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Presentation Overview
•Background on Logan
•Why the Alliance option?
•Type of Alliance selected
•Alliance establishment
•Alliance contract features
•Alliance functional framework
•Alliance governance
•Benefits of the Alliance
•Performance and outcomes
3
Where is Logan?
• Heart of SEQ
• 5th largest city in
Queensland
• 960km2
• 295,000 residents
• Mix of urban,
greenfiled & townships
• 468,000 population by
2031
4
Characteristics of Logan
• 2008 SEQ local
government boundary
reform 220 – 950km2
• Former Logan area
• Northern Gold Coast
area
• 2/3 Beaudesert Shire
• 3,000 km of mains
• 200 pump stations
• 4 wastewater
treatment plants
5
Former Logan area
•85% developed
•Redevelopment &
infill
•Limited greenfield
areas
•Ageing assets
•Capacity constraints
Characteristics of Logan
Characteristics of Logan
6
Gold Coast transfer
area
•Ageing assets
•Capacity constraints
•Greenfield areas
Characteristics of Logan
7
Beaudesert transfer
area
•Small townships
•Ageing assets
•Capacity constraints
•Multiple urban growth
nodes
•Planning deficiencies
•Major investments
Challenges facing Logan
• Diverse range of assets (type & age)
• Significant investment in infrastructure
required to service new urban growth nodes
• Infrastructure planning deficiencies
• Backlogged works programs
• Limited asset information
• Maximise use of existing assets
• Insufficient in-house capacity
• Regulator requirements
• SEQ water reform (Allconnex)
Available options
• Increase in-house staff by 60 new FTP (lowest cost)
• Outsource for equivalent contractors and consultants (highest cost)
• Partner with consultants and contractors in a procurement model (balanced cost)
• August 2008, Council resolved to establish a ‘Program Alliance’
What is an alliance?
An alliance is a relationship based contract (ie a partnership) between two or more
parties to establish a vehicle to deliver a complex business outcome.
For Logan City Council, the complex business
outcome was planning and delivering water and sewerage infrastructure required to
address the infrastructure challenges resulting from boundary reform.
Why the Alliance Option?
• Access to scalable capacity not available within Logan Water to deliver infrastructure planning and capital works to support growth
• Access to specialist resources through established, mature organisations to develop innovative, optimised solutions
• Integration of ‘value chain’ activities (infrastructure planning, design and construction) to achieve efficiencies and unlock value
• A partnership approach rather than traditional adversarial contractual relationships i.e. ‘cost-based’ rather than ‘price-based’ contract rates
• Increased confidence in achieving the right technical and financial outcomes
• Better allocation of risks and associated costs
• Leave a positive legacy within Logan Water through transfer of knowledge, skills and experience
Alliance Models
Logan Water Program Alliance Conventional Project Alliance
Owner
Client
Other Participant/s
(Consultant/s)
Participant 1
(Constructor)
Participant 2
(Consultant)
Logan Water
Alliance
Contract
Tenix
(Constructor) Cardno
(Consultant)
Parsons Brinckerhoff
(Consultant)
Alliance
Contract
The ingredients
• Logan Water – Provides core resources and LG experience
– Continues to deliver projects
• Our Alliance Partners – Provide experienced, skilled resources
– Has a strong planning focus
• Together, the Alliance will – Increase planning and delivery capacity
– Ensure depth and breadth of skills
– Provide a planning-driven value chain
– Unlock value at each phase
– Is an extension of Logan Water
Alliance establishment
• 12-month process
• Specialist services including:
- Transaction advisor (ongoing)
- Probity advisor
- Legal services
• Auditor (ongoing)
• 7 high quality tenders
• 3 short-listed tenders
• Tender awarded August 2009
• $450,000 establishment cost
Program Alliance Agreement
• 3+1+1 contract term (in final year)
• Potential value to $300 million
• Back-to-back contracts with Cardno and Parsons Brinckerhoff
• TOC development framework
• Gain/Pain share model
• ‘Opt Out’ provision at gateways
• Payment of ‘actual costs’ to contractor
• Scope change/variation process
• Functional areas covered: − Program management
− Planning and project development
− Project delivery
Commercial arrangements
• Negotiated ‘cost based’ contract rates vs ‘price based’
• Consultant partners:
- Actual cost plus negotiated % (as opposed to typical hourly charge out rate of say 2.8 x salary rate)
• Contractor partner: - Actual costs plus negotiated %
•Gain share/pain share: cost base adjustment process on project completion
Language of the alliance
• Alliance contractor: Tenix
• Alliance partners: Council, Parsons Brinckerhoff, Cardno
• ALG: Alliance Leadership Group
• APMT: Alliance Program Management Team
• Task: Planning projects
