Project Delivery and Contract Strategy (PDCS) Project Delivery and Contract Strategy Research Team Project Delivery and Contract Strategy Research Team Gary Vandiver Solutia Gary Vandiver Solutia CPl Conference 2001

Project Delivery and Contract Strategy (PDCS) Gary Vandiver Solutia Gary Vandiver Solutia CPl Conference 2001

PDCS Research Team Stuart D. AndersonTexas A&M Stanley F. Berger3M G. Wayne BurchetteEastman Chemical, Chairman James R. GreeneAbbott Labs Robert P. KehoeNASA Larry KruseMurphy Company Ade OyetunjiTexas A&M Tim ThuryGSA Gary VandiverSolutia Paul WickerGM Past Members Darrick D. BowersTexas A&M David CombsJohn Gray Richard De Leon, Jr.UT System Jerry KirkFPL John PhillipsU.S. Steel, former Chairman Janice WhiteUT System John WrockloffU.S. Air Force

Team Mission Statement To produce a process to assist in selecting a contract delivery strategy to optimize owner's project objectives.

PDCS Within industry, no existing set of delivery systems applicable to a wide range of project types. CII commissioned the PDCS Research Team to: -Identify a larger set of project delivery systems and contract strategies. -Develop a decision process and tool.

PDCS The research team developed a procedure and tool to assist in selection of Project Delivery and Contract Strategy.

PDCS Procedure Focuses on owner’s project objectives. Focuses on project execution environment. Incorporates quantitative assessment of PDCS alternatives in decision support tool. Focuses on owner’s project objectives. Focuses on project execution environment. Incorporates quantitative assessment of PDCS alternatives in decision support tool.

Research Research conducted with: CII members, non-members Owners and contractors Public agencies Industrial and general building sectors Research conducted with: CII members, non-members Owners and contractors Public agencies Industrial and general building sectors

PDCS Definition Defines roles and responsibilities of parties in a project. Defines how owner pays for services. Establishes framework for organization of project execution. Defines roles and responsibilities of parties in a project. Defines how owner pays for services. Establishes framework for organization of project execution.

PDCS – Typical Representation Bid Traditional Design-Bid-Build delivery system, PDCS 01 Phase Sequence: Serial sequence of design and construction (Procurement begins with construction) Design Procure Construct Project Team Relationships Primary Contractual/Functional Relationships Owner DesignerConstructor Compensation Approaches Designer:Firm Price Constructor:Competitive Lump Sum

PDCS – Purpose Develop a tool that will assist owners in selecting a project delivery method and contract strategy for their projects, based on their project objectives.

Objectives Develop PDCS alternatives and selection factors for industry-wide application. Develop procedure and analysis tool to aid PDCS selection. Develop procedure to facilitate owner’s objectives. Develop PDCS alternatives and selection factors for industry-wide application. Develop procedure and analysis tool to aid PDCS selection. Develop procedure to facilitate owner’s objectives.

Characteristics Identify and define: Set of common PDCS alternatives currently used in industry Set of factors considered in selection process Approach for assessing factors leading to appropriate PDCS Identify and define: Set of common PDCS alternatives currently used in industry Set of factors considered in selection process Approach for assessing factors leading to appropriate PDCS

Data Collection and Validation Phase I – Questionnaire data from 90 projects: Defined PDCS alternatives and selection factors that are used in practice. Evaluated decision analysis approaches. Phase I – Questionnaire data from 90 projects: Defined PDCS alternatives and selection factors that are used in practice. Evaluated decision analysis approaches.

Data Collection and Validation Phase II – Workshops involving 32 owner and contractor project managers: Developed relative effectiveness scores that are intrinsic to spreadsheet analysis. Phase II – Workshops involving 32 owner and contractor project managers: Developed relative effectiveness scores that are intrinsic to spreadsheet analysis.

Data Collection and Validation Phase III – Validation of the Tool: Identified 20 selection factors and 12 PDCS alternatives. Tested and validated on 12 projects from research team member companies. Owners are using the tool to support PDCS decisions on new projects. Phase III – Validation of the Tool: Identified 20 selection factors and 12 PDCS alternatives. Tested and validated on 12 projects from research team member companies. Owners are using the tool to support PDCS decisions on new projects.

Data Collection and Validation Result obtained was appropriate. Procedure and tool are improvement over current practices. Insight into selection of PDCS provided. Result obtained was appropriate. Procedure and tool are improvement over current practices. Insight into selection of PDCS provided.

