Académique Documents
Professionnel Documents
Culture Documents
By Sunil Shinde
Projects in Hand
Multi product SEZ at Chennai- Ramanujan city (>4 million square feet) IT SEZs for TCS at 8 locations in India Pune, Ahmedabad, Kolkata (ongoing) State of the art retail mall at New Amritsar City Centre for integrated development. Participating in development of world class bridges, roads, highways etc. Its subsidiary has won NHAI project on DBFOT model for Pune Solapur section in partnership with Atlanta S.p.a. Italy. Evaluating development of multi product Special Economic Zone (SEZs) in State of Orissa , Maharashtra and Andhra Pradesh The consortium lead by TRIL has qualified for RFP stage of development of Udaipur and Amritsar Airports. Value of the projects under execution is more than Rs.9000 Crore
Alliance Experience
More than 200 projects worth $67 Billion have been executed. The results were extra ordinary The projects were mostly through Government & Private partnerships Complex infrastructure projects were successfully executed by using this concept
Roads, Bridges & Expressways Railways Buildings (Museum) Water Desalination/Purification Plant Tunnels
Cost Performance
Variance between Final project cost & TOC (target outturn cost)
10.00
5.00 0.00 -5.00 -10.00 -15.00 -20.00 -25.00 -30.00 -35.00 Projects 1 3 5 7 9 11 13 15 17 19 21 23 25 27 29
Time Performance
Variance of actual program & Estimated program
60.00
50.00 40.00 30.00 20.00 10.00 0.00 -10.00 -20.00 -30.00 -40.00 -50.00 Projects 1 3 5 7 9 11 13 15 17 19 21 23 25 27 29
Alliance in a Nutshell
Standard Contract Alliance Contract
Project
Project
Individual Interests
Common Objective
11
Structural consultant
Introduction of contractor
Concept is finalized by architect. Value engineering Limited to finalized concept. Cost is an outcome of the finalized concept i.e. Cost is derived
6-8 weeks Concept stage Schematic stage Design development stage GFC stage Construction 8-10 weeks 10-14 weeks 4-6 weeks ~32-36 months
stage
Introduction of contractor
Concept is jointly evolved keeping Cost as a Target. Value Engineering over the entire process including constructability of the concepts
12
Project Alliance
1. Project Alliance is where an owner & one or more service providers work as an integrated team to deliver a specific project under a contractual framework where their commercial interests are aligned with actual project interest# We have a project specific alliance for the Chennai project with a contractor, Local architect, MEP consultant & Structural consultant
2.
13
The Difference
Many companies & the client make an agreement to work together towards common goals - we are One Team Design & Construction teams working collaboratively The client is part of the team Pain/Gain sharing: When things go well all parties win. If not, we all lose Managing cost, being efficient & beating the schedule provides big benefits to all parties
14
Alliance Management Team (AMT) headed by Alliance Project Manager Deliver Project Objective Day to day management Provide leadership to the wider team try to resolve all alliance issues AMT comprises key project leaders with specific project functions, with at least one representative from each alliance participant
"IPT" Integrated Project Team All roles in the IPT will be filled by personnel drawn from the resources of the alliance participants on a "best-for-project" basis.
15
Companies and client agree on desired project outcomes and objectives Participants focus on meeting and exceeding project objectives All decisions must be best for the project Individuals objectives aligned with project objectives
Reimbursement of 100% open book All participants win or all participants loose Equitable sharing of risk and reward Equitable sharing of Gain/Pain
16
Commercial Alignment
Collective responsibility
No us and them The alliance participants (together) shall . A peer relationship where all participants will have an equal say Integrated project teams Full access to best resources from all participants
No Blame
All decisions of PAB/ALT must be unanimous Commitments to resolve issues within the alliance No recourse to litigation Personal accountability and no blame culture
17
Exceeding Objectives
High performance teams Commitments to stretch targets Breakthrough thinking process Innovative culture Challenge the status quo there is always a better way
18
19
20
4.
21
Development of Alliance
Selection: The owner to select the right partner and align on the overall framework and primary commercial parameters. iPAA: (interim Project Alliance agreement )The participants enter into a simple consultancy agreement whereby nonowners are reimbursed at cost to work in an integrated team on pre-construction activities. Incl. development of Target Outturn Cost (TOC), Target Schedule and non-cost targets. PAA: (Project Alliance Agreement) After agreeing on TOC and other targets and with owners wish to proceed with the alliance , the participants enter into a full agreement.
22
Alliance Auditor
Owner engages an experienced financial auditor to validate that all payments under the alliance are fully open book & in accordance with the terms of compensation The auditor can also be used to validate that the corporate overhead and profit are business as usual rates
23
No pain: gain in this period though it is a period of very high innovation & value-adding
24
Limb 1: 100% of what they expand directly on the work inc. projectspecific overheads Limb 2: A fee to cover corporate overheads and profit. Limb 3: An equivalent sharing between all alliance participants of gain/pain depending on how actual outcome compare with pre-agreed targets in cost and various non-cost key result areas (KRAs) In our case we have restricted risk up to margins & capped it to maximum % gain
Profit
Limb 2 (Fee)
Recovery of costs under limb 1 is guaranteed irrespective of the outcome under the limb 3 risk:reward arrangement
Limb 1 (Costs)
25
TOC Gainshare/Painshare
NOP Share of Gainshare
50% Gainshare to NOPs, 50% Gainshare to Owner Owner Share of Gainshare Target Outturn Cost
27
Pain : Gain
The sharing of cost under/ overruns is usually the primary component of the pain: gain arrangements The cost overruns may be shared 5O-5O%. Generally there is a cap on pain share Under runs are also shared is the same way For better performance in non cost areas, Non Owner Participants gain additionally. It can be additional few % to NOPs
28
Variations
The situations that would be treated as variations under a traditional contract are not variations under the alliance-rather they are just part & parcel of the delivery of the project If owner changes scope or changes fundamental or design requirements, then cost & other performance targets are adjusted
29
Selection Process
Request for Proposal Panel recommends a preferred proponent Owner approves a prefered proponent
Nominate initial shortlist (3 to 6) 1/2 day interview / discussion with each shortlisted proponent to:
Discuss/ Clarify key issues Review/Discuss alliance model Assess alliance understanding / affinity Assess technical & resource capability Review expectations
Confirm direct cost framework Lock in on fee % (Profit + OH's) Agree risk:reward strucutre Finalise drafting of iPAA Agree kick-off Plan incl. budget for iPAA Agree on terms/strucutre for PAA
Yes
Is everything agreed?
No
2 day workshop with each of the final shortlisted proponents to align on:
Commitment to outstanding results Principles, mission & objectives Prospective PAB / ALT Alliance team structure / roles Compensation framework Process for development of TOC Alliance management system Project kick-off strategy
Executive iPAA
Project definition, Consultation, site /material investigation, strategic procurement , initiate approvals , develop & agree target etc.
iPAA Period
30
31
References
Evans & Peck, Australia Relationship contracting, 1999, Australian Constructors Associations Phillip Greenham, Minter Ellison Lawyers, Australia Jim Ross, Introduction to project alliancing, April 2003
32
THANK YOU
33