Section 5.4
Work Planning and Delivery
Investments are conceived and delivered in many different ways. The different models used for work planning and delivery have an impact on the resource allocation approach.
Work Planning and Delivery
Investments are conceived and delivered in many different ways. The different models used for work planning and delivery have an impact on the resource allocation approach.
5.4.1
TAM Work Planning and Delivery
The approach used to deliver work can have a major impact on what investments an organization makes, the resources required to perform work, and work timing. Transportation agencies have many options for performing work, including using internal forces to perform work, and/or using a variety of different contracting approaches.
Typically, U.S. transportation agencies perform some or most of their maintenance work internally, and contract out a large portion – if not all – of their capital projects. The line between the types of work performed as maintenance and capital projects varies by organization and is often blurred. Agencies can often use maintenance forces in a flexible manner to perform a wide variety of activities, including preservation activities on pavements, bridges and other assets. However, in the near term, an organization’s maintenance resources – staff and equipment, in particular – are fixed. Consequently, the asset owner is challenged to optimize use of these resources to meet immediate needs, such as winter maintenance and incident response, while performing additional work to improve asset conditions wherever possible.
The ability to contract out maintenance work, such as through Indefinite Delivery/Indefinite Quantity (IDIQ) contracts, provides an agency with flexibility in meeting near-term needs. Other approaches for contracting out maintenance work include use of portfolio or program management contracts in which certain operations and maintenance responsibilities for some group of assets is delegated to a contractor over a specified period of time. Section 4.3.3 provides additional details on considerations involved in outsourcing asset maintenance.
Regarding contracting approaches for capital projects, in the U.S., most transportation agencies rely on Design-Bid-Build (DBB) model for delivering their capital programs. With this approach, the project owner designs a project (or contracts for a private sector firm to prepare a design) and solicits bids for project construction following completion of the design. This provides the project owner with control over the process, but can be time consuming and can result in cases where bids for project construction exceed the expected cost developed during design. In recent years, many transportation agencies in the U.S. and abroad have explored improved approaches to work planning and delivery to accelerate completion of needed work, leverage alternative financing approaches and transfer program and project risk.
All of these approaches are intended to reduce the time from initial conception of a project to its completion, and in many cases transfer risks associated with project completion from the public sector to the private sector. As these examples help illustrate, major trends in this area include:
- Group work together by geographic location or type of work to develop fewer, larger, and more easily contracted projects
- Use Design-Build (DB), Design-Build-Finance-Operate-Maintain (DBFOM) and other contracting strategies, wherein a single contract is awarded to design and complete a project, as opposed to separate contracts for design and construction
- Encourage development of Alternative Technical Concepts (ATCs), wherein a contractor proposes an alternative approach to meeting a contract requirement in the bidding phase
- Select contractors earlier in program/project development through use of Construction Manager-General Contractor (CM-GC) arrangements, where a contractor is selected as Construction Manager while design is still underway
- Use IDIQ contracts and other flexible contracts to provide a more efficient mechanism for performing smaller projects
- Incorporate performance-based specifications, time-based incentives and other specifications in contracts to improve project outcomes
- Outsource operations and maintenance of an asset using program or portfolio management contracts.
Both in the U.S. and abroad there are many examples of public agencies making extensive use of alternative contracting strategies, such as Public-Private Partnerships (P3s) and performance-based contracts to speed project delivery and transfer risk.
While alternate strategies for work planning and delivery hold great promise, all of the approaches described here have advantages and disadvantages and carry their own risks. Use of alternative approaches can save taxpayers money and provide improvements more quickly than a traditional model. Success stories typically result from improving the efficiency of the process and incentivizing the use of better technology and methods, but there are also many cautionary examples in which these strategies have failed to achieve cost savings, time savings or risk transfers as desired. Asset owners should consult the separate body of research in this area (referenced at the end of this section) when exploring the use of alternative approaches and carefully weigh the expected return, advantages and disadvantages of whatever delivery approaches they consider.
