SUPERSTRUCTURE CONTRACTS: Procurement and contract strategy

1. SUPERSTRUCTURE CONTRACTS: Procurement and contract strategy April 20th 2009Benno StoiberArjen de BoerThijs van Steen

2. Agenda • Scope • Contract strategy (creation process) • Contract form • Procurement procedure • Planning • Risks and challenges • Propositions for discussion

3. Scope superstructure contracts

4. Scope e.g. • Escalators (99) and elevators (26) • Architectural outfitting stations (8): walls, glass panels, tiles, etc. • Lighting • Ventilation systems • Substations and switching devices • Camera’s and dynamic passenger information system • Rail system (except signalling and equipment) - 9.5 km, mostly ballast-free

5. Contracting Strategy: Completion • Workshop in May 2008  determining priorities (key risks) • Realization concept Contracting Plan • Comparison of variants • Preparation preferred variant • Review variant(s) in interviews with experts • September 2008 in Board of Directors NZL  discussion with Director Public Works Amsterdam  the Alderman was informed

6. Contract Form: Choices • Balancing Contract Forms: traditional versus integrated (E&C / D&C / DB(M) / DBFM) • Multi-criteria analysis on criteria such as: time/planning, interfaces, market, environment, etc. • Results discussed in exploratory talks with (potential) candidates

7. Contract Form: Market analysis • Market wants to integrate disciplines • Market is eager for quick selection procedures (reduce to 2 or 3 competitors) • ‘Rail’ market is ‘hungry’ because of declining workload ProRail (September 2008) • Telecom/installation market is selective regarding selection of projects • Outfitting market: positive nor negative image • Progressive insights  Effects of credit crunch, economic situation in the construction market  results in ?

8. Choice: D&C contract Dominant arguments: • Planning advantages (integration of disciplines) • Interfaces • Coordination • Flexibility • Technical specifications based on Systems Engineering (Safety Case)

9. Procurement: Choice of procedure • Competitive dialogue: technical and logistical complexity of the work • Focus: quick selection procedure based on ‘Critical Success Factors’ (CSF‘s): • Management system • System integration • Minimize Environmental Nuisance • Use of ‘Maximum Value of Bids’

10. Maximum Value of Bids • Maximum amount the Authority has available for the project • Published early in the procurement process • Validity criteria • Price is still an important criterion

11. Prequalification phase Dialogue Final Tender Phase Business Plan Consultation phase Dialogue phase Publication Contract Award n Participants 3 Participants 1 Participant Application for participation Business Plan Definitive Bid • Grounds of Exclusion • Eligibility Requirements Award Criteria: - Rating preparation Critical Success Factors (CSF‘s) Award Criteria: NCW valuation of Options

12. Procurement phase: Prequalification Relatively "light" criteria on the candidate companies: • Exclusion criteria • Financial economic standing • Project management experience • Experience in 'rail' market

13. Procurement phase: Business Plan (Critical Success Factors) Three Critical Success Factors (CSF): CSF 1: Management system CSF 2: System integration CSF 3: Minimize environmental nuisance

14. CSF 1 Management system Purpose: ‘In Control’ in aspects time, quality and budget in realization process Questions • Vision on cooperation and flexibility? • Organization regarding the management systems? • Selection of critical processes for the project? • How are these processes arranged? Process • Categorize at strategic level (vision, top risks, opportunities, etc) • Assessment focused on controlling risk cq. size residual risks for the Authority during contract period

15. CSF 2 System integration Purpose: a controlled test, system integration, Test run and commissioning of the North / South line Questions relating to: • Testing System • Acceptance and transfer • Test run Process: • Categorize in consultation with AMSYS (coordinator / 'system integrator') • Assessment focused on residual risks for the future operator

