A recent report, "Strategic Transport Infrastructure Needs to 2030," (www.oliverwyman.com/transportation-infrastructure-2030.htm) released by the Organization for Economic Cooperation and Development (OECD), found a need to invest $53 trillion in infrastructure during the next 20 years worldwide – the equivalent of three times the European Union's $18 trillion GDP. More than $11 trillion alone will be required for ports, airports, and key rail routes.
Other items highlighted in the report from the OECD included:
- The greatest amount of investment, $17.7 trillion, needs to be made in water infrastructure, followed by $10.9 trillion in telecom.
- By 2030, roads will require $7.5 trillion in investment, while electricity will need $6 trillion.
- Asia has the most airport investment planned, at $135 billion, followed by North America at $128 billion.
- North America has the most gas supply infrastructure investment planned, at $1.7 trillion, followed by Eastern Europe at $1.2 trillion.
While those are impressive numbers and up from the estimated $41 trillion needed just two years ago, the most striking aspect of the report was the following statement by Alex Wittenberg, head of the Oliver Wyman Global Risk Center: "Better risk management of large investment projects could free-up $5 trillion, or about 10 percent of total required infrastructure investments, for other purposes by minimizing cost overruns and delays.Talk to any contractor about what is the most important aspect of project delivery beyond safety and it's delivering a project on time and on budget. Yet we have seen numerous studies that show upwards of 25 percent of project costs are tied to change orders, RFI's, rework, and design clashes that are not found until construction begins due to a silo-type project delivery approach. In an era where tax and private dollars are scarce and intolerance for waste is at an all-time high, to be successful we have to look at doing things differently, more modern, and more accurately. While the trend has started, it needs to accelerate; we need Project Delivery 2012 – not 1912.
Array of project delivery choices
There is an array of project delivery strategies for infrastructure that range from those where the owners are fully involved to the opposite end where their involvement is minimal. In some cases, the owner is an active participant from the initial planning and design phase through commissioning and operations, to those where the owner has minimal involvement and relies on a turnkey designer or contractor to coordinate all aspects of the project, including its long-term maintenance and operation. Determining which particular project delivery strategy to choose can significantly affect the success of a large infrastructure project, especially today with rising project complexity and more aggressive timelines and budgets. We all know that the delivery strategy drives project cost, quality of design, construction, long-term maintenance, and the project completion date. Project owners planning large infrastructure projects can improve their chances of success by a thorough review of key objectives for the project and aligning the delivery strategy best able to achieve it.
Today there are a number of delivery options (see Table 1), but paramount to success is to have the project owner's objectives and project organizational characteristics dictate which project delivery strategy to use. In all cases, the most appropriate delivery strategy will also depend on the specific project circumstances and in some cases the governmental approval to use a particular approach in a particular state or country.
So this leads us to the key question. Given the options of project delivery methods and the current industry conditions of protracted financial uncertainty and infrastructure privatization with rapidly developing technology, if these current industry conditions persist, will the "predominant" project delivery method change, and if so, how far will the infrastructure design and construction industry be willing to transform itself to deliver projects more efficiently?
The new necessity: More integrated project workflow
Traditionally, project data created by the designer has always been somewhat isolated and fragmented from the rest of the project team – owners and contractors alike. Whether due to incompatible formats or contractual barriers, it created silos of information.
To aid in the removal of these barriers, the design and construction industry needs to communicate more effectively the dramatic improvement that integrated and collaborative project delivery methods have had on schedule, budget, quality, litigation, and the enjoyment factor for construction projects. Owner education is the single-most important factor in maintaining and enhancing the use and continued refinement of collaborative delivery methods.
Traditional design-bid-build approaches have been in use for centuries and much has changed within the infrastructure community since their inception. Based on conversations with professionals in the industry, not adapting the delivery approach and associated technology to current conditions has led to an inefficient and liability-ridden process sometimes costing as much as 15 to 20 percent of a project. The simple reason is the inability of the contractors to work directly with the designers during the initial design since generally the contractor who will do the work hasn't been selected.