5.4.2
Implications for Resource Allocation
The different work delivery approaches that are available should be considered both at the outset of the resource allocation process, and as part of finalizing the resource allocation plan. Frequently it is necessary to consider multiple allocation scenarios using different delivery approaches.
The availability of alternative approaches for work delivery creates opportunities for organizations to improve asset conditions and address other needs in a more efficient manner, thereby performing needed work sooner, at a lower overall cost and/or with less risk to the organization. It is important to consider different work delivery strategies both early in the resource allocation process (as part of Step 2 – Determine Constraints) and at the end of the process (in Step 7 – Finalize Allocation and Plans).
Considering alternative delivery approaches early on as investment needs are identified helps identify options and determine approaches that an organization can use to achieve the best results. For instance, in determining how to allocate resources for asset maintenance an organization may wish to explore the potential for outsourcing additional maintenance work if there are specific constraints on staff or materials that could be relaxed using an alternative delivery approach. To properly assess the alternatives it may be necessary to define multiple scenarios, such as a scenario in which a “business as usual” approach is used for delivery, and a second scenario in which increased flexibility is assumed regarding use of different delivery methods.
Once an initial allocation of resources has been made, it is important to review options for delivery to revisit prior assumptions and identify opportunities to lower costs and improve outcomes. For instance, once overall budget levels have been established by asset and/or work type in a financial plan, an organization may need to revisit delivery options when scoping specific maintenance activities or capital projects.
The practice examples describe improved delivery approaches used in the U.S. and abroad, and discuss their impacts on resource allocation.
The Work Planning and Delivery checklist lists factors to consider during the resource allocation process for maintenance and capital projects to leverage opportunities for improved work planning and delivery.
Colorado DOT
In 2011 CDOT’s Innovative Contracting Advisory Committee (ICAC) began work to develop a structured approach for selecting the best delivery mechanism for a given transportation project. Through a set of workshops ICAC identified different factors that the agency should consider in selecting a delivery approach, including five primary factors (project complexity and innovation, delivery schedule, cost considerations, level of design, and risk assessment) and three secondary factors (staff experience and availability, level of oversight and control, and competition and contractor experience). ICAC then defined a three-stage approach for making the delivery decision. In Stage 1 CDOT identifies project goals, constraints and attributes. In Stage 2 CDOT assesses the primary factors, and in Stage 3 assesses the additional secondary factors. The approach is illustrated in the figure. As of 2018 CDOT has used the approach to assess 25 different projects, resulting in the selection of a mix of projects using DBB, DB and GM-GC.
Source: TR News 316 http://onlinepubs.trb.org/onlinepubs/trnews/trnews316.pdf)
Western Australia
Main Roads Western Australia (MRWA) is responsible for Western Australia’s highway and main road network. MRWA represents one of the largest geographically spread road agencies in the world, covering an area of 1.55 million square miles. The agency is responsible for approximately 11,200 miles of Western Australia’s 93,000 mile network (12%) which carries 60% of the state’s traffic. MRWA has been a leader in trialing alternative procurement models to manage operations, maintenance and renewal on their road network.
Beginning in the mid 1990’s MRWA underwent major restructuring, and at that time shifted from performing highway asset management and maintenance activities using internal forces to outsourcing these activities through a set of 10-year contracts. As initial outsourced contracts came to an end, MRWA took the opportunity to capture lessons learned over the previous years and researched other national and international methods for delivery of maintenance activities. These investigations concluded that MRWA should pursue a new procurement strategy based on the use of Integrated Service Agreements (ISA). An ISA is a contracting arrangement in which the private sector and agency staff work together to deliver, in an integrated manner, a range of services including Operational Asset Management, Road Maintenance, Improvement Delivery and Network Operations. In essence the ISAs “in source” private sector partners to help deliver the range of integrated services that are core to the MRWA business. To do this the ISAs incorporate a performance specified outcome-based approach. The agreements integrated a number of services that were being delivered by a range of different methods and enabled MRWA to regain much more control and influence on when and how the services are delivered, particularly in regard to asset management decisions for maintenance. The shift to this contracting model was driven by:
- The need to rebuild capability and capacity within Main Roads and thereby assist Main Roads to remain an informed purchaser of asset management services. This was achieved by forming close, collaborative working relationships with industry where the best people and systems from each organization are used to deliver “needs based” asset management and “best for network” outcomes;
- The understanding gained from past models that risk needs to be appropriately allocated to the party best able to manage the risk; and the need for flexibility in the model to adapt to changes in network needs and broader Governance issues.
