A Presentation on

Innovative Approach in Contracts and Tender Procurement Management

Presentation Outline
Introduction

Innovation / Implementation

Types of Contract Procurement Why Choose Design and Build Procurement What are the Various Options Case Study to illustrate the suitability Question-and-Answer Session

Innovation Implementation
z

Creativity ( C) is a function of three components by Tereasa Amabile z expertise (E) z Creative-thinking skills (CTS) CTS E z motivation (M) C z matching people with right projects and tasks z Always ask why, what if? M
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Making most of the Best by James Quinn z know what knowledge z know how skills z know why understanding z can why - motivation
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Generating ideas by Robert Cooper z creativity is the ability to develop new ideas z through stage-gate systems (stage 1 gate 1 stage n stage n - ? (i.e. screening process)

Traditional Contract w o N f o Procurement - know what k n i th - know how

- know why

Bills of Quantities (Firm or Approx.) Lump sum (Drawing & Specification) Remeasurement Design and Build Management Contracting Construction Management

Innovation Contract Procurement Approach

Set up a task force led by a Champion Mission / Goal Setting Make up a platform for investigation Project Requirement Generating Questions - why? what if? Options / Proposal Sorting process through innovation Traditional Approach or modified standard or tailmade version Timeframe / Uncertainties / Risk allocation / Ceiling process Optimization Screening Selections Most effective contract approach Idea Generating - Creativity Identify problems

Disadvantages

Advantages

See Common Problems

Unforeseen design problems Late design information Programming problems Sub-contractor arguments May not be suited best to Developers Objectives

Generating Ideas : Why choose Design & Build? OR Develop & Construct?

Question 1: How to do get flexibility in design, quicker construction period but with certainty of product? D&B contracts Single Stage Tendering

e Design-and-Build Procurement e s Contractor responsible for design and construction s t Le Single-point responsibility
Client
z z z z

Employer s Agent Employers Agent Quantity Quantity Surveyor Surveyor

D&B D&B Contractor Contractor

Designers Designers

Sub -Contractors Sub-Contractors

Contractual Link Functional Link

Standard Form with Contractor s Design Contractors

Typical D&B Documentation Structure

Particular Conditions Employer s Requirements Employers Contractor s Proposals Contractors Contract Sum Analysis Schedule of Rates

Employers Requirements

Design Intent Proposals

Design brief - most important element

Salient Points to Note

z z

Clear statement of what Owner wants Varies in detail:

Very brief ? Maximum design flexibility for Contractor Very detailed ? Close control over end-product

z z

Ensure ER clearly set out quality benchmarks required As Contractor has fitness-for-purpose obligation, ERs must be clear on what the Employers purpose is

Contractor s Proposals Contractors

z z z z

D&B Documentation

Response to ERs Presentation format as stipulated in ER Part of contract documents No provisional sums allowed unless called for in ERs

Contract Sum Analysis

z z z z

Contractors lump sum price Provides detailed analysis of offer Assists in valuation of Changes and checking payment applications Part of contract documents

Question 2: But even with D&B contracts, how can we get the right contractor for the job? Risk Management & Two Stage Tendering?

Design-and-Build Procurement
Which Option?
(1) Design and Build Form with design consultants engaged by Contractor or through novation of consultants (2) Design and Build Form but retention of Architect by Employer as Architectural QP and Employers Agent (3) D&B with Architectural design by Architect engaged by Employer and Structural and M&E design by Engineers engaged by Contractor

D&B Form
(including FULL novation of consultants)

D&B Form (including novation of consultants)

Salient Features
(1) Either Contractor engages all design consultants team or Employer- engaged consultants novated to D&B contractor (2) D&B contractor engages architects and engineers not only to design the works but also to act as the appropriate Qualified Persons for the works under the Building Control Act.

