1 RICS The Royal Institution of Chartered Surveyors London Quantity Surveying & Construction Faculty The Built Environment Group Corporate Professional Local Faculties & Forums CityRail 2007 Shanghai, People’s Republic of China 11 th September 2007 Estimating & Bidding for Rail Infrastructure Projects – a Whole Life Cycle approach Michael Byng FRICS, AAIQS, ACIArb, MPWI Chairman Quantity Surveying & Construction Faculty

2 RICS The Royal Institution of Chartered Surveyors London Corporate Professional Local Faculties & Forums 1. RICS, Built Environment Group - Who are we? Building Surveyors- 25,000 Members Building Control Surveyors- 2,500 Members Project Management Surveyors - 30,000 Members Quantity Surveyors- 40,000 Members Some members belong to one or more of these faculties; the total number of members in the BEG is 75,000 (57% of whole membership)

3 RICS The Royal Institution of Chartered Surveyors London Corporate Professional Local Faculties & Forums 2.Built Environment Group – What do we do? Quantity Surveyors- Costing of Construction works - Life Cycle costing - Construction procurement - Construction payment and dispute resolution Project Management - Client Management Surveyors- Programme Management - Contract Administration - Project Monitoring Building Surveyors- Building Pathology - Neighborly Issues - Design and Specification - Property Management Building Control - Development of Building codes Surveyors- Design Audits - Construction Inspections and Approvals

4 RICS The Royal Institution of Chartered Surveyors London Corporate Professional Local Faculties & Forums 3.Built Environment Group – What the RICS Does?  Regulates the profession  Develops the profession  Develops members  Sets standards  Represents the Members Interests  Promotes member services

5 Corporate Professional Local Faculties & Forums RICS The Royal Institution of Chartered Surveyors London  Feasibility studies  Procurement  Commercial management  Dispute resolution  Whole Life Cycle Asset Management Scope of advice  Project work – CAPEX  Maintenance - OPEX Quantity Surveyors and the Railway Industry – What do they do?

6 Corporate Professional Local Faculties & Forums Rail infrastructure projects – issues to be addressed (1) Time and budget  Optimum time for delivery against optimum capital cost  Capital cost – meeting the business case Ensuring competitive tenders  Limited supply versus increasing demand  Equitable management of risk  Other competing concurrent schemes  Problems in dealing with an international market  The supplier’s needs The supply chain’s ability to meet the purchaser’s requirements

7 Corporate Professional Local Faculties & Forums Rail infrastructure projects – issues to be addressed (2) Minimise disruption to existing operations  Speed of construction  Availability of a skilled workforce  Innovative working methods  Use of High Output Plant  The effect of design decisions on operating costs  Is the maintenance strategy available at tender stage; if so – what is it?  Is the cost of maintenance affordable? Ease of maintenance during the life of the assets

8 Corporate Professional Local Faculties & Forums Estimating and bidding should include  Design, construct and delivery of capital projects  Extended maintenance obligations – set against tendered Whole Life Cycle cost targets The supplier’s obligations to maintain  Supplier to be responsible for maintenance of the assets for an agreed period of operation  The annual cost of maintenance to be agreed at tender stages  Benchmarked against asset performance Key Performance Indicators (KPI’s) with Variation of Price (VOP) adjustments  Adjustable against purchaser’s future decisions to upgrade or improve assets Rail infrastructure projects – a “Whole Life Cost” procurement strategy

9 Corporate Professional Local Faculties & Forums Design decisions should take into account  Labour skills, plant & equipment available to maintain the assets  The impact of construction on sustainable development  Health & Safety requirements to protect the work force  Strategic asset management experience  Proposals for effective “Planned, Preventative Maintenance  The provision of modern maintenance and track renewals plant to minimise disruption to revenue earning operations. Rail infrastructure projects – a “Whole Life Cost” procurement strategy The Supplier’s obligations to maintain must include

10 Corporate Professional Local Faculties & Forums The Business Case/CAPEX and OPEX  Procurement and delivery must be seamless  Design decisions should consider maintenance and operating requirements  Team working – supplier and purchaser’s design team should work together  Choice of supplier should reflect the operating and maintenance costs of his capital proposal Rail infrastructure projects – procurement solutions (1)

11 Corporate Professional Local Faculties & Forums Rail infrastructure projects – procurement solutions (2)  The effect of design decisions on operating costs  Supplier should be asked to warrant maintenance costs and  Should have his performance benchmarked against Key Performance Indicators (KPI’s) Maintenance and operation Ease of maintenance during the life of the assets

12 Corporate Professional Local Faculties & Forums Measurement management software from inception to completion  Creating the business case – approximate estimating on a “Whole Life Cycle Cost” basis  Procurement and evaluation of tenders – reconciling suppliers’ offers for CAPX and OPEX with business case  Commercial management – of design, construction and maintenance  Project monitoring of supplier performance – monitored against agreed benchmarks (KPI’s) Rail infrastructure projects – “Whole Life Cycle Cost” approach – the Quantity Surveyor’s involvement For details of the tools used by Quantity Surveyors and the range of services offered, see the next two slides

13 Corporate Professional Local Faculties & Forums Rail infrastructure projects – tools used by the Quantity Surveyor to deliver these services Involvement from inception to completion  Measurement management systems – linked to computer aided design (CAD)  Measurement linked to industry standard programming & planning software – linked to Primavera © or other industry standards  Project management of resources – labour and plant managed by reference to the programme approved in the business case  Asset management software related to the maintenance activities – activities monitored against PPM targets; for Health and Safety records and against “Whole Life Cycle Cost Plan” This is a selection of software – there are other industry standards

14 Corporate Professional Local Faculties & Forums  Project monitoring at each stage of the process – 5 levels:  Estimates  Cost plans  Composite Quantities for tendering  Full Bills of Quantities for detailed negotiations of individual work sections  Whole Life Cycle Cost planning  These techniques are applied by both purchaser and supplier Rail infrastructure projects – “Whole Life Cycle Cost” approach – the Quantity Surveyor’s involvement – in diagrammatic form Estimating Cost Planning Full Quantities Whole Life Costing Composite Quantities Co-ordinated projects controls through an integrated process

15 Corporate Professional Local Faculties & Forums Summary  The purpose of the process is to create for purchasers and suppliers alike:- “ The Bankable Proposition”.  For further information please contact Michael Byng at Estimating & Bidding for Rail Infrastructure Projects – a Whole Life Cycle approach