Lecture 8

Question 1

PSMC

Answer 1

Performance-Specified Maintenance Contracting

Question 2

PBMC

Answer 2

Performance Based Maintenance Contracting

- provides incentives and disincentives to achieve desired outcomes or results from the maintenance contractor

Question 3

Why do PBC?

Answer 3

• ‘do more with less’
• minimise life-cycle costs
• innovation
• increase level of service
• reduce agency costs
• shifting risk to contractors

Question 4

Why NOT do PBC?

Answer 4

• change in culture
• incomplete asset inventory data
• privatisation fears
• insufficient competition

Question 5

Value in PBMC

Answer 5

• ## increased value if Level of Service (LOS) improves or remains while const remains constant or declines respectively

Question 6

LOS

Answer 6

Level of Service

Question 7

Advantages to PBMC

Answer 7

• reduction in costs
• improve level of service
• risk transfer to contractor
• innovation
• integrated services
• enhanced asset management
• achieving economies of sale
• partnering potential

Question 8

Disadvantages to PBMC

Answer 8

• costly tendering
• longer tendering period
• uncertainty with long-term contracting relationships
• loss of agency flexibility
• reduction in competition

Question 9

ECI

Answer 9

Early Contractor Involvement

Question 10

Background to ECI

Answer 10

• hybrid of both traditional and relational delivery methods (DB and alliance)
• support alignment of goals and trust between parties
• contractor and owner develop design and detailed project plan cooperatively
• risk adjusted price, agreed upon when all the risks can be assessed.

Question 11

Contractor in ECI

Answer 11

• selected on non-price attributes
• can form a consortium with a consultant
• negotiates price(s) for works

Question 12

Benefits of ECI

Answer 12

• work collaboratively with agency
• decisions made on “best for project” basis
• innovative and value engineered options recognised and realised earlier in the project
• improved risk management
• resulting in: lower costs, greater cost certainty, shorter completion time

Question 13

Time Issues ECI

Answer 13

• design phase progresses faster (contractors and owner)
• time savings insignificant (consultant) (because of additional consultation involving contractor and lengthy price negotiation process)

Question 14

Cost Issues ECI

Answer 14

• agreement on ability to save money for owner

- mixed views on ability to increase profitability for consultants

Question 15

Quality Issues ECI

Answer 15

• ECI encourages work above expectations due to project ‘ownership’
• ECI does not include delivery of improved environmental outcomes

Question 16

Staff Involvement Issues ECI

Answer 16

• staff willing to work on collaberative approach
• some feel right culture not present within sector
• communication between all parties is essential
• presently, adequate communication depends on individuals
• design management needs to be passed to the design team

Question 17

Risk Allocation Issues ECI

Answer 17

• risk faced by contractors greater (consultants and owner)

- risk faced by contractors smaller through increased knowledge (contractors)