D&B Form (including novation of consultants)

Organisation Structure

Client
z z z z

Employer s Agent Employers Agent Quantity Quantity Surveyor Surveyor

D&B D&B Contractor Contractor

NOVATED DESIGN TEAM

QP QP (Architect) (Architect) QP QP (Structural) (Structural) QP QP (M&E (M&E Services) Services)

Sub SubContractors Contractors Suppliers Suppliers

Contractual Link Functional Link

D&B Form (including novation of consultants)

PROS and CONS

Pros

Single point responsibility Contractor engaged professional architects and designers not only to design the works but also to act as appropriate Qualified Persons (QPs) for the works. Whole design process (statutory and non-statutory) carried out by D&B contractor => Contractor cannot argue that his design liability has been discharged by the involvement of another party

D&B Form (including novation of consultants)

PROS and CONS

Cons

Employer appointed project manager to administer the Contract May not know history

D&B Form but retention of Architect as Architectural QP and Employers Agent

D&B Form but retention of Architect as Architectural QP and EA

Salient Features
(1) Contractor engaged structural and M&E consultants (including Employer- engaged structural and M&E consultants novated to D&B contractor) (2) Employer-engaged Architect is retained to act as the Architectural QP for the works and to act as the Employers Agent.

D&B Form but retention of Architect as Architectural QP and EA

Organisation Structure

Client
z z z z

Employers Employers Agent Agent (Architectural (Architectural QP) QP) Quantity Quantity Surveyor Surveyor

D&B D&B Contractor Contractor

QP QP (Structural) (Structural) QP QP (M&E (M&E Services) Services) Own Own Designer Designer

Sub SubContractors Contractors Suppliers Suppliers

Contractual Link Functional Link

D&B Form but retention of Architect as Architectural QP and EA

PROS and CONS

Pros

Employer appointed project manager is discharged from duty to act as Contract administrator.

D&B Form but retention of Architect as Architectural QP and EA

PROS and CONS

Cons

Liability for Design in the Employers Requirements Employers Architect prepare the Employers Requirements (ER). - Contractor may rely on above fact to discharge or reduce their liability for the design of the works by arguing that they should not be liable for the adequacy or fitness of the design contained in the ER.

D&B Form but retention of Architect as Architectural QP and EA

PROS and CONS Cons (..continued)

Employers Architects statutory submissions and supervisions - Contractor may argue that since the Employers Architect had made the necessary submissions (which would include checking the submission)=> this fact should discharge or reduce his liability for any inadequacy in the detailed design.

D&B Form but retention of Architect as Architectural QP and EA

PROS and CONS

Cons (..continued)

Employers Architects Approval of the Contractors Detailed Design and Shop Drawings - Contractor may argue that such approval discharges or diminishes his responsibility and liability for the detailed design for the architectural works that have been approved by the Employers Architect.

Partial Novation Design and Build on Structural and M&E works

SIA Form with Design and Build on structural and M&E

Salient Features
(1) Architectural works are designed by the Client-appointed Architect whilst the Contractor is responsible for the design and construction for the structural and M&E works

SIA Form with Design and Build on structural and M&E

Salient Features
(2) Lump sum tenders are invited based on the following: - Full detailed drawings for the architectural works - Employers requirements comprising the design brief and performance requirements for the contractor-designed portion (structural and M&E works).

SIA Form with Design and Build on structural and M&E

Organisation Structure

Client
z z

Contractor Contractor

z z z z z z

Contractor -Designed Contractor-Designed Portion Portion

Structural Structural Works Works Mechanical Mechanical and and Electrical Electrical Services Services

Architect Architect (Qualified (Qualified Person Person and and Contract Contract Administrator) Administrator) Structural Structural Engineer Engineer (Technical (Technical advisory advisory role) role) Services Services Engineer Engineer (Technical (Technical advisory advisory role) role) Quantity Quantity Surveyor Surveyor (Full (Full pre pre and and post post contract contract services) services)

Nominated Nominated Sub -contractors Sub-contractors

Contractual Link

Nominated Nominated Suppliers Suppliers

Functional Link

SIA Form with Design and Build on structural and M&E

Organisation Structure
Contractor -Designed Contractor-Designed Portion Portion with with Novated Novated Consultants Consultants

Client
z z

Contractor Contractor

z z

Architect Architect (Qualified (Qualified Person Person and and Contract Contract Administrator) Administrator) Quantity Quantity Surveyor Surveyor (Full (Full pre pre and and post post contract contract services) services)

Structural Structural Works Works Mechanical Mechanical and and Electrical Services Electrical Services

Nominated Nominated Sub -contractors Sub-contractors

Contractual Link

Nominated Nominated Suppliers Suppliers

Functional Link

SIA Form with Design and Build on structural and M&E

PROS and CONS

Pros

Client has full control over architectural design. Contractor is responsible for co-ordination of all drawn and written information between and within the different disciplines and integration of his design with the design of the Works as a whole. Contractor assumes a fitness for purpose obligation where the choice of materials and workmanship and/or design is left to him.

