Föredrag om Outsourcing/inhouse av Pekka Pakkala från Vägförvaltningen i Finland

1. Föredrag om Outsourcing/inhouse av Pekka Pakkala från Vägförvaltningen i Finland på NVF 11 möte den 9.11.2001 Pekka Pakkala PTL IT Meeting

2. Presentation Overview • Objectives: • Why Change • Client Role Changes • Models Used • Innovative Project Delivery Methods • Keys To Success • Innovation • Challenges In IT Pekka Pakkala PTL IT Meeting Source: Pekka Pakkala - Finnra

3. Future Road Administration Perspectives • Future Funding Levels - Insufficient to meet needs • Unfair at Regional Levels • Less Traffic Volume Roads Are Suffering • Gravel Road Situation • NEED => PROVIDE A BETTER ROAD SYSTEM IN A HEAVILY CONSTRAINED FUNDING ARENA AND AN INTENSE COMPETITION FOR LIMITED ALLOCATION OF GOVERNMENT FUNDS Pekka Pakkala PTL IT Meeting Source: Pekka Pakkala - Finnra

4. Future Client Perspectives • Why Change: • Insufficient Funds to Meet the Level of Road Care Management • Fully Integrated Client Services • Cost Savings (10-35%) in Long Term Contracts • Risk Sharing • Changing to Performance Based (Outcome Based Criteria) • Partnering Potential • Innovation • Better Asset Management • Road User Satisfaction • Improved Budgeting • Strategic Focus • Too much Contract Administration • Maintenance Budget Fluctuations Pekka Pakkala PTL IT Meeting Source: Pekka Pakkala - Finnra

5. Fully Integrated Client Services • Lump Sum Contract for all activities: • Routine Pavement Maintenance • Asset/corridor management • Vegetation control & Mowing • Signs & Traffic Signals • Resurfacing • Pavement Rehabilitation • Emergency Response • Drying & Drainage Control • Traffic Services • Guard Rail Repair/Replacement • Lighting • Seal Widening & Repair • Winter Maintenance Pekka Pakkala PTL IT Meeting Source: Pekka Pakkala - Finnra

6. Paradigm Changes In Client Procurementof Maintenance Estimated Potential Savings 45% 35% 20% Own Forces (Method Based) Outsourcing Outcome Based Long Term Agreements Pekka Pakkala PTL IT Meeting Source: Pekka Pakkala - Finnra

7. Client Decisions Pekka Pakkala PTL IT Meeting Source: Pekka Pakkala - Finnra

8. PERFORMANCE CRITERIA Performance Measures in PSMC Roughness (IRI) Skid Resistance Rutting Deflection (Structural Condition) Texture Cracking Residual Surface Life Pekka Pakkala PTL IT Meeting Source: Pekka Pakkala - Finnra

9. Phase 1 Phase 2 Phase 3 Phase 4 Phase 5 Phase 6 Phase 7 Corporatize Privatize Identify Separate Client Client Client Client Client and Client Agency & and Production Producer Corporatize Privatize Producer Producer Producer (Deliverer) Road Fund Decreasing Government Involvement Phases in Road Organization’s Reform Pekka Pakkala PTL IT Meeting Source: World Bank, TNZ & Finnra

10. Client Role Changes • Need To Outsource All Capital & Maintenance Projects • Need To Outsource Other Client Services • Develop Clear & Well Defined Client Scope (What You Want) • Develop Project Partnering • Cultural Change • TRUST Between Client & Contractors • Developing Outcome Based Criteria • Changing to Asset Management (Changing Skills) • Aging Organization & Attracting New/Young Professionals • Hope => Young Professionals in IT Area • Risk Allocation - Which Ones to Transfer • Contractors Will be Responsible for Development & Innovation Pekka Pakkala PTL IT Meeting Source: Pekka Pakkala - Finnra

11. England MAC Model Client Network Board Managing Agent Contractor Pekka Pakkala PTL IT Meeting Source: Highways Agency

