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BETTER PROJECTS TOGETHER -INNOVATIONS IN COLLABORATIVE
WORKING
PRESENTED: CALGARY FOR PMI-SAC: NOVEMBER, 4, 2019
YOUR FACILITATORS
YOUR FACILITATORS
VENERUS ADVISORY PARTNERS
SERVICE OFFERINGS
• Procurement and Negotiations Advisory
• Collaboration Working (44001) Advisory
• Claims Management & Dispute Resolution
• Learning and Coaching
https://veneruspartners.com/
4
PRACTICAL PROCUREMENTTM
WHY ARE WE HERE TODAY?
LEARNING OBJECTIVES
In this session, we will:
• Review the relationship challenges that typically arise in the project context;
• Identify how collaboration methodologies can ameliorate these challenges;
• Review key elements of these methodologies and explain how they work;
• Show real-life projects that resulted in successful implementations and benefits;
• Discuss strategies for “turning the wheel of change”
SOME INTERESTING EMPIRICAL DATA
COLLABORATION AND PRODUCTIVITY
SOURCE:McKinseyConstructionProductivitySurvey
5,000construction-industryCEOsrepresenting:assetowners,engineeringandconstructionfirms,suppliers,otherinstitutionssuchasconstructionconsultingfirms,academics,andindustryassociations.E.g.CSI
Tested10causesforlowconstructionproductivity
COLLABORATION AND PRODUCTIVITY
SOURCE: McKinsey Construction Productivity Survey:
“There is a need to move away from the hostile contracting environment that characterizes many construction projects to a system focused on collaboration and problem solving”
COLLABORATION AND PRODUCTIVITY
SOURCE: The American Institute of Architects: Integrated Project Delivery: Case Studies (2010)
“Traditional design and construction contracts seek to manage risk by narrowly defining roles and responsibilities. Each participant must then be vigilant to limit the scope of their activities to prescribed parameters, which reinforces isolating “silo” behavior, limiting collaboration and precluding an aligned focus on the good of the project.”
TRADITIONAL VERSUS COLLABORATIVE RELATIONSHIP
TOP “COMPONENTS” OF THE SUCCESS OR FAILURE OF COLLABORATIONS
Presence (favourable) or absence (detrimental) of:
1. Alignment on Objectives2. Effective Communication (internal/external)3. Trust4. Leadership
5. Incentive/KPI’s6. Process/Governance7. Plan for “evolution” e.g. major change, renew, exit8. Defined Roles/Responsibilities
Source:2015McKinsey– JointVenturesandAlliancesSurvey.Andourcollectiveexperience
IS COLLABORATION ALWAYS A GOOD IDEA?
• Collaborative relationships take investment; And deserves an appropriate return
• Because of the investment, collaboration should have a strong link to strategic goals
• Relationships can incorporate varying degrees of collaboration (not always “all in”)
• Collaboration is not useful to all relationships.
TYPES OF PROJECTS WHERE COLLABORATION MAY BE BEST SUITED
• High Complexity• a High risk and innovative endeavour where significant knowledge transfer will be required
• Market Capability• A project where no one supplier has the market capability or breadth of operations to
undertake without incurring significant enterprise risk
• Longer term alliance • A project that forms the basis of a longer term program wishing to formalise the value add
and improvement over the cycle of projects within the program
COLLABORATIONMODELS
• Project Alliances: Any Industry
• NEC 4 (New Engineering Contract v.4, 2017): Construction-specific
• Integrate Project Delivery (IPD) : Construction-specific
• ISO 44001 : Any Industry
AN INVENTORY OF COLLABORTION MODELS
• Joint Purpose (which explains the need for the collaboration)• Shared Vision/Aligned objectives for what the collaboration should be
• Commitment to the Purpose (with accountable leadership/sufficient resources)
• Establish, Develop and Maintain Trust (including the “right” communication methods)
• Use a SYSTEM for Collaboration (a collection of resources: leadership, governance structures, processes, tools, etc. that enable collaboration)
• Monitor and Measure Collaboration• Create a measurement method. e.g. “SMART KPI’s”, etc., liked to Vision/Goals
• Evolve the Collaboration - Or Exit (if not remaining well aligned to vision/goals)
COMMON CHARACTERISTICS AMONG MODELS
FOCUS ON IPD
• Originated in the United States, mid-late 2000’s.
