEnsure lowest cost project success Comments: Serial phasing provides more time to find lowest cost, though slow implementation may engender cost escalation – minimal cost at sacrifice of overall completion schedule. Arrangements involving a sole contractor with responsibility for design and construction, coupled with competitive bidding work well for minimizing cost – minimal cost at the sacrifice of owner’s control over finished project. PDCS 01 PDCS 02 PDCS 03 PDCS 04 PDCS 05 PDCS 06 PDCS 07 PDCS 08 PDCS 09 PDCS 10 PDCS 11 PDCS

60 PDCS Tool Walk-Thru Tool Workbooks Tool Operations Project Delivery & Contract Strategy (PDCS)

61 Benefits of PDCS Tool Considers larger set of relevant alternatives in the PDCS selection process Encourages decision-makers to identify and focus on project objectives and other critical success factors early in project development Enhances insight into PDCS selection through systematic consideration of all decision variables Provides a defensible rationale for PDCS selection based on quantification of alternatives Project Delivery & Contract Strategy (PDCS)

62 CII Value of Best Practices Corporate Survey Questions regarding PDCS Tool –How frequently over the past two years would you say that the PDCS structured process was used on your capital projects? –None or A Few(1); About Half (4); All (7) –Please indicate how valuable you believe the PDCS structured process is to your organization? –Not Valuable (1,2); Moderately Valuable (5-7); Extremely Valuable (9,10)

63 CII Value of Best Practices Corporate Survey Use of PDCS –Eleven stated about half to All use the PDCS –Average = 5.3 Value of PDCS –Eleven stated highly moderate to extremely valuable process/tool –Average = 7.8

64 Questions and Discussion! Thank You!


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