sou · H0B339d4 · 2012-06-14 00:00:00 — This was not possible in this study and requires further study. Factors in General that Potentially Decrease Productivity There are also factors that contributed to lowering the productivity and may be attributed to several causes. A list of factors that potentially decrease productivity is presented in Box 4. Each is elaborated upon. Factors in General that Potentially Decrease Constraints in working times Too many method-based requirements Traditional cultural between client & industry Lack of approval by client to ATCs Not maximizing the usage of labor and equipment The quality of design was decreasing (increasing amount of errors and omissions) Yearly budgeting system that requires spending at a net zero yearly balance Project approval cycles are not optimum Additional environmental or administration burden, or other requirements Some countries have constraints in working periods, especially where projects are located in large habited areas and bigger cities. Even weekend work is sometimes not allowed, which can results in an inefficient usage of working equipment that reduces productivity. Just as functional requirements increase the potential of productivity gains, the significant amount of method-based requirements reduces the flexibility and freedom of the contractors to obtain productivity gains. Korteweg (2002) explains the need for more functional requirements when using alternative project delivery methods. Some of these countries continue to have method-based requirements that were created a long time ago and sometimes cannot even determine why these were used. It is difficult to remove method-based requirements as it requires due diligence. Sometimes it is just difficult to find good functional requirements. A stove-piped or traditional culture exists in many client organizations with a long standing of ways and means to accomplish road . Typically, the client has absorbed most of the risks in infrastructure projects and the contractors have been risk adverse. A long history of doing things a certain way requires change management. It is a significant challenge, as people are individuals and individuals do not change, but conformity, comfort and security. This also applies to the contractors, but is more noticeable in the client organizations. Many contractors are also not willing to take risks unless rewards are substantial. Just as ATCs have the potential to stimulate productivity, the lack of expertise in approving ATCs by the client organizations staff is potentially reducing the productivity. The client may not be able to quickly approved ATCs during the tendering process and may reject them due to inexperience or simply not knowing the consequences. Despite the use of alternative or innovative practices in other countries external to this study, it has been difficult for clients to accept these ATCs. Perhaps when a system of balanced risks between the client and contractor is created, then there is potential to take advantage of these newer concepts. Only in were there comments of not maximizing the use of labor and equipment during the construction period. There is a perception that the labor and equipment may be used 4 days a week and not utilized to its maximum potential. This may be due to labor rules or worker flexibility, but it may cause a negative effect on productivity. In all countries there is a perception of degrading design quality. The cause of this was uncertain, but all countries in the study have reported more errors and omissions as well as simply poorer design quality as in the past. This may require a further study to determine the cause, but it was a surprising outcome. Most countries require a net zero yearly balance budget for all projects. In other words, actual spending must match the calculated/estimated yearly expected costs required by the government finance agencies. Project overruns or savings are not desired by the financial governmental institutions and require close scrutiny and monitoring of the spending accounts. Sometimes these conflicts may cause project delays and have a negative impact on productivity. Some project budgets in the Nordic countries are not approved until (year ending) by the political decision makers. A typical result in construction tenders being awarded in the fall or of the following year, when very physical work can be done. It would be more efficient and productive to have the design available during the periods and construction starting as soon as possible in the springtime. So project approvals can be affected by governmental requirements. The additional administrative burden along with increasing environmental requirements may decrease productivity. These may not have a significant impact on the overall outcome, but the client should demand compliance with procedures and processes only for those administrative issues that are relatively important. On the other hand, sometimes environmental requirements may also trigger innovations and ATCs. recently, some countries have been experiencing shortages in skilled labor as the technology gets more sophisticated. Equipment and systems are technically challenging and there were comments of not having enough skilled workers. This could potentially limit the use of equipment and systems, and cause a downturn in productivity. The experiences from the Design-Build projects show mixed results, some have performed well and some not so well. Some of the poor performing DB projects might be explained by a lack of experience with DB, not having enough resources for the client and contractor (phasing of projects), not treating the design entity fairly, lack of performance/functional requirements, lack of creativity with local designers, and not considering risks in the project. On the other hand, there have been numerous examples of good outcomes and successful projects. The Design-Build (DB) method was considered having the most