So you’re planning to build a new port or expand an existing port. Or perhaps your railway or road network is insufficient to handle increased freight and automobile traffic. Considering expansion and further construction is logical, it would seem. Economic stability and growth are based on modernising and maintaining your national and regional infrastructure transportation links. Yet getting a major infrastructure project started can be fraught with opposition from stakeholders. Add to that a basic scepticism between project owners, contractors, environmentalists and consultants and you may arrive at a perfect storm of delays, postponements or even in a worst case scenario, cancellation. As regulations increase and resistance, be it environmental or otherwise grows, the chances of launching a project without hassle grow slimmer. Nowadays these obstacles are being challenged by a new concept in planning, designing and tendering major infrastructure projects: Early Contractor Involvement. According to Professor Dean Kashiwagi, a leading proponent of performance information and Director of Performance Based Studies Research Group (PBSRG), “A paradigm shift is taking place in procurement. And we need to educate the client and contractors….” As infrastructure projects grow larger, the importance of co-operation amongst all the contractual players from the early stages of project development grows ever more essential.
Clarifying risks and responsibilities
To quote Dean Kashiwagi again: “Risk management is part of the procurement process. We understand that the client is not the expert. The vendor is the expert.” Following Kashiwagi’s train of thought, if vendors (contractors) are the experts, then they have to be included in the planning of the project as soon as possible. Early Contractor Involvement or ECI involves creating a fundamental basis of trust amongst client, contractor and consultant, in which all parties are seeking the best value for the execution of the project. This “contractual partnering” means that the contractor is brought in at an early stage to consider the best means for accomplishing a given task.
The client will most likely have done a ‘needs assessment’ and can describe what the ultimate results should look like. But how do you implement this and get the end product you desire at the best possible price? Consider the case of the Port of Melbourne. The port had done its homework and the economic basis of the Channel Deepening Project was well founded. Planned for the next 30 years, with a budget of USD640 million, creating some 3000 jobs in construction and operations, it was essential to maintaining Melbourne’s economic prominence as a world-class port. Yet, as the first trailing suction hopper dredger arrived, she was greeted by protestors in kayaks and banners on the beach. Despite thorough Environmental Effect Statements and five months of trial dredging, where reliable data concerning the effects on precious coral reefs, RAMSAR wetlands and innumerable fish and wildlife species were considered, a Supreme Court legal challenge arose. The basic truth was that though some environmental threats were perceived, others were real. And here was where the added value and the benefits of “contractual partnering” became evident. The client and the contractor had formulated a contract based on shared responsibility and risk. To honestly confront the public outcry, to successfully meet the demands of the regulatory agencies, the client was able to turn to the expertise of the contractor. Technical modifications were made to existing equipment and precautionary environmental measures were implemented by the dredging company so that dredging was done in a direction away from the coral reef canyons in the bay. In addition, post-dredging video surveys demonstrated to stakeholders as well as the contractual partners that the work had been executed optimally. The early, and enduring, involvement of the contractor with the client “facilitated the completion of the legally required environmental studies as decisions about the proposed work scope, cost estimates and total budget were developed and approved together,” according to Stephen Bradford, CEO of the Port of Melbourne Corporation. In addition, the ability and flexibility of the contractor to think along with the client gave the client the ability to communicate openly with the public. This cooperation, this teamwork was fundamental to ensuring the successful execution of this essential infrastructure project. As Stephen Bradford has written, “The Channel Deepening Project provided some key learning experiences regarding the need to establish open and transparent communications protocols ….”
Complex challenges require complex solutions
Not only do high risk environmental issues form challenges for project owners and contractors. The sheer complexity of some mega-infrastructure projects also demands new ways of tackling the tasks, and this has resulted in innovative contract forms. One such novel approach is the use of “Systems Engineering” which was implemented when planning the future Maasvlakte 2 port facility. What is ‘systems engineering’? According to members of the team working at Maasvlakte 2, it is “a systematic, structured and transparent way of handling technical and contractual information through all project phases.” The key to the ultimately successful project was the Port of Rotterdam’s (PRA) willingness to explore new contractual forms starting with the pre-qualification rounds of tendering: The PRA decided to apply the Design Construct and Maintenance (DCM) principle to this huge contract. This meant incorporating construction expertise into the design process; avoiding disputes between the designer and the contractor; and finally creating cost-savings by having a design made by the contractor which kept the convenience of construction in mind. As team members pointed out: “The DCM contract format allowed the contractor to develop the design of the sea defence so that it makes optimal use of existing construction expertise and utilises the actual knowledge of the equipment and materials available.” After years of struggling with the implementation of projects, parties on all sides of the debate – contractors, project owners and consultants – are beginning to see the value in reconsidering how they approach infrastructure projects. Financiers, insurers, regulators, government agencies and NGOs are starting to realise that contractors are not the enemy. They are the experts who can point the way to successful design solutions and can think out of the box about equipment, engineering and environmental approaches. Early Contractor Involvement aims to get everyone with their noses pointed in the same direction before a project commences. And provide a platform in which all parties can communicate constructively and openly for as long as the project continues.