12. USA Model • Characteristics • 5 + 5 Year Duration • Lump Sum Contract • 50% Price & 50% Other (Varies in some states - Best Value) • Some Outcome Based Criteria • USA states still uses In-house forces for maintenance activities • Rehabilitation is not included (Resurfacing is included) • Results • Innovations are realized - Equipment, Contractor efficiency, pavement, markings & etc. (over the life time of the contract) • Significant Cost Savings to Client Pekka Pakkala PTL IT Meeting Source: Pekka Pakkala - Finnra

13. British Columbia, Canada Model • Characteristics • Now 8 Year Duration (Previously 5 years - 3+2) • Lump Sum Price • 60% Price & 40% Quality Selection Criteria • Outcome Based Contract • No resurfacing & rehabilitation • Results • Some minor Equipment & Contractor efficiency innovations • Some Cost Savings to Client • Defaults due to Union labor problems & High Costs Pekka Pakkala PTL IT Meeting Source: Pekka Pakkala - Finnra

14. New Zealand PSMC Model • Characteristics • 10 Year Duration • Lump Sum Contract • Quality Price Trade Off - Selection Criteria • Outcome Based Criteria • Uses consultants for management & rehabilitation • Results • Innovations are realized - Equipment, Contractor efficiency, pavement, markings & etc. (over the life time of the contract) • Incentives as a means to foster innovation • Significant Cost Savings to Client Pekka Pakkala PTL IT Meeting Source: Pekka Pakkala - Finnra

15. Innovative Project Delivery Methods FULL DELIVERY PRE-PLANN ING & ACQUISITION FINANCE DESIGN CONSTR. O & M (Operatons & Maintenance) UPKEEP & IMPROVE- MENTS SEGMENTED IN-HOUSE D-B-B Consultants & PPP DESIGN-BUILD COMBINED LONG-TERM MAIN. AGREEMENTS (PSMC) CAPITAL PROJECTS (DBOM) Design-Build Operate Maintain (DBFO) Index: Traditional: Green Innovative: Purple Design-Build Finance Operate Pekka Pakkala PTL IT Meeting Source: Pekka Pakkala - Finnra

16. Partnering Issues CLIENT PARTNERING PROJECT CONTRACTOR PARTNERING PARTNERING PARTNERING PARTNERING SUB-CONT. SUB-CONT. SUB-CONT. SUB-CONT. SUPPLIERS Pekka Pakkala PTL IT Meeting Source: Pekka Pakkala - Finnra

17. Keys To Success • TRUST • Partnering • Cultural Change • BOLD CHANGES - A Champion Among The Industry • Future - Contractors will be Responsible for Development • Fully Integrated Client Services • Longer Life Cycles • Quality Based Systems • IT Developments • New Products (R&D) • Innovative & Intelligent Work Places • Intelligent Materials Pekka Pakkala PTL IT Meeting Source: Pekka Pakkala - Finnra

18. Innovation • Long Term Agreements - Greater Than 7 Years • Partnering (Both Client & Sub-Contractors) • Lump Sum Contracts • Provide Most Sub-Contractors With Same Long Term Agreement • New Equipment • Ability to Use Innovation Throughout the Length of the Contract • Technical Efficiencies • Efficiency in Controlling the Network Area • Utilizing New Tools & Materials to Improve Efficiency & Quality • Intelligent Materials Pekka Pakkala PTL IT Meeting Source: Pekka Pakkala - Finnra

19. Pre-Design Design, Engineering Planning, Cost Information Briefing for Changes Product Specification Construction Rehab or Disposal Upkeep & Maintenance Information Lifecycle Briefing Pekka Pakkala PTL IT Meeting Source: VERA - Arto Kiviniemi

20.         Geometry Design/Engineering Product Specifications Goal in the Future Information is shared in exploitable data format directly between different systems Maintenance Mgmt Systems Traffic Services PMS Asset Management RWIS Pekka Pakkala PTL IT Meeting Source: VERA - Arto Kiviniemi

21. Challenges In IT • Interoperability • New Business Opportunities • E-Roads • Project & Maintenance Management • Integrating All Design Aspects Into Asset/Cost Management • Traffic & Safety Management • New Equipment • Develop Young Professionals • Ability to Use Innovation • Technical Efficiencies • Utilizing New Toolsto Improve Efficiency & Quality Pekka Pakkala PTL IT Meeting Source: Pekka Pakkala - Finnra