positive effect on productivity due to the integration of design and construction. Ibbs et al. (2003) address productivity in terms of cost change and schedule change. Discussion indicates that productivity levels for both DBB and DB were very similar even though DB showed a slight increase in productivity when the project schedule is reduced (main advantage of DB). It was interesting to note, as cost increased, the level of productivity decreased. It was also mentioned that cost savings are debatable when using DB. These results come from and industrial applications and it would be interesting to complete a systematic study for the road contractors. In most cases DB has provided savings, but not always. It depends upon the different motivators for the project and what constraints might be applicable. Most countries have experienced savings when using the DB method. Surprisingly, the Alliance or ECI models have been used only in and and is used in a limited amount as the model is quite new. There needs to be a systematic appraisal in order to properly allow comparisons with other models. The teamwork and cooperation were outstanding and the participants engaged in the project are very satisfied. Some experiences were that some personnel felt disappointed by returning to traditional practices. The Value for Money (VfM) has not been evaluated or compared with other models. A long term procurement strategy or plan should be introduced by the client organization in order to drive the process and communicate the long term needs, so contractors are able to react accordingly. This would assist meeting the challenges previously described and knowing that it takes time to change the traditional practices. Announcing a procurement strategy is a common practice in many countries. There have been some examples of innovations in DB projects and they have been in line with using alternative materials and by adopting working methods that have increased productivity and reduced cost. Some examples of innovations from these countries are as follows: Better traffic management during construction periods Standardizing sections for increased efficiency and possible prefabrication Temporary structures – made of structural plastics Cost certainty was mentioned by some clients and the importance of collecting the cost data and unit prices. It is important for the client to determine what costs affect which elements or categories and what influences prices. Despite collecting the cost data, the market prices, contractor behavior and other factors could influence the knowledge of cost certainty. It may be inconclusive to have cost certainty, but collecting the cost data is important. Figure 5 shows the comparison of project delivery methods used according to the quantity of projects. The figure represents the average of all countries together. On average about of the countries use DBB. When considering the project cost, Figure 6 shows an average of using DBB while utilize the DB model. The results indicate that the traditional model is used more often and usually for small and medium sized projects. The Design- Build model seems to be applicable to medium and larger projects, while the DBFO is used for large and mega-projects. Table 1 shows the project delivery methods used in each country by quantity and project costs. The DBOM, DBFO and Alliance models are represented by the number of projects using these methods. Both and do not use the DBB method, unless there are extenuating circumstances. has the highest use of the Alliance or ECI model and accounts for of their project In , the progression favors the DB method as the main choice while most other countries are using DBB. has used the DBOM model on two projects in 2010 and 2011, each with a responsibility for 20 years by the contractor. Another DBOM project was completed earlier and had successful results. Comments from the interview reported at least a savings. Note: Data is collected from the last 5-6 years. Table 2 shows a summary of the project delivery methods used by each country. Most countries have tested the DB model and some have used the advanced Design-Build variants. DBFO and privately financed projects have captured attention mainly due to the lack of public resources. However, the financial crisis will have an effect on privately financed projects. project has a different set of requirements, objectives, challenges, and the owner should carefully consider these requirements in the context of their own culture, environmental issues, and technical characteristics to decide which project delivery method provides the best opportunity for success. It is possible to productivity in any procurement method by including those factors and concepts mentioned or accrued elsewhere. It is also possible to obtain productivity gains, by measures not included in this report. The main benefit of the Design-Build model is the potential to innovation, reduce project duration, and address customer oriented solutions (especially disruptions) by integrating the design and construction phases. Productivity on the other hand is mainly driven by the contractors processes, methodology, ingenuity, project management skills, innovation, and lean construction practices (reducing waste in all project phases). The main influence by the client is to use the best procurement method for the project and allow enough freedom for the contractors without corrupting the objectives of the . There is no guarantee for success, but the clients should provide the best opportunity or framework for success. 