Post-ICA contract renewals further transitioned contract models to advance several agency objectives. These goals included centralizing strategic asset management work, retaining agency core capabilities, demonstrating value for money, continuous improvement and fit for purposes reporting framework and target setting. Recent contracts build in ICA learnings, and are a reflection of changing market factors and enhancing corporate capabilities.
Colorado DOT
In 2011 CDOT’s Innovative Contracting Advisory Committee (ICAC) began work to develop a structured approach for selecting the best delivery mechanism for a given transportation project. Through a set of workshops ICAC identified different factors that the agency should consider in selecting a delivery approach, including five primary factors (project complexity and innovation, delivery schedule, cost considerations, level of design, and risk assessment) and three secondary factors (staff experience and availability, level of oversight and control, and competition and contractor experience). ICAC then defined a three-stage approach for making the delivery decision. In Stage 1 CDOT identifies project goals, constraints and attributes. In Stage 2 CDOT assesses the primary factors, and in Stage 3 assesses the additional secondary factors. The approach is illustrated in the figure. As of 2018 CDOT has used the approach to assess 25 different projects, resulting in the selection of a mix of projects using DBB, DB and GM-GC.
Source: TR News 316 http://onlinepubs.trb.org/onlinepubs/trnews/trnews316.pdf)
Western Australia
Main Roads Western Australia (MRWA) is responsible for Western Australia’s highway and main road network. MRWA represents one of the largest geographically spread road agencies in the world, covering an area of 1.55 million square miles. The agency is responsible for approximately 11,200 miles of Western Australia’s 93,000 mile network (12%) which carries 60% of the state’s traffic. MRWA has been a leader in trialing alternative procurement models to manage operations, maintenance and renewal on their road network.
Beginning in the mid 1990’s MRWA underwent major restructuring, and at that time shifted from performing highway asset management and maintenance activities using internal forces to outsourcing these activities through a set of 10-year contracts. As initial outsourced contracts came to an end, MRWA took the opportunity to capture lessons learned over the previous years and researched other national and international methods for delivery of maintenance activities. These investigations concluded that MRWA should pursue a new procurement strategy based on the use of Integrated Service Agreements (ISA). An ISA is a contracting arrangement in which the private sector and agency staff work together to deliver, in an integrated manner, a range of services including Operational Asset Management, Road Maintenance, Improvement Delivery and Network Operations. In essence the ISAs “in source” private sector partners to help deliver the range of integrated services that are core to the MRWA business. To do this the ISAs incorporate a performance specified outcome-based approach. The agreements integrated a number of services that were being delivered by a range of different methods and enabled MRWA to regain much more control and influence on when and how the services are delivered, particularly in regard to asset management decisions for maintenance. The shift to this contracting model was driven by:
- The need to rebuild capability and capacity within Main Roads and thereby assist Main Roads to remain an informed purchaser of asset management services. This was achieved by forming close, collaborative working relationships with industry where the best people and systems from each organization are used to deliver “needs based” asset management and “best for network” outcomes;
- The understanding gained from past models that risk needs to be appropriately allocated to the party best able to manage the risk; and the need for flexibility in the model to adapt to changes in network needs and broader Governance issues.
Post-ICA contract renewals further transitioned contract models to advance several agency objectives. These goals included centralizing strategic asset management work, retaining agency core capabilities, demonstrating value for money, continuous improvement and fit for purposes reporting framework and target setting. Recent contracts build in ICA learnings, and are a reflection of changing market factors and enhancing corporate capabilities.