These costs are due to everything from design errors found in the field rather than in the office, requiring extensive redesign work through change orders, to lack of understanding of the designer's intent by the contractors, causing requests for information and waiting days to a week to hear back. In some cases the issue is a design or schedule collision that can cost millions of dollars and weeks of time to correct that almost never can be found in a segregated project approach. One customer said they have seen negative cost impacts of upwards of 25 percent on some projects. The good news is this is rapidly changing.
Consider the following:
- Integrated delivery methods are appropriate in a growing or decreasing market, even more so during a recession when schedule and price certainty are critical to owners with limited budgets.
- Early contractor participation in the design process is critical to successful projects by confirming constructability, value analysis, estimating costs of initial design segments, and updating a running cost against project budgets. The integration of design and construction teams through the use of collaborative processes from the beginning of the design process reduces costs and improves schedules.
- Discussion of the numerous variations of collaborative delivery methods with agreed upon terminology describing those variations have the potential to reduce confusion on the part of owners, who may not clearly understand integrated project delivery (IPD) processes – especially owners who may have only built a single project.
- The design and construction industry is critical in the discussion to clarify the benefits of an integrated collaborative
Infrastructure projects are becoming larger and more complex, with shorter schedules, at a time when the need for better analysis and visualization for approaches like sustainable design are becoming a requirement. Today, more disciplines and organizations are involved earlier in the process. To keep projects moving, they all need to share design data easily, efficiently, and in a timely fashion.
In addition, clients are starting to demand true life cycle management – not just simple life cycle costs (i.e., OPEX) but true ROI and total benefits of a design approach and its associated construction. This creates many great opportunities downstream for the civil engineer's information and contractor's knowledge, for use by facilities coordinators, work crews, subcontractors, and suppliers that need rich, interactive data at their point of work to do their jobs more effectively.
This integrated approach for infrastructure project delivery stems from current challenges facing the design and construction industry, and the need for a more holistic view and understanding of the project from three key perspectives – the designer, the contractor, and more importantly, the owner. Most of the work today around integrated approaches – from Project Alliancing, IPD, to public-private partnerships (PPPs) – has been in the private sector where owners have more control and less rigid regulations about how they approach projects. With the right education, the same benefits easily could be realized from a public infrastructure owner's perspective, but that requires administrative changes and a rethinking of the decades-old mantra: "We've always done it this way."
IPD, for example, is based on Australia's Project Alliancing, a framework that allows project contributors to focus on the design problem rather than litigation prevention, taking the approach of mitigating issues first and foremost, not litigating them. Often today, when owners sit down with the members of a project team, they view them as a group of potential litigants versus a collaborative team. This is partly driven by industry history and past experiences but also by no one discipline truly "knowing" all the intricacies of a project and having a holistic view of the project. In fact, many seated at the table don't have the perspective of what is required for successful project execution across all disciplines and how their decision may impact others. Traditional understanding would only occur from an individual discipline perspective.
Within pockets of the infrastructure design and construction community interest has been growing around understanding IPD and how it can be leveraged with transportation, water, environmental, and land development projects. And now with the shifting of funding from public to private enterprises and the dramatic growth globally of an even more integrated approach – PPPs – this interest is at an all-time high. However, it is important to note that to achieve maximum benefits, any changes in process should be mirrored with changes in technology and workflows to support it.
Technology to support more integrated project delivery
Better collaboration on designs by all team members – designers, contractors, and owners – during all the phases – planning, preliminary and detailed design – is needed, not just simple coordination. As my colleagues in the field often have expressed, this has proven to dramatically reduce the up to 20 percent or more of project costs associated with rework mentioned previously. By doing so, the requests for information (RFIs), associated change orders, and general errors and omissions are reduced through early detection and better understanding of conflicts and ability to resolve them before construction. There are many causes and none are intentional, but one key contributing factor is digging through and processing hundreds, if not thousands, of sheets of paper or 2D CAD files with millions of bits of information, looking for conflicts or missing information, even transposed numbers. The task is daunting and most of the time nearly impossible to make error proof, no matter how many quality assurance cycles, tight timelines, or strict budgets. Factor in a change in design scope and it multiplies the challenge dramatically, maybe even exponentially.