3.4Characteristics or Factors when Selecting DB Projects Another topic in the structured interviews was to describe some pre-requisites, characteristics or factors when selecting Design- Build. Many factors or characteristics were already described in Section 2.3. This can be valuable information for those who are not experienced in what makes a good Design-Build project or who use Design-Build for the first time. It is interesting that many have a set of issues or perceived pre-requisites, but did not have a comprehensive guidebook or framework for successful Design-Build projects, or what characteristics promote a good framework. Box 6 shows the characteristics collected from this study. Characteristics or Factors when Selecting DB Projects Do not exclude projects Less design development – strive for about or less Budget is fixed and approved Schedule driven or urgent completion dates Suitable for complex projects Amount of in-house staffing resources Environmental permitting is approved A single measure of productivity or index is extremely difficult or not measurable for the infrastructure contractors and therefore not reported. Labor and construction productivity results are typically used and are for the entire construction industry and a fair comparison is not practical. Project interviewees were asked if there are any indicators that might represent some relationship to productivity. It was very difficult to objectively correlate any indicators of productivity, but cost (/km) was the most common recommendation. Only a selected number of clients in the study collect the unit prices, which is more common in countries. The unit prices collected were not used for productivity requirements, but merely to assist in the cost estimation of future projects. It is also very difficult to compare the costs that are not homogenous and to compare prices of urban areas versus rural areas. Since all clients in this study do not measure productivity, it is difficult to recommend any objective indicators. However, it is possible to have qualitative productivity indicators or (KPIs) that resemble some form of productivity, even though they may not be measured objectively. Some of these KPIs stated by some clients are included in Box 7. Potential KPIs in Capital Projects Project cost (on budget) Schedule (on time) Quality (subjectively) Number of change orders submitted by contractors Customer satisfaction during construction (subjectively) Safety (both to workers and road users) There were other findings not specifically related to procurement or productivity measures. Some are general in nature and others are indirect, but do have an effect or some correlation with productivity. Findings from the interviews are highlighted in Box 8. Lack of systematic evaluation in procurement methods construction practices (at the discretion and control of contractors) Collaboration, communication and teamwork of contractors (even internationally) Contractor working methods (difficult to determine in practice) Co-location of parties in Design-Build Lack of trust and openness between client and contractors Lack of Systematic Evaluation The main finding shows a lack of systematic benchmarking between the objective results used from different project delivery methods. Many comparisons were more of a subjective nature and not based upon quantitative measures. There was a significant consensus that prices were lower for Design-Build projects, but lacked real comparisons. Most agree that DB produces shorter project duration, but should be calculated and reported. This is one lesson to be learned and that a quantitative evaluation should be performed for each project and used for comparisons. construction principles and practices do increase the productivity along with the type of working methodology/practices of contractors. These factors are mainly determined by the contractors and are difficult for clients to demand. It would behoove clients to use those factors in the contracts that provide a framework for success and drive the correct behavior. Head to head competition is very important to take advantage of outsourcing. Even international competition is beneficial even though there are some concerns when international players are involved. In some countries, there is not a healthy competition between contracts in Design-Build. It is the contractors working methods, practices and ability to reduce waste throughout the project that provides benefits and productivity gains. This was agreed by the contractor interviews and they more freedom so that they can maximize the use of labor, equipment and resources. If a contractor has a larger operational working area, the productivity of work can be improved, especially when working areas are close to congested roads. When the designer, contractor and client are co-located (all working together at the same site/location) there is much more potential for productivity gains because decisions are made quicker and without a significant administrative burden. This goes hand in hand with collaboration, communication and teamwork philosophy. When there is a lack of trust and openness between the client and contractors, the productivity may be affected negatively. This behavior can potentially cause a backward movement towards profit seeking, increased claims, and lack of cooperation, which are all undesirable. There were many inputs and comments during the face-to-face interviews that can be considered as lessons learned. A collection of the lessons learned are presented in Box 9. Some of these were discussed in earlier sections, while others are from experiences and practical concerns. This is not an exhaustive list, but provides a broad perspective. Lessons Learned from Capital Projects Productivity is difficult to measure Pick the right project with the right procurement method Develop a systematic evaluation of all delivery methods There are many good examples of successful DB projects and its variants It is a challenge to change the internal culture and practices It takes time to change and to implement alternative methods Model has good potential, but lacks proof of VfM The good practices in DB and its variants can be also applied and added into the traditional model - DBB Cultural differences affect acceptance and implementation Requires training