16. Learning from other experiences ....

17. CSF 3 Minimize nuisance on surrounding environment Objective: to reduce environmental nuisance  strengthen image of the Noord/Zuidlijn in the surrounding environment Questions • Through what measures will nuisance for the environment be minimized? • How is the duration of the disturbances minimized? • Elaborate risk analysis (identifying bottlenecks, formulating measures) • Targeted cases on several bottlenecks identified in advance

18. Logistics process • Logistic accesses in Sixhaven and South • Relieve disturbance in sensitive areas (inner city, canal area) Sixhaven South

19. Assessment Methodology CSF • Qualitative assessment and valuation by external Advisory Committee for each CSF • Per CSF the Advisory Committee will give a score between 0 and 5 points Optimal interpretation, Very significant improvements Compared to minimum requirements Minimum completion, Only just complies to the minimum requirements 0 1 2 3 4 5

20. Advisory Committee • Composed of experts in relevant fields / disciplines (professors, recognized experts and local experts) • Appointed early in the process and involved in final drafting of the CSF

21. Relation Business Plan – Final Bid • Final Bid must build on Business Plan (validity criterion) • Parts Plan (drawing CSF) are further developed in Options Option A CSF 1 Option B Option C CSF 2 Option D “new” topics Business Plan Option E

22. Options • The Authority has defined ‘Options’, in addition to the minimum requirements • To (partially) not fulfill these Options results in a fictitious increment of the NCW • Options will be translated into ‘Dialogue Products’ • Final valuation of Options will take place in the Dialogue Phase

23. Options • Option A: Management System • Option B: System integration • Option C: Minimize environmental nuisances • Option D: Fast delivery • Option E: Elevators / Escalators (Quality levels) • Option F: Maintenance Concept (LCC) • Option A: effect CSF 1 • Option B: effect CSF 2 • Option C: effect CSF 3

24. Dialogue Products • Options: • Management Plan • Acceptance Plan, System integration, Safety Case, Installation and Test run • Logistics plan • Planning • Analysis Failure mechanisms Elevators and Escalators • Maintenance Concept

25. (Other) Dialogue Products • Sample Preparation regarding Systems Engineering • Verification matrix (on risky design elements such as the vibration reduction systems in the rail track)

26. Planning • Prequalification: July 2009 - Nov 2009 • First phase of the Dialogue – Business Plan (n Participants) Nov 2009 - Feb 2010 • Second phase of the Dialogue – Consultation phase (3 Participants) Mar 2010 - Apr 2010 • Third phase of the Dialogue – Dialogue phase (3 Participants) May 2010 - Oct 2010 • End of Dialogue – Definitive Bid (3 Participants) Nov 2010 - Dec 2010 • Completion – Contract Award (1 Participant) Dec 2010

27. Key risks • Capacity of the internal NZL organization (quantity and quality) for drafting the contract, the process of contracting and contract management • Complexity of the project: none or (too) few interested parties • Unstable scope • Implementation planning is not feasible • Appeals of candidates or participants • Bidding over budget • Realisation of substructure contracts will take longer than planned • The building time frame (superstructure) will take longer than planned

28. Challenges: coordination and input External stakeholders • Managing ‘the Law of the inhibitory ahead’ • Discussion Maintain component (DIVV Management) • Signalling, Integration test, Test run (AMSYS) • Frames for Acceptance and Transfer (DIVV Management) Internal stakeholders • Interfaces file substructure ('as built' or 'as designed ‘ including non conformities)

29. Questions?

30. Propositions for Discussion

31. Proposition 1 If large infrastructural projects are contracted traditionally*, public authorities are incapable of keeping project control. *choices in design and methods of construction made under responsibility of the Authority, with directive supervision by the Authority

32. Proposition 2 The characteristics and the key risks of the project, for instance: • Capacity of the internal organization • Unstable scope • Uncertainty in timeframes of substructure contracts make the project highly suitable for a form of alliancing

33. Proposition 3 To transfer design responsibility is like a boomerang: it will inevitably return to the Authority.