Alternate Delivery Methods and Sharing Contract Risk APTA - Business Member Board of Governors APTA - Business Member Board of Governors Mike Robertson Frontlines 2015 Program Management Group Utah Transit Authority January 11, 2008

Sharing Contract Risk Why do we contract? –Establish a relationship with others to accomplish work we cannot do ourselves Who do we contract with? –Multiple entities who share a common language but have a different culture

Sharing Contract Risk Honest Self Assessment Box the Risk Gathering the Right People Order of Importance

A Good Start Goes a Long Ways Honest Self Assessment –How do we want to work with our contractors? –What do we expect to accomplish? –What do we do best? –Where do we need help? –What problems can get in our way? Box the Risk – define the problem and create the mitigation plan –Perform enough investigation/design/evaluation to understand the nature and size of the risk? –Who has the most to gain when the problem is solved? –Who can solve the problem at the least cost and time? The Right People –Appropriate Delivery Method to acquire external needs (tailor this to your needs-not a set recipe) –Creative, Build Solution Oriented Relationships, Trusting, Experienced What is it How big is it Who can best solve it

Self Assessment Why am I Using a Creative Approach? –It’s a mandate!!! (malicious obedience) –Process/Schedule/Budget – Dictates a change –We want to do more - Great things are accomplished by a group of people working together at what they do best. Maybe there is a better way!! (Gerber’s Strained Peas or Pumpkin Pie?) Form of Motivation Must Should Will Potential for Success

Self Assessment What are our objectives? –Positive Relationships w/Contractors and Stakeholders –Avoid Litigation and Costly Changes –Manage Risk - Coordinated effort –Value Engineering –Resolve Technical Complexity –Early Fixed Price- Increased knowledge at an earlier date –Shortened Schedule –Reduced Internal Staffing –Funding Assistance –Meet Political Ambitions

Box the Risk Risk Assessment Exercises - Facilitated exercise with a broad group –Probability and Impact –Low, Medium and High –Start in the concept phase, End when the contract closes out, Refresh often Gather Information Internal –Business and Project Managers –Designers –Contractors –Real Estate, Legal, Finance –Utility & Permits –Operations and Maintenance –Legislative Liaison IMPACT PROBABILITY External –DOTs –FTA –Business Community –Cities/Counties –Utility Owners –AGC

Box the Risk Assign Risk - Think like a business –Mutually agree on who can best solve the issue and has the most incentive to do so. –Create incentives where valuable D-B-B provides incentive to contractor to increase scope and costs Public Involvement on the University Line Port of Long Beach - $6.8M instead of $600K Access Roads w/UP – Quick solution w/low current and future costs Flagging Costs – Lowest cost and partnered approach to mitigate probability of event

Appropriate Delivery Methodology Objective - Creation of the Appropriate Relationships with all Parties Establish Critical Factors for Success 1.Complete Self Assessment 2.Establish goals, objectives, interests, obstacles, etc 3.Define Contractor and Major Stakeholders objectives 4.Set criteria to measure success Evaluation of Options 5.Brainstorm “Best Fit” Process - incentivises all parties 6.Is that approach legal? Can it become legal? 7.Have others tried it? Can I alter a known approach? 8.Will the approach succeed?

The Right People Managing Risk - Relationships and Contracts “You can’t be bulletproof – Live in a safer neighborhood” May be a culture shock to existing staff. Manage the change effectively Pick the right contractor who can appreciate the owners interests Work to help the other parties meet their objectives. Corporate Identities Dissolve Contract codifies the approach – use as a tool not a weapon Share and Build Synergy

Common Success Stories Business Improvements –Problem solving (Access Roads and Fencing costs) Recognize the problems early Define Responsibility and Authority Regular events to address issues Whole team works to solve or avoid all problems –Value Engineering (Ogden Bridge) Weekly Event Systematic Process Share in Returns –Allow Time to set Cost and Schedule –Developed Cost and Schedule “envelope” Establish goals towards the low end Help everyone meet their objectives if you can “beat the target” – incentives –Attract the interest of the contracting community Pay on time Evaluate bonding requirements Incentive programs

Common Success Stories Build Synergy –Shared goals (University Line and the CCT) Incentives may help –Co-Locate Constant Communication Owner/Contractor/Designer/Stakeholders in one location Water cooler talk –Build each other up Have some fun together Celebrate Success Awards –Access the Team Work to provide new opportunities for growth Everyone may not like Pumpkin Pie

Key Points Figure out what you do best, Find the rest, and don’t settle for Second Best Bring the right people to the project Golden rule with all (no second class citizens) Communicate constantly Avoid/Solve problems effectively Select the appropriate contracting methodology – Tailor it to fit your needs