More Productivity Jukka Karjalainen Unit Manager Road management Finnish Transport Agency nvf seminar

THE FINNISH TRANSPORT AGENCY IN BRIEF  The Finnish Transport Agency is responsible for maintaining and developing the standard of service in the transport infrastructure administered by the government.  The aim of the Finnish Transport Agency is to promote the functioning of the traffic system as a whole, to improve transport safety and to contribute to a balanced and sustainable development of the regions.  The Finnish Transport Agency has the responsibility to maintain and develop a transport infrastructure property amounting to nearly 19 billion euros.  The Agency has now approximately 700 employees and the target is that the agency shall have approximately 600 employees by the end of 2015, of which persons transferred to Lappeenranta  The Finnish Transport Agency is guiding the performance of 9 regional (ELY) centres for economic development, transport and the environment (1/3 of the financing)

Construction Aircrafts Shipbuilding Automotive industry Steel industry Retail Banking Airlines Industry position Performance improvement Public sector services Electronics - Industry under massive transformation – rapid performance improvements Old school - low or even negative productivity/cost development Fully leveraging, lean approaches, cost improvements 3-5 % annually Hospitals Construction Industry Position

Improved Productivity Through Innovations ICTIndustryLogisticsConstructionSocial Services Mean Value Re-engineering and Innovation index, max. 100 points -5 -2,5 0 2,5 5 7, ,5 15 Annual Change of Productivity Re-Engineering and Innovation Competence Index (Mean Value) Best Organization Index of the Branch Annual Change of Productivity of the Branch (%) Source: BearingPoint, Jukka Yliherva

IN-HOUSE PRODUCTION DEVELOPMENT OF CONTRACTING INTERNAL DIVISION START OF OPEN COMPETITION In-house service production RWB RWB =>RWA FINNRA Finnra (Client) Increased use of contracting in construction and pavement works Daily mainte- nance mainly in-house Client- Producer model starts to take shape Finnish Road Enterprise 1950's and 1960's 1970's and 1980's END OF TRANSITION PERIOD The Development of State Road Management in Finland Finnra Railway Administration Maritime Administration TRANSPORT AGENCY AND REGIONAL AGENCIES 2010 TRANSPORT AGENCY DESTIA Ltd

Design-Build Integrated Design & Construction (Public Funding) Traditional Design-Bid-Build Procurement Methods - Logical Steps Life Cycle Consideration Life Cycle Responsibility Design-Build Plus Long-Term Maintenance & Upkeep DBMO Plus Financing Ecological Efficiency ? DBB DB DBMO DBFO Alliance Co-operation Incentives Lean Construction

Applicability of Alliance Contracting Different systems are appropriate for different project conditions Alliance is applicable in complex projects especially Traditional project Alliance project Performance level Interests of the contracting parties

Development of Daily Maintenance Cost, euro/km

GC Customer End User Owners Public Authorities The whole chain of production must be developed Copyright © 2009 – TUKEFIN Architects and Consulting Engineering CM SubcontractorSuppliers

Tukefin project Improvement of productivity in the public sector supply chain Who Group project: public owners, contractors, consulting engineering companies Objective of the Project Improve productivity by adding the innovativeness of procurement and cooperation eliminating waste from project deliveries accelerating lead times of tasks and projects

Vårnäs Bridge, Incentives for lead time Selection criteria - Price 70% - Construction time 30% 5 tenders Contractor Seppo Rantala Oy Lowest price 1,68 M€ Fastest offered lead time 215 days Actual construction time Bonus/sanction

Tukefin results Some examples OwnerGeneral Contractor Change in processResult Finnish Road Administration Seppo Rantala Selection criteria -> Price and Lead time Bonus/fine for Lead time Last Planner System Price 10 % under budget Lead time 20 % under owners request Finnish Road Administration Skanska Infra Early involvement Last Planner System 6 months faster than owners request Municipality Kerava DestiaBonus : lead time, safety, quality Last Planner System Lead time cut to half Variation increased

Vision Let us make it together– Finland, the most productive Infra sector in Europe By General Director Juhani Tervala Productivity seminar in Helsinki

Vision Productivity is improved 20 %  Products and services serve customer's interests better than earlier.  INNOVATION CHALLENGE It means:  Implementation of products and services must be quicker, with better quality and more econimically.  PRODUCTION CHALLENGE