Using project controls to achieve an integrated approach to new contracting methods
This article provides insight into the role of project controls and how it can help achieve an integrated approach used in new contracting methods.
Canada is a well-recognized leader of Public Private Partnerships (P3s) and continues to successfully deliver significant and complex P3s when used on the right projects. The P3 model typically shoulders most of the design and delivery risk onto the supply chain, and recent changes in the market have led to an increase in alternative procurement models being used to distribute this risk more evenly and gain other advantages to enable successful project outcomes.
In recent years, projects have become increasingly larger and more complex, leading to increased delivery challenges. These challenges, when combined with material and labour shortages and the rising cost of goods, have led to alternative contracting models such as Alliancing and Progressive Design and Build (DB) gaining popularity in the market.
These more collaborative contracts are focused first on building a relationship between the owner and the delivery team. They involve a collaborative “one team” culture, shared risk profile, open book policy, and data transparency, all of which lay the foundation for securing mutually beneficial outcomes.
Data management is fundamental to success
These alternative contract models require a shift in data management requirements to effectively support the development and execution of the contract. Significantly more data points will become available that need to be identified, tracked, and collated in a meaningful way to effectively support status reporting and decision making through the life of the contract.
Crucial to the successful management of this data, and overall implementation of this newer, more progressive way of contracting is to have an integrated project controls function to provide a single source of truth and heartbeat for the project.
The integrated project controls function continually measures, monitors, and interprets inter-disciplinary data to meet the requirements of the stakeholders. By establishing an integrated project controls function from the outset, information can be organized and understood to better guide the project strategy, to define the delivery plan and ultimately inform the owner’s decision on how to proceed with the project through its lifecycle.
Cutting through complexity
When an Alliance or Progressive DB contract type is selected, the chosen delivery team will often be entering into a contract with an immature design, high-level budget, and limited understanding of the delivery risk. Their first tasks involve working with the owner to develop the design, schedule, and cost; typically, on an open book cost reimbursable basis.
During the development phase, the owner will have better line of sight and access to more performance and cost data than would normally be the case under a P3 / Fixed Price arrangement. To leverage the power of this information, an integrated project controls function can efficiently capture and analyse the available data to support the owner’s role as contract administrator. The project controls team plays an important role as the design is developed and the parties work together to collectively establish the scope, cost, and delivery schedule by providing benchmarked data, data analysis, and helping to plan the project in the most efficient way.
Risk and change management
Another fundamental role fulfilled by project controls is to develop and analyze the project risk profile, first identifying and assessing the risks and undertaking statistical analysis to determine the potential cost and schedule impact which then informs the contingency budget and allocation of responsibilities between the parties. Taking the time to properly understand and assess risk is crucial in a contracting arrangement which shares risk between the owner and delivery team and in some cases rewards the contractor for effectively managing their risk within budget.
Given the nature of these contracting methods, a high volume of change is expected, especially in the early stages, as the project develops. An integrated project controls approach is required to ensure these changes are accurately identified, quantified, reviewed, and implemented to maintain a current and accurate position in terms of scope, cost, and schedule.
Looking to the future
This shift in contracting approach is an exciting development for Canada. It presents an opportunity to bring the best elements, and the learnings, from the early adopters of the strategy in the United Kingdom, Australia and elsewhere in the world. Although success with collaborative contracts has been demonstrated in these markets, there are fundamental building blocks required to support that success, and a holistic, detailed, and integrated project controls approach goes to the heart of the model and its success.
Turner & Townsend is a global professional services company specializing in program management, project management, cost and commercial management and consulting across the real estate, infrastructure and natural resources sectors. With 119 offices in 50 countries, we draw on our extensive global and industry experience to manage risk while maximizing value and performance for our clients.
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