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Improving the Success of NEC by Systematically Monitoring and Benchmarking Project Performance Prof. Thomas S.T Ng Department of Civil Engineering, The University of Hong Kong 10 November 2015
Agenda
1) Introduction
2) Project Success under the Spirit of NEC
3) Unified Key Performance Indicators for NEC Projects
4) Continuous Improvement through Benchmarking
5) Q&A
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Project Success under the Spirit of NEC
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Project Success under the Spirit of NEC
o General perceptions from project stakeholders of NEC projects
Overall experience is positive
Progress in NEC projects tends to be faster
More efficient in resolving issues that arise during the project
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Project Success under the Spirit of NEC
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Key Performance Indicators
o Key performance indicators (KPIs) can be used to monitor and benchmark the performance of NEC projects
Highways Maintenance Efficiency Programme – Department of Transport, UK Government
Constructing Excellence, UK
Partnering Contracts in Practice at Blackpool, UK
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Key Performance Indicators
o Practical problems
Many KPIs applicable to GCC and other traditional contracts are also relevant to NEC contracts
Sometimes overly-detailed, containing too much information, making assessment of project performance difficult
Structure, coverage and level of details of KPIs vary between projects
NEC has various options and KPIs may not be the same
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Key Performance Indicators
o Typical aspects of performance in a construction project
Time, cost, quality and safety
Environmental and social impact are also becoming increasingly important
o Distinctive features of NEC
Mutual trust
Early warning system
Compensation events
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Key Performance Indicators
Constructing Excellence (UK)
Blackpool, UK
Highways Maintenance Efficiency Programme
(Dept. of Transport, UK Gov.) 9
Key Performance Indicators
o Key questions for performance monitoring and benchmarking for NEC projects
How do the features of NEC contribute to project success?
How can the features of NEC be reflected in KPIs for NEC projects?
Would the KPIs facilitate benchmarking for different NEC options?
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Unified KPIs for NEC Projects
o Drainage Services Department commissioned The University of Hong Kong to conduct a study – “Review of Performance on the Use of New Engineering Contract in Drainage Services Department”
Goal of study
To develop a unified set of KPIs for DSD’s NEC projects
Motivation
No standard set of KPIs defined specifically for NEC projects
KPIs are usually set depending on the nature of the project
KPIs used for each project is dependent on the NEC consultant
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Unified KPIs for NEC Projects
Methodology for Developing Unified KPIs for NEC Projects at DSD
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Unified KPIs for NEC Projects
o Features of the unified KPIs:
Integration of quantitative and qualitative aspects
Comprises 5 constructs, 8 main KPIs with 34 associated parameters
Compared with > 105 parameters in the existing system
Selection of only the most relevant key indicators and parameters in terms of project performance
Unified KPIs designed for ECC and TSC projects at DSD
With a series of TSC-specific KPIs due to difference in nature 13
Unified KPIs for NEC Projects
3-tier Approach for Unified KPIs
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Input from Project Stakeholders
o Time
Risk mitigation meetings is an important aspect of teamwork promoted in NEC projects which can be beneficial in a number of areas for the project (thus helping with project progress)
o Cost
Entrusted works can cause project to appear over-budget but in fact it may not be the case (final sum also increases)
Relationship between project contingency and compensation events should be shown to reflect relative risks associated with the project
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Suggestions from Project Stakeholders
o Quality
Defects – focus should be on good spirit of teamwork in NEC rather than emphasizing on defects (recording defects as a KPI may have an adverse effect on team environment)
Classification of major and minor defects should be changed – difficult to differentiate and also difficult to compare between projects
Non-conformance that does or does not affect the functional or designed performance is a potential replacement KPI (more reflective of the practice on site and easier to judge)
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Unified KPIs – Time
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Unified KPIs – Cost
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Unified KPIs – Quality
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Unified KPIs – Safety
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Unified KPIs – Social & Environmental
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Unified Parameters – Time
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Unified Parameters – Cost
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Unified Parameters – Quality
Key Differences
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TSC-Specific KPIs
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Validation of Unified KPIs & Parameters
o The unified KPIs template was distributed to the six selected NEC project teams for completion
o In general, the templates were successfully completed by the six selected NEC project teams without much difficulty
o Comments received were relatively minor and on finer details such as suggestions on the wording of certain KPIs or parameters for better clarity, and adjustments on the range of certain parameters
o Final round of adjustments was made after the validation process
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Case Project – Time (KPIs)
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Case Project – Cost (KPIs)
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Case Project – Quality (KPIs)
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Case Project – Safety (KPIs)
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Case Project – Social & Environmental
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Case Project – Time (Parameters)
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Case Project – Cost (Parameters)
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Case Project – Quality (Parameters)
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Case Project – Safety (Parameters)
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Case Project – Environmental (Parameters)
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Continuous Improvement & Benchmarking
o Systematic monitoring and benchmarking of project performance is essential for project success and continuous improvement
o Unified KPIs can help identify aspects of a project that performed well (relative to other projects) and areas where improvements are needed
o Unification of KPIs is needed for proper benchmarking so that results and interpretation would not be skewed
o Structure of unified KPIs allows for streamlined information for various levels of management (from top level to project level) so that appropriate actions could be taken when needed
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o Main KPIs reflect performance in “key” aspects, parameters provide additional supporting details
o Completion of KPIs and review process at quarterly intervals is considered more appropriate
o Implementation of NEC is still relatively new – need larger sample of NEC projects for meaningful benchmarking
o Benchmarking is useful for comparing different NEC projects, but also useful for comparing NEC projects against non-NEC projects
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Continuous Improvement & Benchmarking
o Performance of NEC projects needs to be monitored continuously
o A set of unified KPIs is indispensable for benchmarking purpose
o DSD has for the first time established a set of unified KPIs for NEC projects
o Unified KPIs for NEC projects should reflect he NEC’s features, i.e. mutual trust, early warning system, & compensation events
o Through the unified KPIs, it is possible to identify the merits and weaknesses of NEC over traditional contracts and increase project success
o Collaboration is needed to improve the reliability of the unified KPIs 40
Conclusions
Q & A
Thank you
Q & A
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