This is where Building Information Modeling (BIM) comes in. Designing with intelligent 3D models and using a BIM workflow to facilitate 4D (time) and 5D (cost) discussions simultaneously on the design are critical components to changing this dynamic. On the horizon now is 6D (sustainability analysis), which will become increasingly more important to infrastructure design and delivery approaches. BIM is a technology process, whereas the IPD methods are a behavioral and legal process, and allows teams the framework to foster better collaboration and set the stage for more efficient design and construction process overall.
BIM is not required by the IPD approaches, as some of these approaches predate this technology. But many IPD through PPP contracts today include BIM as a requirement because of its enabling capability for design, construction, and especially for the benefits it provides owners (as seen in the McGraw-Hill Smart Market Report; see Figure 1) who in these more integrated approaches are key stakeholders. It is all about a convergence of tools, computing power, knowledge requirements, and the need to do things smarter, more cost effective, and more efficiently.
Having this technology process is helping to enable a rethinking of the behavioral process toward more integrated project approaches such as IPD and PPP in order to provide more predictable, accurate, and responsible outcomes. The combination of BIM with IPD and PPPs is a great improvement on the process by itself; however, neither can achieve full success in collaboration without the synergy provided in combination with the other.
Infrastructure industry response
Consider my opening question: If these current industry conditions persist, will the "predominant" project delivery method change, and if so, how far will the infrastructure design and construction industry be willing to transform itself to deliver projects more efficiently?
Some designers have stated, "We have been doing integrated design-build for a while already; we just didn't name it this." "This is what design-build is all about." Some of the principles such as collaboration – designers and contractors working closer together and sharing, albeit 2D information – are similar and a very good start; however, it really only touches on the true intent of what more integrated project delivery methods (IPD or PPPs) could achieve.
Key to both is that the most fundamental core principles of more integrated approaches continue to be organization and leadership, fostered by mutual trust and respect. When compared with design-build for example, IPD, PPPs, and other integrated approaches include the owner as a key stakeholder involved throughout, have formal legal arrangements, and set organizational and leadership requirements that are rarely included in design-build agreements.
There is no doubt that trust and respect are critical to both design-build and more integrated forms of project delivery. But many who are familiar with IPD or PPPs agree that they go well beyond design-build, and PPPs even a step beyond that to term-based asset ownership and true sharing of risk and rewards. In addition to the above, other main differentiators included in the integrated and partnership contracts are mutual benefit and reward requirements and mandates of open communication and data sharing, as well as early and ongoing involvement of all key participants including the owner. These principles are recognized as the true differentiators that separate integrated and partnership delivery approaches from other project delivery methods that have come before it. Owner education and involvement will be critical and the design and construction industry needs to communicate more effectively the dramatic improvements in on time/on budget construction projects that collaborative project delivery methods have brought about.
Perhaps one may argue even more so that during a recession, when schedule and price certainty are critical to public or private owners with limited budgets, there are significant advantages of contractor participation early in the design process in confirming constructability, value analysis, estimating costs of early design segments, and updating a running cost against project budget. The project owner's culture has a significant influence on the appropriate choices for project delivery strategy and as such need to be kept up to date with modern tools and processes.
In Project Delivery 2012 and beyond, it will be critical for the infrastructure design and construction industry to clarify the benefits of more collaborative and integrated delivery methods and associated technology such as BIM to owners. In doing so, we can help to produce cost-effective, high-quality designs and finish construction projects with fewer mistakes on time and on budget, helping us all to recoup some of that $5 trillion stated in the OECD study.
Project delivery case studies
Download the report at http://onlinepubs.trb.org/onlinepubs/tcrp/tcrp_lrd_39.pdf
Terry D. Bennett, LS LPF, MRICS LEED AP, is the senior industry program manager for civil engineering and planning at Autodesk, responsible for setting the company's future vision and strategy for technology serving the planning, surveying, civil engineering, and heavy construction industries. He has been a practicing professional for the last 28 years and was the company manager and lead designer for a civil engineering, geotechnical, and land surveying firm. Bennett currently serves on Harvard's Graduate School of Design's Sustainable Infrastructure Advisory Board, is a founding editorial board member of Rebuilding America's Infrastructure magazine, and a council member on the Urban Land Institute's Public Development and Infrastructure Council.