• Work Package: package of capital works to be delivered
• Work Package Definition Statement: detailed project scope (30% - 80% design)
• TOC: Target Outturn Cost or total estimated value
• TOC Development Budget : budget to prepare TOC Report
• AOC: Actual Outturn Cost or actual delivery cost
Benefits to Council
Enhanced capability and capacity
• Better least cost, whole of life investment outcomes
• Increased ability to deliver innovative solutions
• Optimised infrastructure delivery through planning-led decisions – right project, right time, right cost
• Better able to service growth, provide enhanced service levels and achieve environmental compliance
Opportunities for Logan Water staff
• Exposure to experienced professionals brings skills and capabilities from other organisations
• Alliance environment brings opportunities for enhanced roles and new responsibilities
Points of difference
• A ‘virtual organisation’
• Own identity/culture/branding
• Program based rather than project based
• Concept to commissioning – value chain
• Planning-led, unlocking value at all stages of
the project lifecycle
• High level (25%) of owner staff
• Scalable (85 – 110 personnel)
Features & Principles
• True partnership rather than client/servant relationship
• ‘Best for program’ decision making
• Non-adversarial culture
• Trust, trust, trust
• Shared risk – ‘skin in the game’
• Early operator and constructor involvement
• Value for Money framework
• Lessons Learned register
• KPI framework
•Zero Harm Safety Program (Tenix)
•Value management workshops
•Challenge workshops
•Planning Opportunity and Risk (POAR)
Workshops - early operator involvement
•Design Opportunity and Risk (DOAR)
Workshops - early constructor involvement
•Safety in Design process
•Program Management Plans
•Risk management
•Gateways – opt out provisions
Alliance Processes
Established by Logan City Council in 2009, the Logan Water Alliance is one of a few infrastructure alliances in Australia that
incorporates planning, design and construction functions.
The Alliance comprises personnel from Logan Water, constructor Tenix and engineering service providers Parsons
Brinckerhoff and Cardno.
Meet the team
Performance objectives/KPIs
The Alliance’s seven performance objectives are:
1. Program delivery
2. Community and stakeholder satisfaction
3. Owner satisfaction
4. High performing team
5. Value for money
6. Public and workplace safety
7. Environmental sustainability
Functional areas
Overall program management Safety management
People management and training Community and stakeholder engagement
Financial management and accounting Quality and environmental management
Information management and reporting Internal communications
Alliance health and change management Information technology and telecommunications
Office overheads Annual budget ~$5m
Master infrastructure planning
Servicing strategies
Capex program development
Detailed asset planning
Feasibility studies
Network optimisation
Hydraulic modeling
I/I investigations
Project development
Work package definition
Preliminary design
Annual budget ~$4m
Works packaging
TOC development
Statutory approvals
Easement / land acquisitions
Detailed design
Risk and contingency planning
Tendering and contract awarding
Contract management
Project management
Construction and commissioning
Annual budget ~$60m
Program management
Planning and project development Project delivery
Program Management Functions
• 15 FTE staff
• Overall program management
• Program Management Plans
• Human resource management & training
• Community & stakeholder engagement
• Financial management & accounting
• Safety, QMS and EMS
• Information management & reporting
• Marketing, promotions & branding
• Alliance health and change management
• IT and communications
Planning & Program
Development Functions
• 30 FTE staff
• Infrastructure planning
• Capex program development
• Detailed project development
• Preliminary design
• POAR workshops
• Challenge and value management
• Hydraulic modelling
• I/I investigations
• Network optimisation/improvement studies
• Work package definition
Project Delivery Functions
• 40 FTE staff
• TOC development
• Approvals & acquisitions
• Design inc DOAR workshops
• Risk & contingency planning
• Work packaging
• Tendering & contract awarding
• Contract management
• Project management
• Construction & commissioning
Governance
Logan City Council
Deputy CEO Roads and Water Infrastructure
Alliance Leadership Group (ALG) Alliance Manager
Alliance Program Management Team (APMT)
Program management / wider team
Planning and project development
Project delivery
Strategic
leadership
▼
Operational
leadership
▼
Delivery
Checks & Balances
• LCC DCEO RWI and Water Business Manager on ALG
• Water Infrastructure Manager and two WIB Program Leaders (rep Infrastructure Planning & Delivery) on APMT
• Alliance Advisor has ongoing role on ALG
• Key Performance Indicators agreed by partners