SIA Form with Design and Build on structural and M&E

PROS and CONS

Cons

As the SIA Form is a traditional delivery contract, it is unclear to what extent the draftsmen of the SIA Form intended it to be used as a form of D&B contract => If such form is to be used, modifications would be required in particular the Clause 3 of the SIA Contract Conditions.

The Case Study

GFA Retail area Residential areas Height Residential Unit Mix Configuration 3 Bedroom 4 Bedroom Garden Unit Penthouse Unit Major consultants list Concept Design Architect Local Architect Structural Engineer M&E Engineer Quantity Surveyor Lighting Consultant Acoustics Consultant Faade Consultant Building Consultant Water Feature Consultant Video Wall Consultant Retail Designer

125,726m2 38,240m2 (4 levels basement retail + 4 level retail podium) 87,486m2 218 AMSL

84 nos 84 nos 3 nos 4 nos 175 high end Residential units Benoy Ltd RSP Architects Planners & Engineers Pte Ltd Architects Planners & Engineers Pte Ltd Squire Mech Pte LTd Davis Langdon & Seah Singapore Pte Ltd LPA with Parsons Lighting Acviron Acoustics Consultants Pte Ltd Arup Consulting Engineers Integrated Building Consultants OASE Asia Pacific Pte Ltd Lightscape Technologies Benoy Ltd

The Project
1. Tight Time lines from conception to completion
1. 2. 3. Retail targeted to open in 1st quarter 2009. That means that Completion & TOP need to be obtained in December 2008 for tenant fit-out. Consideration for top-down construction with fast construction cycle time Possible need for construction innovation

2. Numerous specialist works needed coupled by complicated contractual relationships

1. 2. 3. Specialist needed for related works such as fire, security, temporary works etc. Eventual contractual relationship will be complicated due to multiple contractual relationships Possible cross-liabilities

The Project
3. Numerous Authority Approvals for the construction of the building e.g. LTA, MRTC, URA and BCA requirements.
1. 2. 3. No night working which involves noise generation Stringent scrutiny for approval by authorities due to existing infrastructure works (e.g. MRT box, lines, bus routes, HT cables etc) Neighbouring high-end residential blocks less than 100m.

4. Complication of Design
1. 2. 3. Tall tower over podium Podium over MRT box (need for transfer structure) Deep basement (safety and construction risks)

What choices ?

What if ?

Common Procurement Routes in Singapore

z

Bills of Quantities (BQ) Traditional z Lump Sum (LS) Contracting z Design & Build (LS) + GMP Option

Contracting in relation to Project

z z z z z z z z z

Common Problems in Traditional

Unforeseen design problems due to technicalities Late provision of design information Splits construction and design Possible Programming problems Sub-contractor arguments due to multiple contracts High chance of variation due to clashes in coordination

High possibility of time and cost escalations Long design development time = June 2008 deadline will not be met in all circumstances for commencement of Tenant Fit-out High time and cost risk to JV owners

Design & Build - Innovation (Develop & Construct)

z

z z

Design intent drawings has to be completed i.e. key plans, layouts, framing plans sections and elevations. No need for construction detailing at this stage (usually 1st two to three months from project commencement). Tender to include Performance Specification, Prime Cost Rates, Employers Requirements etc. Contractor to bring to completion and carry out design development and be solely responsible for the design in totality. (Single point responsibility) Combines the technical know-how and knowledge of the contractor and the ability to amalgamate design and construction

The D&B Approach

in relation to Project
z z

z z z

Single point responsibility Shorter construction period due to the condensing and overlapping of the contractors programme I.e. design development commences during piling and as the work proceeds. The risk for the deep basement excavation and building on top of the MRT box lies solely on the contractor as compared to the traditional approach whereby certain risk can be linked to the Employer (Employers consultants design) Quality can be met via the Employers Requirements, Schedule of Finishes, Prime Cost Rates, Provisional Sums etc Coordination responsibility lies with the Contractor. Better time and cost certainties.