PDCS Decision Support Tool Review project objectives. Identify selection factors (related to owner’s project objectives). Assign preference rank and preference weights to selected factors to reflect priority. Review project objectives. Identify selection factors (related to owner’s project objectives). Assign preference rank and preference weights to selected factors to reflect priority. PROCESS FLOWCHART Start End Review project objectives and profile Review list of Selection Factors Identify relevant factors. Go to Analysis Worksheet. Copy/paste factors into PW Table in Analysis Worksheet Compute Preference Weights Copy/paste Effectiveness Values into Aggregation Table in Analysis WS Review aggregate scores. Select top three. Review Default Compensation Approaches Refine Compensation Approaches Yes No Default Compensation Approaches Okay? Make Decision

PDCS Decision Support Tool (continued) Paste effectiveness values into aggregate table. Obtain aggregate scores from spreadsheet. Review results to make final decision. Choose from 20 selection factors, 12 PDCS alternatives. Paste effectiveness values into aggregate table. Obtain aggregate scores from spreadsheet. Review results to make final decision. Choose from 20 selection factors, 12 PDCS alternatives. PROCESS FLOWCHART Start End Review project objectives and profile Review list of Selection Factors Identify relevant factors. Go to Analysis Worksheet. Copy/paste factors into PW Table in Analysis Worksheet Compute Preference Weights Copy/paste Effectiveness Values into Aggregation Table in Analysis WS Review aggregate scores. Select top three. Review Default Compensation Approaches Refine Compensation Approaches Yes No Default Compensation Approaches Okay? Make Decision

PDCS Decision Support Tool Factor Selection Factor Description Factor Action Number Factor for Comparing Statement 1 Completion withinDelivery system Control cost growth original budget is facilitates control of critical to project cost growth success 7 Early completion isDelivery system Ensure shortest critical to projectensures shortest schedule successreasonable schedule 17 Project features areDelivery system Capitalize on well defined at thecapitalizes on well well defined scope award of the designdefined project and/or constructionscope prior to award contractof design and/or construction Factor Selection Factor Description Factor Action Number Factor for Comparing Statement 1 Completion withinDelivery system Control cost growth original budget is facilitates control of critical to project cost growth success 7 Early completion isDelivery system Ensure shortest critical to projectensures shortest schedule successreasonable schedule 17 Project features areDelivery system Capitalize on well defined at thecapitalizes on well well defined scope award of the designdefined project and/or constructionscope prior to award contractof design and/or construction

Table A-1: Compute Preference Weights PDCS Decision Support Tool Factor Action StatementPreferencePreferenceNormalized RankScoresPreference Weight Control time growth Protect confidentiality Capitalize on familiar project conditions Maximize owner's involvement Efficiently coordinate project complexity or innovation 300 Factor Action StatementPreferencePreferenceNormalized RankScoresPreference Weight Control time growth Protect confidentiality Capitalize on familiar project conditions Maximize owner's involvement Efficiently coordinate project complexity or innovation 300

Table A-2: Compute Aggregate Scores PDCS Decision Support Tool

Benefits of the Tool Relates PDCS to project objectives and success parameters. Provides a decision support tool to facilitate selection of most suitable PDCS. Expands knowledge base with well-defined, documented PDCS alternatives. Relates PDCS to project objectives and success parameters. Provides a decision support tool to facilitate selection of most suitable PDCS. Expands knowledge base with well-defined, documented PDCS alternatives.

Benefits of the Tool Provides rationale for selecting PDCS, based on quantification of alternatives. Supports CII Best Practices: -Alignment -Pre-Project Planning Provides rationale for selecting PDCS, based on quantification of alternatives. Supports CII Best Practices: -Alignment -Pre-Project Planning

LOWEST COST SHORTEST SCHEDULE MAXIMIZE CONTROL LOW LEVEL OF CHANGES PDCS Implementation Session

PDCS – Implementation Session Moderator Wayne BurchetteEastman Chemical Panel Stu AndersonTexas A&M University Stan Berger3M Company Robert P. KehoeNASA Larry Kruse Murphy Company Moderator Wayne BurchetteEastman Chemical Panel Stu AndersonTexas A&M University Stan Berger3M Company Robert P. KehoeNASA Larry Kruse Murphy Company

Construction Project Improvement Conference Construction Industry Institute Austin, Texas 2001: A Construction Odyssey Trends and Perspectives