FIDIC WS 6 William Howard

Slide1: 

Partnerships and Alliances in the United States Trends and Lessons Learned William S. Howard, P.E., FACEC Chair, ACEC Executive Vice President, CDM September 14, 2004

Major Market Drivers: 

Major Market Drivers Faster delivery Large and complex projects Risk sharing Cost-effective and streamlined solutions Combined and complementary skills to achieve a common goal

Partnerships/Alliances Are Not New: 

Partnerships/Alliances Are Not New While emphasis on cost vs. quality, multiple parties, and complex disputes have all led to exploring new ways of executing projects and transferring risk to one party, the mechanisms used to address these issues are returning us to the approach of the late 1800s.

Market Penetration of Major Project Delivery Systems: 

Market Penetration of Major Project Delivery Systems Source: Design-Build Institute of America, 2004

Lessons From Some Projects: 

Lessons From Some Projects Tolt water treatment plant DBO Tampa Bay Water DBO NYCDEP 1.9-bgd water treatment plant Gilbert & Mosley USAID Environmental Health Project

ToltSeattle, Washington: 

Tolt Seattle, Washington A 450 ML/D conventional water treatment plant DBO project Saved 40 percent from benchmark Experienced team and a competitive procurement Complex contractual organization Learning curve for everyone

ToltOrganization: 

Tolt Organization

ToltChanges in Ownership: 

Tolt Changes in Ownership

Tolt Lessons Learned: 

Tolt Lessons Learned Private ownership can change Cost savings can influence redundancy/backup facilities Construction phase involvement of designer can be intensive

Tampa Bay WaterTampa, Florida: 

Tampa Bay Water Tampa, Florida A 250 ML/D conventional water treatment plant DBO project Savings of 20 percent from benchmark Experienced team and competitive procurement Delivered on time and on budget Expensive for all parties to pursue

Tampa Bay WaterOrganization: 

Tampa Bay Water Organization

Tampa Bay Water Lessons Learned: 

Tampa Bay Water Lessons Learned Financial considerations can remove engineer from “top box” in the organization chart Team organizer may not be the team leader Roles must be compatible such that the “sum is greater than the parts”

New York City, New York: 

New York City, New York 7.2-ML/D water treatment facility—world’s largest! Hazen and Sawyer: city presence (headquarters in New York City) and understanding of existing conditions CDM: large water facility and process experience Joint Venture: combined resources for complementary skills, necessary capacity, and city presence

New York City, New York (cont.): 

New York City, New York (cont.) Joint venture with CDM/Hazen & Sawyer in its 10th year Only joint venture recognized by NYC as successful Recently won NYC master water plan

New York City Lessons Learned: 

New York City Lessons Learned Leadership at the top of the firms builds success in joint ventures with competitors Seamlessness is important to clients If viewed as successful by the client, joint ventures can lead to other projects, but… Like politics, alliances can lead to strange bedfellows

Gilbert & MosleyWichita, Kansas: 

Gilbert & Mosley Wichita, Kansas 4.5-ML/D landmark groundwater remediation project Contamination presented health risks and plummeting property values Unique partnership with lending institutions, real estate community, and industry Successful certificate of release program to revive economy

Gilbert & Mosley Lessons Learned: 

Gilbert & Mosley Lessons Learned Financial pressure (declining property values downtown) can drive diverse entities together All stakeholders, working together, can create win/win scenarios

U.S. Agency for International DevelopmentWASH, EHP 1, EHP 2: 

U.S. Agency for International Development WASH, EHP 1, EHP 2 Global alliances for healthier communities Consortium of organizations with skills to promote good health and sanitation within local communities World Bank, UNICEF, Pan-American Health Organization, CARE EHP 2: 5-year, $67 million project with 7 consortium members and 90 subcontracts in 30-35 countries

USAID Lessons Learned: 

USAID Lessons Learned The management skills of engineers can help government agencies bring together interdisciplinary teams (engineers, anthropologists, medical professionals, social scientists, institutional specialists, etc.) to achieve common goals and build capacity in developing countries.

Some Recent Challenges: 

Some Recent Challenges Rapid growth, underestimates of scope of work, increased pressure to assume more risk, and shrinking margins have resulted in…

Recent Challenges: 

Recent Challenges Some highly publicized disputes and changes in direction, which in turn is increasing the pressure for more risk sharing and more reasonable compensation terms.

Current Trends: 

Current Trends Public-private partnership agreements involve legal, financial, and political elements – not just engineers Pressure too great on alliances to shoulder all the risk and produce low-cost results Industry as whole needs to change and adopt “best management” practices Education and a mutual understanding are required Maturation of market will lead to truer partnerships and reasonable transferring of risks

The Future: 

The Future Drivers still exist and private-public partnerships and alliances will thrive Truer partnerships with more realistic risk sharing All parties will develop win/win scenarios that focus on cost effectiveness and award sharing as much, if not more, than penalties for poor performance Maturation will adjust expectations for beneficial future

ALLIANCES: 

ALLIANCES Leadership Diversity Sub-Prime Project Program Dispute Avoidance Rewards Penalties Risk Transfer All Stakeholders Common Goals Incentives Seamlessness Financial Strength Conflict of Interest Synergy Teaming Joint Venture

Slide25: 

Thank You! Questions?