1. Innovative Contracting Practices for Capital Projects Pekka Pakkala - Aalto University, School of Engineering Department of Civil & Environmental Engineering January 13, 2011

3. FAST TRACKING & DESIGN-BUILD

4. INTERNATIONAL EXAMPLES

5. CONCLUSIONSJanuary 13, 2010 2

7. Design-Bid-Build (DBB)

8. Construction Management At-Fee

9. Construction Management At-Risk (Usually Rest Areas & Building structures)

10. Innovative Project Delivery Methods:

11. Design-Build (D-B)

12. Design-Build Operate Maintain (DBOM)

13. Design-Build Finance Operate (DBFO)

14. ECI (Early Contractor Involvement)

15. Alliance Model – (Australia & New Zealand)!Source: Pekka Pakkala - Finnra January 13, 2010 3

16. FINAL DESIGN CONSTRUC- TION MAINTENANCE FEASIBILITY STUDIES PRE-PLANNING & ENGINEERING ACQUISITION & COSTING UPKEEP & IMPROVEMENTS PREPLANNING/ENGINEERING/ACQUISTION D-B-B FEASIBILITY DESIGN- BUILD REPLANNING/ACQUISTION DESIGN-BUILD PLUS FUNDING FULL DELIVERY or PROGRAM MANAGEMENT Capital Project Delivery Methods ALLIANCE MODEL ALLIANCE MODEL & DESIGN-BUILD-FINANCE-OPERATE (DBFO & DBOM) Source: Pekka Pakkala - Finnra January 13, 2010 4

17. Procurement Progression – Towards LCC DBFO ??? DBOM DB Plus Financing Design-Build Plus Long-Term Maintenance & Upkeep B Design-Build Integrated Design & Construction (Public Funding) Traditional Design-Bid-Build Life Cycle Consideration Life Cycle Responsibility January 13, 2010 Source: Pekka Pakkala & Finnra 5

18. Design-Build Concept TRADITIONAL Initial Design & EIS Design ROW Bid Construction DESIGN-BUILD Initial Design & EIS Bid TIME SAVINGS Construction Starts at 30% Design & Environmental Clearances Completed Design ROW COST SAVINGS Construction Source: January 13, 2010 6

19. Design-Build Concept Traditional Design-Bid-BuildDESIGN IS NOT CHALLENGED Single Design/Eng. Solution Construction CLIENT Evaluate Best Solution/Innovation? Design-Build Solution #1 Solution #2 Solution #3 Solution #4 Source: Pekka Pakkala - Finnra January 13, 2010 7

21. Use Design-Build For the Correct Reason

22. TIME

23. PREVENT COST GROWTH

24. INNOVATION POTENTIAL

25. (Not just to Transfer Risks)

26. Should Not Be Low Bid

27. Client Needs To Make Fast Decisions in “Design” Approval

28. Two Step Process for Medium/Large Projects – RFQ/RFP

29. Small Projects - One Step

30. Less Contract Administration According To Clients’

31. Potential to Make Mistakes in Fast TrackingSource: Pekka Pakkala - Finnra January 13, 2010 8

33. Competence:

34. Teamwork (Co-Located)

35. Using Each Others Strength

36. Streamlined approach - only designing needed tasks

37. Understanding the Real Costs of Design & Construction

38. Constructability optimized

39. Visibility - High Profile projects Using the "A" Team

40. Testing Innovation or Proprietary Technology

41. Downside:

42. Design Taken Too Far (Inhibits Innovative Solutions & Efficiency)

43. Partnering or Teamwork Needs to be Developed & Rewarded

44. People Process (Does not Fit All Cultures - individual work)

45. Lack of Know-how Throughout Client Organization Source: Pekka Pakkala - Finnra January 13, 2010 9

47. International Examples Source: Pekka Pakkala - Finnra January 13, 2010 11

48. International Examples Source: Pekka Pakkala - Finnra January 13, 2010 12

50. Traditional Contracting Still Rules in most Countries (DBB)

51. Getting Design-Build model correctly implemented (Takes Time)

52. Teamwork Between Contractors & Designers

53. Proper Risk Analysis, Allocation & Putting into Contracts

54. Changes the Market (Integration & Bundling of Services)

55. Usually have Good Results & Experiences

56. PPP is not a solution  Another Potential Alternative – if done right!

57. Letting Go of Design Control – Increases Benefits

58. Low Bid & Unit Prices are being replaced by Best Value & Lump Sum

59. QC by Contractors is normal for Europe but difficult in USA & Down Under

60. Performance Specifications very slowly developing (Performance Specifications goes hand in hand with innovative contracting practices

61. Clients are not able to accept Alternative Solutions (innovations) easily

62. Essential to DevelopPartnering & Trust

63. Infrastructure Sector (Public Sector) is slow to change Source: Pekka Pakkala - Finnra January 13, 2010 13

64. Value Engineering Source: Pekka Pakkala - Finnra January 13, 2010 14

66. Roads & Rail

67. Mainly Capital, But Also Including Maintenance

68. Challenges:

69. Different Approaches to Measuring Productivity

70. How Can Clients Influence Productivity

71. Are Lean Construction Practices Being Used

72. Any Indices for Measuring Productivity

73. Benefits:

74. Determine Better Practices

75. Improving Productivity & Efficiency January 13, 2010 15

76. Questions? Reports Available: “Innovative Project Delivery Methods For Infrastructure - An International Perspective". & International Overview of Innovative Contracting Practices for Roads For More Information; Contact: Pekka Pakkala – Aalto Univ.- pekka.pakkala@aalto.fi January 13, 2010 16