• A “project delivery method” with a complimentary form of contract. Incorporates:
• Lean Construction Methods• Building Info. Modeling (BIM) Technology• Collaboration Techniques
• See: http://ipda.ca
INTEGRATED PROJECT DELIVERY (IPD)
WHAT DOES THE IPD MODEL LOOK LIKE?
Source:IPDFrameworkbyHowardW.Ashcraft
HOW DOES IPD WORK?
Source:IPDFrameworkbyHowardW.Ashcraft
HOW DOES IPD WORK?
Source:IPDFrameworkbyHowardW.Ashcraft
Cross-FunctionalTeamworksoutof“BigRoom”:
• Architect;• Engineer;• Contractor’s• Superintendent,• TradesForemen
FOCUS ON ISO 44001
ISO 44001 OFFERS A CONSISTENT, SYSTEMS-BASED APPROACH
New ISO 44001 - Collaborative business relationship management systems:
“A strategic lifecycle framework toimprove collaborative businessrelationships in and between
organisations of all sizes.”
First international standard of its type
ISO 44001 – ORIGINS
ISO 44001 – SUMMARY VIEW
• ISOusesa“10Clause”structureformanyofitsstandards.
• Clauses1-3,aremereformalism.3-10Clausesare“operative”
• Clause8isborrowedfromtheoriginalBSI11000,Lifecycle
ISO 44001 FUNDAMENTALS
• Collaboration between individuals is relatively common but transitioning this to collaboration between organisations is more complex and requires a systems base approach.
• ISO provides a framework within which to create a Relationship Management Plan (RMP).
• Integration can be optimised by focusing on the interfaces between organisations and leveraging what each does best – enabled through a joint business process and aligned objectives.
• A collaborative approach has been shown to release potential value and innovation.
• Collaboration is not a solution but does offer an alternative perspective to the value chain.
ISO 44001 – HOW IT WORKS
SUCCESSFUL IMPLEMENTATIONS AND BENEFITS
SUCCESSFUL IMPLEMENTATIONS AND BENEFITS – UK RAIL SECTOR
• 90% decrease in Owner PM costs (from ~ 6-7% to ~ 0.56%) vs. conventional contract
• 65,000m3 excavated material saved
• 80% reduction in design rework through integrated team and self-assurance model
• 18 month betterment in achieving regulatory milestone
• Industry leading safety
• The same alliance team secured the a new project where it aims to replicate success
SUCCESSFUL IMPLEMENTATIONS AND BENEFITS – UK NORTH SEA FEEDBACK ON COLLABORATIVE CONTRACTS EXCUTED
• Case study 1 - Collaboration meant that each organisation understood the key drivers of the other collaboration partners. The parties were therefore aligned on management of risk and the project was delivered safely, on-time and with a top quartile cost performance.
• Case Study 2 - The existing relationship between client and contractor was already collaborative and successful, but the tight timeline and added complexity of re-using existing plant and materials required extremely close communication and open dialogue. The ECITB Project Collaboration Toolkit provided a framework to take a fresh look at the relationship and how it could be strengthened to overcome the particular challenges of the project. Project has demonstrated that applying a collaborative strategy to small / medium sized project scopes can deliver similarly enhanced project delivery performance to that which major ECITB PCT pilot project scopes have experienced and reported
• Case Study 3 - many projects lose efficiency because of multiple versions of the same reports, role duplication and man marking etc. The project strongly followed its axioms of ‘one team, one project, one source of the truth’ and a fit for purpose approach to the use of corporate standards and standard industry practice.
• Case Study 4 - The Callater project discovery well results came in during August 2015 and it achieved first oil in May 2017. A rapid development, 23 months after discovery. It was five weeks ahead of the field development schedule and achieved 10% savings on budget. The project had an outstanding safety record. The project team put their success down to following an effective collaborative approach from the very beginning using pre-existing arrangements with topsides and subsea contractors. They all know the Callater project is a repeatable, transferable and sustainable example of delivery with collaboration at its core.