• Defined program management plans and procedures along entire value chain including ‘gateway’ approvals
• Open book visibility of all partner costs and margins
• LW staff involved in all planning and delivery activities
• Independent Estimator – ‘market based’ audit of all ‘first principle’ estimates ahead of competitive tenders
• Financial auditor – quarterly audits
• ALG meets monthly
• APMT meets fortnightly
• Monthly alliance program review
• Monthly P&PD task program review
• Monthly works delivery program review
• Annual program management budget TOC
• Annual program KPIs (reported monthly)
• Alliance health surveys (six monthly)
Reporting
Gateways
Logan
Water
Task
Notice
Task
Budget
Request
Planning Task
Investigations
Draft
Task
Report
Task
Completion
Report
Work
Package
Definition
Statement
Work
Package TOC
Development
Work
Package
TOC Report
Work
Package
Delivery
Work Package
Commissioning
Completion
Report
Work
Package
Completion
Report
Asset Handover
to Logan Water
AL
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val
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AL
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AL
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AL
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Lo
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Wate
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Logan
Water
Approval
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LW / LCC QA / CWP Processes
Hold Points (5)
Projects
Greenwood Lakes Reserve:
- $1.9M
- 13.5ha rehabilitated to offset native
vegetation removal at sites
- 92,500 native tube stock planted
- 45 nest boxes installed
• Enhanced value chain capacity
• Robust planning framework established
• Enhanced infrastructure outcomes
• Affordable investment programs
• Early operator and constructor
involvement
• Maximum value from existing assets
• Capital programs delivered
• Risks managed
• Regulatory compliance
Outcomes for Logan
Performance
Planning tasks
•More than 150 planning tasks completed, with up to 40 underway at any time
•Largest planning task - $1.2m Logan City PIP
Capital works
•40 capital projects completed, value $140m
•10 capital projects in progress value $80m
•62km of pipelines, 13 pump stations, 2 reservoirs, 4 SPS & 1 WWTP decommissioned
Performance
Value for money
•Planning-led approach unlocks value at every stage of the infrastructure delivery process:
e.g. $84m capital cost saving Slacks Creek to Loganholme sewerage pipeline duplication when compared with Council’s original solution
Performance
Key performance indicators (KPIs)
•‘Exceptional performance’ for 10 of 15 KPIs in: safety, program delivery, owner satisfaction, high performing team, community and stakeholder satisfaction, and environmental sustainability
Safety
•One Lost Time Injury over alliance life
•Zero public safety incidents over alliance life
•Around 900,000 working hours completed
Performance
Environment
•Zero significant environmental incidents
•4,146 trees saved in construction corridors
•More than $1.1m saved by reducing vegetation removal
Community and stakeholders
•92% stakeholders satisfied with community engagement and project delivery
•Proactive community engagement (= few complaints)
Independent Review
In 2011, an independent business consultant engaged by Allconnex Water reviewed the performance of the Logan Water Alliance.
The results showed:
The Alliance’s governance systems are rigorous.
The Alliance team demonstrates value (for money) in delivery.
The program-style Alliance model is well suited to the planning and delivery of water and wastewater infrastructure.
The Alliance’s planning-led approach contributes to a high level of certainty in enhanced engineering solutions, least cost planned outcomes and project delivery costs.
Industry recognition
• 2012 Queensland Engineering Excellence Awards - Reports, Procedures and Systems
• 2012 Institute of Public Works Engineering Australia (Qld Division) Awards - Water, Wastewater, Sewerage and Drought Management (projects $1m to $5m)
• 2012 Infrastructure Partnerships Australia – Contractor Excellence Award (Finalist)
• 2011 Australian Water Association (Qld) - Infrastructure Project Innovation Award
• 2011 Australian Water Association (Qld) Awards:
- Water Professional of the Year (Ian Cameron)
- Young Water Professional of the Year Finalist (Liliana Castro Araoz)
Rocks in the road
• Risk allocation
• Gold plating
• Demonstrating VfM
• Key staff turnover
• SEQ water reform
• Operator participation
• Close out process
• Business integration
• Reliable asset Information
• Contract gaps
A model for others?
• Logan Water Alliance model well suited
to water infrastructure planning and
delivery
• Framework relies on robust systems and
processes - easily replicated
• Council now considering model for
infrastructure planning and delivery post
August 2014