in relation to Project?
z z

Why choose the D&B Approach

As this project is of high quality and is in the heart of the Orchard Road district, quality of the Architectural works is important. Therefore, it is our recommendation that the Architect remains with the Employer ( not novated like the M&E and C&S Consultants). However, all design responsibility still rests on the Contractor Procurement package can be further tightened with a Guaranteed Maximum Price (GMP) Methodology. This is to safeguard the clients interests in any variations that may lead to cost and time implications

z z

Services Design -and-Build Design-and-Build contracts cancelled Procurement Procurement Contractor Novated Consultants responsible for Civil and Structural Engineer design and M&E Engineer construction\

Client
Project Manager Architect

(Qualified Person and Contract Administrator)

Quantity Surveyor

(Full pre and post contract services)

Single-point responsibility

Novated services contracts

Main Contractor

Domestic Sub-Contractors

Domestic Suppliers

Summary

Summary

Post Contract Administration Merging of Singapore & Hong Kong Practices

z z z

How to merge two countries one system SHK & CapitaLands concerns Variation Process AIP System / meeting CPO at site apart from project office ICU Cost Report / Cost Plan / Cost Reporting Executive Cost Report Monthly cost Review Overbudget Vs Saving Benchmark JV approval in monthly DC meeting Sub-Contract Semi system as DSC

Contract provisions to protect the Client in Contractor's VO claims

Prices to be inclusive
Article 5 of the SIA Conditions and Contract (7th Edition) Subject to adjustment of the Contract Sum for variations under Clause 12 of the Conditions . The Contact Sum and Contractors Rates and prices in the SOR, . , shall be inclusive of all ancillary and other works and expenditure, which are either indispensably necessary to carry out and bring to completion the Works described in the Contract Documents, or which may contingently become necessary to overcome difficulties before completion

Also added

adopting the GMP Conditions whereby notwithstanding clauses 1(2), 1(4) and 12(2) of the Conditions of Contract or any other provisions of this agreement and the Contract, nothing whatsoever in the Design Development and/or Construction Detailing or the Contractors compliance with such Design Development and/or Construction Detailing shall constitute a variation under this Contract, or at law and/or shall result in any increase whatsoever of the Contract Sum or EOT for the completion of the Works, unless; the GMP shall have included the latest development in rules and regulation that are being discussed and/or contemplated y the Government of Singapore that is relevant and is in connection to the construction industry of Singapore but not yet enacted up to and until the submission of the Tender.
z

the Architect issues an instruction which fundamentally and materially changes the overall floor plan area, building volume, function of an area and/or the level of quality of an area; or

GMP

Variations and Adjustment

Architects Instructions that materially change: Overall floor plan Building volume Function of an area Level of quality of an area

Changes as a result of legislation or statutory requirements Changes of Intent

Relevant Project Experiences

VivoCity (Design and Build with GMP) One George Street (Design and Build with GMP) Church Street (Design and Build) SIF Building (Design and Build with GMP) Condominium at Draycott (Lump Sum with GMP) Ang Mo Kio Town Centre Mall (Design and Build)

Other Projects with Full D&B

St Regis (JCT Form) City Square (JCT Form) City Lights (JCT Form) The Sail (JCT Form)

One Marina Boulevard (JCT Form)

Whats the beauty?

Our preference to embrace the innovatiive Design and Build (Develop and Construct) procurement approach for this project are as follows
1. 2. 3. 4. 5. 6. 7. Concurrent planning, design and construction activities. In Develop and Construct there is single-point responsibility that the contractor will be responsible for the design. A seamless involvement of the original design consultants by novation combined with early dialogue with the authorities and relevant parties. Architectural structure requirements are stipulated and drawn at time of tender and therefore this important aspect is not compromised. Higher degree of cost and time certainty (if the GMP methodology is adopted) as opposed to the traditional procurement route. Modified form of contract incorporating latest legislations. Not only a scientific approach but also an art of expression?

... and finally

? s n o i t s e u Q y An

Thank You