Early contractor involvement merged seamlessly with D&C on Great Northern Highway

Subject to a harsh climate ranging from monsoonal wet seasons to desert-like dry months, 23km of the road in five sections over 170km between Halls Creek and Kunnunurra, needed upgrading to meet new standards.
Federal Government funding became available in 2007 under AusLink’s Accelerated Upgrade Package and sections were identified as a priority due to factors such as poor geometry and narrow seal width. Also, three bridges needed improved load capacity and better flood immunity.
Main Roads WA project director Mark Hazebroek, who was the project’s client representative, said it was not possible for works to be tendered under a traditional lump sum contract, because the project was not well defined.
“The funding was announced before early project development and approvals were in place. The boom was also in full swing, so we could not afford to tie up three designers and three constructors in a detailed bidding process at a time when both our and their resources were stretched. But we wanted a contract model that would deliver a fit for purpose solution, provide the certainty of a lump sum and which would have a low demand on Main Road’s resources.
Alliancing flexibility
“From experience we knew that alliancing style contracts provide the flexibility to deliver. We also knew how challenging it is contracting in the far north, where you need to rely on natural road building materials and must therefore tailor standards to suit the harsh conditions and available materials.
“For example, pavement material is sourced from gravel pits off the side of the road so we need to locate and test it to determine appropriate pavement material standards. Likewise, it is not a well defined process to agree flood serviceability of bridges. We undertake modelling and then used engineering judgement to work out design floods for bridges.
“You can’t use that approach with a conventional Design and Construct (D&C) project, because you have to be very prescriptive. Other challenges requiring a more collaborative approach included scarcity of water for construction purposes and significant logistics getting people and equipment to site.
“So we chose, a Main Roads WA first, an early contractor involvement (ECI) process for the project development phase and a design and construct (D&C) model for delivery, with relationship contracting elements and incentives throughout.
“We saw the benefits of collaborating with industry during the ECI phase to determine a scope of works within the $116m budget, as this would ensure funding could be allocated prudently and within the timeframe required.”
ECI tender process
Hazebroek said the ECI tender process requested competitive rates for plant, labour, staff and key construction activities as well as a percentage margin for corporate overhead and profit.
BGC Contracting, Laing O’Rourke Australia and AECOM Australia were selected from four tenderers to work with Main Roads during the ECI phase.
They were reimbursed actual costs during the 8 month ECI phase. Following an intense review period, the ECI phase concluded with Main Roads accepting the D&C fixed price and TS were awarded the second phase contract. The ECI phase set the scene for enhanced relationships through the D&C phase.
Establishing and maintaining relationships
TS agreed that co-location during the ECI phase was a fundamental requirement to maximise synergies of the diverse team and to support the ‘one-team’ culture being developed.
A special-purpose project office included a large open-plan work area, breakout areas for informal interactions, an Ideas Room which facilitated capture and development of innovations and various meeting rooms.
Hazebroek said collaborative principles were transitioned to the D&C phase by utilising a co-located site office and keeping the same governance and management teams as much as possible.
“We all knew each other when we started construction. There were no new people so relationships were very strong, even when inevitable D&C contractual issues arose.
“These discussions can get difficult at times but relationships remained strong at all levels. The same senior executives stayed on our project management board into the D&C phase, providing consistency in relationships. This team met monthly, unlike a traditional D&C where they would only meet every three months.
“We also kept the same consultants to maintain the focus on team health. This included allocating time for team building activities and asking for team feedback on relationship health through regular independent health check surveys. Our ECI Management Team transitioned into the Project Review Group and met monthly during the D&C phase; the same discipline managers were involved from the ECI phase.
“We also brought alliancing principles into the D&C contract by allocating a $1m performance pool, with the team setting performance targets for Key Result Areas (KRAs). The Project Management Board had to agree on how the team performed, whether targets were met and what were the benefits and lasting legacies for the environment and community.
“This was the first time Main Roads has included a performance bonus in a D&C contract and it worked well, driving the right behaviours. We were willing to allocate an incentive for these key outcomes and performance became a big topic of discussion. It kept the managers involved and focused on delivering outstanding outcomes.”
Achievements, challenges
The primary objective of the ECI phase was to fast-track scope development, statutory approvals and pricing of this remote infrastructure project. Tasks included detailed project planning, preliminary investigations and design, development of management plans, and preconstruction works where possible.
Hazebroek said early works were brought forward into the ECI phase from the D&C phase, which increased the ECI budget from $3.5m to $12m but provided overall budget savings including time gains.
“We built the camp as part of the ECI early works, even though it would normally be part of the D&C contract, to keep the project moving. We also constructed a side-track and identified and stock-piled gravels so we could have a quick start-up. You don’t have this flexibility under a traditional D&C contract,” he said.
“Another example of the benefits of a more flexible approach was the inclusion of an on-site designer during the construction phase to avoid delays with resolving design issues from a remote site. This would normally be left out of a lump sum price in an effort to save cost. Having a designer on site proved effective during construction to manage adjustments quickly, particular in relation to foundations, drainage, culvert locations and levels – basically wherever we interfaced with the natural environment.”
Budget certainty
Team Savannah produced an early indicative price to provide a benchmark for future changes and highlight high cost areas where innovation could generate the greatest savings.
Hazebroek said this also provided early warning that the available budget (which was not known to the team) was insufficient for the intended project scope.
“This led to the scope being tailored to suit the available budget, saving considerable time and resources and avoided potential delays of re-scoping and re-pricing in the event that the final priced scope exceeded the budget. The collaborative process also enabled a very distinct allocation of risk and it was clear which party carried which risks.
“Main Roads and TS shared the risk on bridge foundations, a traditionally difficult area, as we decided cost savings could be achieved by taking on the risk jointly. This risk provision was taken out of the contingency, which kept the price down, and when the risk did not eventuate there was a win-win for both parties,” he said.
To be continued next month.