• Reference - https://www.ecitb.org.uk/portfolio-items/project-collaboration-toolkit-2/
IPD PROJECTS HAVE SHOWN BETTER RESULTS
J.Constr.Eng.Manage.2013.139
MANY IPD PROJECTS HAVE BEEN EXECUTED IN US/CANADA (2010)
AUSTRALASIA EXPERIENCE - COST
Reference;PerformanceofProjectAlliancinginAustralasia:aDigestofInfrastructureDevelopmentfrom2008to2013,DerekHenryThomasWalker,JamesHarleyandAnthonyMills
AUSTRALASIA EXPERIENCE – CLIENT PROJECT VALUE STATEMENT
Reference;PerformanceofProjectAlliancinginAustralasia:aDigestofInfrastructureDevelopmentfrom2008to2013,DerekHenryThomasWalker,JamesHarleyandAnthonyMills
Respondentsalsonotedthat,duetotheflexibilityofprojectdeliveryapproach,alliancingeffectivelyallowsprojectsthatareofhighriskorhavecomplexunknownfactors,tobemanagedefficientlywhilstalsoengagingininnovativepractices.
“TURNING THE WHEEL OF CHANGE”
TURNING THE WHEEL - DEMONSTRATING VALUE FOR MONEY
How do you convince your organisation that changing its existing practices to adopting a methodology based on trust is actually reducing their risk rather than increasing it?
5. TURNING THE WHEEL – CHANGING PERCEPTIONS OF KEY STAKEHOLDERS
Stakeholders Perceptions/Concernsre:CollaborativeContracting
Mitigatingactions/demonstrations
ExecutiveLeaders Howwillthisdeliverbetterresults?WhatistheBusinesscase?
Showthebusinesscase
BudgetHolders(allparties) Howmuchcontrolarewegivingup? Aligntheprojectobjectives;Understandtheobjectiveofotherandtheyarenotincompatiblewithoverallprojectobjectives.
SupplyChain Withouttheusualsourcingstrategyhowdoweensurethelowestcost?
Focusonoverallvalue.OpenbookapproachandactionplantoverifyTOC/Contractorestimates
CommercialandRisk Whocarriestherisk?WhereistheRiskallocationcarried?
RiskSharingversuslayeredriskineachcontract.Equityissharedriskandreward=aligningcommonobjectivesandbehaviors
EngineeringandDesign Howdowemaintainquality? Alignedobjectivestohaveupfontengagementandearlyandongoingvalueengineeringwithoutjeopardisingengineeringverification.
Legal Whatdoesthecontractslooklike?Whatlegalremediesarewegivingup?
Contractelementsreflectbothpositiveandnegativeoutcomesandaddressprocessesforboth.
ContractorProjectManager Disputeresolutionofprojectdecisions- Whohasfinaldecision?
Ensureunderstandingofcommongoalsandtheprocessforbestforprojectdecisionmakingatsteeringcommitteelevel
ClientProjectManagement Whomakestheprojectfinaldecisions? Facilitatetheengagementwithpartnerstoenablefrontendplanningandearlyalignment.Ensureunderstandingofcommongoalsandtheprocessforbestforprojectdecisionmakingatsteeringcommitteelevel.
TURNING THE WHEEL - DEMONSTRATING VALUE FOR MONEY (VFM)
Key to motivating the move to Collaboration, is show the VfM to leaders who control resources useful to support collaboration. In a construction context, this will involve:
• Understanding the preferred contractor’s processes
• Evaluating the Target Cost
• Ongoing verification of Actual vs. Target
SUPPORTING THE CHANGE TO COLLABORATIVE METHODOLOGIES
CONSTRUCTION OWNERS ASSOCIATION (COAA)
COAA Leadership identified that Collaborative Contracting is the top rated initiative to improve productivity on projects:
• A “Collaborative Contracting Committee” was created by the Board
• Committee tasked to investigate/develop a Collaborative Contracting Framework
• Nicki and Richard are members of this Committee
COAA COLLABORATIVE FRAMEWORK
Reference:COAA
FRAMEWORK COMPONENTS
The Framework shall be in the form of a white paper, posted on the COAA website (in early 2020) and shall include:
• Flowcharts
• Checklist
• Comparison of a global sample of Collaborative Contract Model (T&C’s)
• Risk Management methodology
• Maturity Assessment
Awareness and Knowledge will be provided by willing COAA collaboration partners
INDUSTRY COLLABORATION
Reference:COAA
PMISCMA
VAP
THANK YOU!
