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Water Services National Training Group

Water Services National Training Group. 12th Annual Conference 11 th September, 2008. Water Services National Training Group. Delivery. New Conditions of Engagement and Forms of Contract from a Consultant's Perspective. Michael Hand Managing Director WYG Engineering Ireland Ltd.

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Water Services National Training Group

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  1. Water Services National Training Group 12th Annual Conference 11th September, 2008

  2. Water Services National Training Group Delivery

  3. New Conditions of Engagement and Forms of Contract from a Consultant's Perspective Michael Hand Managing Director WYG Engineering Ireland Ltd

  4. Content • Introduction • New Conditions of Engagement • New Conditions of Contract • Conclusions

  5. Introduction

  6. Time Cost Project Performance Project Execution - Aims • Time • Cost • Quality/Performance

  7. Organisational Method Type of Contract Tender Procedure Strategic Choices Management All-in Conventional Lump Sum Admeasurement Cost Reimbursable Target Competitive Two – Stage Negotiated Continuity

  8. Historical Development of New Conditions 2004/05 Development of New Conditions of Contract & Conditions of Engagement 2005/06 Consultation with the Industry 2007 Public & Private Sector Training 2008 Effective Launch of New Conditions 2010 Review and Modifications ?

  9. Change Process Model

  10. New Conditions of Engagement

  11. Consultancy in Context • Typically 7-10 year project relationship • Design critical to project cost efficiency • Consultants’ fees represent 4-6% of Project Capital Cost • Consultants’ fees represent 1-2% of Project Whole Life Costs • Service or Commodity ?

  12. Guide Quality/Price Ratios • Feasibility Report and Investigations • Innovative and Imaginative Design Projects Major Conservation & Restoration Projects • Most Construction Projects • Repeat & Straightforward Projects • Straightforward Repairs & Maintenance

  13. Risks of Price-Biased Selection • Drop in Quality of Service • Less Time for Innovation • Less Time for Value Engineering • More Errors and Consequential Costs • More Claims for Extras and Disputes • Conflict/Adversarial Relationships • Loss of Quality Personnel from the Industry THE COMMON LAW OF BUSINESS PROHIBITS PAYING A LITTLE AND GETTING A LOT – John Ruskin (1860)

  14. Value Engineering • Project 1 – RC Basement Initial Design 130t Rebar Revised Design 80t Rebar Works Cost Saving €60k Audit Fee €5k • Project 2 – 3 storey RC Building Initial Design 150t Rebar Revised Design 110t Rebar Works Cost Saving €150k Job Fee €250k

  15. Fee Correction • Where approved construction contract tender price >10% higher or lower than pre-tender estimate • Design Stage Fee reduced by % variation in excess of + 10% • Sliding Scale 10% for projects up to €50m 1% for projects above €600m • Applies only to Consultant at fault • Client discretion to waive fee correction

  16. Procurement - Lianakis • Prequalification – Qualitative Selection Criteria • Tender – Award Criteria • Can Assess Quality of Team Once Only • Award Sub-criteria to be Brought to Tenderers’ Attention • Transparency and Equal Treatment

  17. Some Suggestions on Consultants • Brief at EOI Stage • “Eurovision” Scoring on Quality • Reality Check on Prices and Eliminate Outliers • Health & Safety is a Key Ingredient • Select on Value for Money – Not Price • Timely Appointments and Approvals

  18. New Conditions of Contract

  19. Historical Contracts – Employer Issues • Overspends & VFM • Health & Safety • Public Relations • Services Disruption • Landowner Issues • Prompt Reinstatement

  20. Historical Contracts - Contractual Claims • Unforeseeable Conditions • Legislative Enactments • Delay & Disruption • Method of Measurement • Method Statement • Extensions of Time

  21. DoF Public Works Contract Objectives • Short listing of tenderers • Tender price = Final cost • Transparent risk allocation • Non adversarial / partnering • Value engineering incentivised • Speedy appointments • New Inflation Index

  22. New Conditions of Contract Experience • Early Days • Launch Coincided with Market Decline • Burden of Notices • Value Engineering • Partnering • SI Inadequacies / Errors • Award Delays

  23. Ground Condition Risks • All Risk may be transferred to Contractor • Comprehensive Site Investigation • Factual Report Only • Tender Period SI Facilitated • Archaeology Fully Investigated • Utility Services Identified

  24. Measurements Issues • BOQ Accuracy – Contractors Risk • Compensation Events • Delay Events • Claims - Notice within 20 days - Valuation within 20 additional days - Monthly updates for continuing effect • Delay costs - Cost per day Quote • Provisional Sums Out • Prime Cost Sums Out • Price Variation (New Index) after 36Mts

  25. Conclusions

  26. Conclusions • Engineers Adaptable & Flexible • Industry Cooperation Essential for Efficiency • Vital to Attract and Retain the Best • Competition on Price Wrong for Design – Not VFM • Still Time to Stave off Lawyer-ridden Industry • Enlightened Review Essential

  27. Water Services National Training Group 12th Annual Conference 11th September, 2008

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