throughout the organization Lump sum contracts may provide benefits Some innovations are driven by the contractors construction thinking should be applied by the contractors Consider collecting cost data and unit prices Providing flexibility and freedom to the contractor Alternative practices are more applicable for time based issues and innovation potential Client should be an participant in alternative models Consider using upset prices Contractors more performance requirements, longterm contracts, incentives and disincentives, more client investigations before tender, better communications before tender, and approval of innovations (ATCs) Formal or informal partnering is important Encourage development of the Information Model () Use factors that drive the correct behavior Contractor selection should not be low bid Probably the biggest lesson learned is that the project delivery method used should be grounded on good business decisions, client goals, and specific projects characteristics. 4.Results from Maintenance Interviews Again a structured questionnaire was used as data collection method for the interviews. The interviews included client organizations, contractors, and experts involved in maintenance projects. Maintenance projects significantly differ from capital type projects, and the productivity of maintenance work is not measured by any country in this study. A productivity measure is therefore not available and it is virtually impossible to measure productivity for maintenance. It may be possible to measure the performance of maintenance contractors, but lacks measurements related to productivity. The main focus is to determine those factors that potentially influence productivity used in maintenance contracts. Selecting the appropriate contracting model for maintenance is not as complex as compared with capital projects. The results in this section are mainly from the actual interviews with the road clients and how the procurement practices relate to productivity and what factors potentially influence the productivity of maintenance services. 4.1Background Information on Maintenance Contracting Maintenance is defined as the act of fixing or replacing things as opposed to constructing or things. Most countries in this study are now using or have used some form of (), also called Agreements (PBSA). The definition of PBMC or PBSA (using PBSA from this point forward) is defined as a maintenance concept where a private service provider is responsible for the maintenance and management of assets to a predefined set of conditions or service levels. Performance specifications have thought to provide flexibility and boost innovation by the contractors as stated in (2004). The challenge to performance specifications (functional specifications) is the need for robust data and re-evaluation, and finding the best measures based upon existing practices. PBSA seems to be the main practice used in all countries, except for a few states in the . Most are using some variation of the PBSA contract model. Box 10 shows a list of various terminologies around the world that practically refer to the PBSA terminology. The point is that the terminology varies, but refers to the outsourcing of maintenance usually using a performance-based approach. or eMAC (enhanced ) (TAMS -VDOT) Agreements (– and ) There was a noticeable variation in the implementation and amount of performance-based requirements used in the contracts from the study. The hybrid model (combination of performance requirements and method based) seem to be the most common approach as it is difficult to have all measures defined in terms of outcome based criteria. Most countries are using PBSA for routine maintenance, and three countries include resurfacing into the contract using fixed unit prices. Area based contracting is the most common practice used as it is easy to quantify the amount of work in a certain road network area, but in the is the only one using a corridor based approach. 4.2How Infrastructure Clients Affect Productivity For maintenance contracts it is even more difficult to increase the productivity, as maintenance is the repair or preventive approach to keep assets in reasonable condition. The infrastructure clients can affect the productivity of contractors mainly through the procurement processes. Indirectly they can also influence contractors productivity through close communications, sharing of ideas, and some loose forms of client-contractor cooperation through activities or associations. The main influence on productivity for the clients is to choose the best/optimum maintenance contract model. There is no guarantee that productivity will be increased, but allows the opportunity for higher degree of performance, efficiency, better practices, and therefore may positively influence productivity. Open and healthy competition is probably the best way to improve productivity, efficiency and cost savings. 4.3Factors that Potentially Influence Productivity Open and healthy competition is probably the main avenue to increase productivity. This can be done in many ways and each country included in this study had used different approaches to PBSA. The success varies from country to country and some have achieved significant savings compared to others. Productivity occurs as a result of competition, performance orientation, and using long-term agreements. General that Potentially Influence Productivity During the course of the study, there are many general factors that potentially influence the productivity of maintenance service providers. These factors are listed in Box 11. General that Potentially Influence Productivity Open and healthy/functional competition Using a performance-based approach Longer term contracts (greater than five years) Bundling of activities (economies of scope) Larger area contracts (economies of scale) flexibility (e.g. yearly replacement plan) Measuring the performance of the service providers