embedding evm in good contracts for good governance

8/7/2019 Embedding EVM in Good Contracts for Good Governance

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Embedding Earned Value Management inGood Contracts for Good Governance

Breda Ryan, BAA Project Controls Leader12 th May 2010


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Heathrow Airport

68 million passengers per year (185,000 a day) 90 airlines flying to 180 destinations

Nearly 70% of the UKs longhaul flights go from Heathrow More than half of all UK air freight Heathrow employs 70,000 people and supports 100,000indirect jobs

1950s Today


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Objectives

Continually improve the passenger experience

Making every journey better

Heathrow: Europes hub airport of choice Reduce operating and airline costs Increase airport resilience and capacity


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Terminal 5

4.3 billion project Opened on time and on budget in March 2008 Capacity for 30 million additional passengers annually


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The new Terminal 2

1 billion replacement for Terminal 2 20 million passenger capacity terminal The Star Alliance will operate from under one roof Environmentally friendly design


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Airline Relocations

S t a r

Star

Star

T5 T3

T1

T2A

T4

T2

T2


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Terminal 1

60 million investment More spacious, brighter check-in which is easier to navigate Baggage Reclaim, Immigration, Security and Arrivalsmodernised


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Terminal 3

130 million ongoing spend Modernised check-in completed 90 million landscaped forecourt


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Terminal 4

100 million modernisation of check-in A 6,000m2 extension into the forecourt


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Heathrow in 2013


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How do we achieve success?


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Intelligent Client

Define the brief and the requirements clearly Remove obstacles and deliver on commitments Enforce the contract both ways Evaluate contractor performance and project effectiveness Accept that the luxury of flexibility has gone


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IntelligentContractCompliance

IntelligentConscience

IntelligentInformation

IntelligentCustomer

ProgrammeDeliveryManager

ProgrammeControl

Manager

ContractingOfficer

CommercialManager

Programme Leadership Team


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P r o g r a m m e

C o n

t r o

l M a n a g e r

Cost Schedule Earned Value Reporting Risk Opportunity Budgeting Forecasting Data Integrity Owner of one

version of thetruth

IntelligentInformation

P r o

g r a m m e

D e l

i v e r y

M a n a g e r

Defines Standardsand Requirements

Selects Source Controls Budget Manages Change Expedites Approves overall

Delivery strategy Intelligent

Customer

C o m m e

r c i a l M a n a g e r Programme

Director advisor onCommercialmatters

AcquisitionStrategy

Quality andDefinition of theStatement of Works

Source Evaluation Supplier Evaluation Supply Chain

Manager Intelligent

Conscience

C o n

t r a c

t i n g

O f f i c e r

Competition Source Selection Elevated

Negotiator Dispute Resolution Enforcer Official Signatory

for all contractmatters

Approve Changes Intelligent Contract

Compliance

Programme Director

Programme Control and Acting Acquisition Director


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Intelligent Contractor

Know the contract Work to contract and stay aligned

Cooperate Innovate

Staff with the right quality of talent Produce quality products

BE ABSOLUTELY SAFE:

No harm to operatives, staff or passengers


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Set the Plan Define; Purpose & strategy

Scope of Work Plan of work includingmilestones and deliverables

Define; SMART Objectives Define Key Metrics Define Targets and Goals

Measure

Performance

Observation & Involvement Questioning & Discussion Statistics/Actual data Reports; regular reporting exception reporting

Monitor & ComparePerformance against Plan

To Assess; if everything is going according to plan the need for corrective action Opportunities for performance improvement Comparative Reporting Variance Reporting Performance Analysis Benchmark Reporting

Key Milestone Reports Resource Utilisation Target Performance etc.

Management Action Proactive Devices;

Action to ensure standards are met includeincentives, motivators, training, coaching,persuasion and discipline

Do nothing Change the standards Implement corrective action Implement improvement action

Proactive Responses;

THE CONTROL

LOOP

Feedback andCorrective Action Set the Plan

Define; Purpose & strategy



Set the Plan Define; Purpose & strategy



Measure

Performance


Measure

Performance








Comparative Reporting Variance Reporting Performance Analysis Benchmark Reporting









Proactive Responses; Do nothing Change the standards Implement corrective action Implement improvement action


THE CONTROL

LOOP

Feedback andCorrective Action

Incorporate signedoff change

Support Risk/Opps Management

Apply The Control Loop


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Where does EVM fit in?

Programme Controls Mandate EVM applicable on all contracts

PER Project Controls & Time (schedule)

Management

Supplier Obligations

EVM Z Clause WPEP Contract for each stage of the

Gateway Process


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project specific requirementsstandard requirements

DGS-IGS ProcessProject Management Processes

Design Performance Standards

ProjectExecution

Requirements(PERs)

BAA Works Terms BAA ProfessionalServices Terms

BAA Service Terms(commodity & LPI only)

Programme Execution Plan (PgEP)

Project Execution Plan (PEP)

Work PackageExecution Plan

(WPEP)

BAA documentfor project (single

/multi suppliers)

BAA/Supplierdocument

BAA documentfor multi-projects

Value in PartnershipFramework

Agreement

Contract Environment VIP Framework Suppliers


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Project Execution

Implemented inconjunction with...

ManagementPolicies

BAA OperatingRequirements

TechnicalStandards

13 Project Execution Requirements


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Principal Benefits of the NEC Form

Flexibility Multi disciplinary Flexible Design Allocation Choice of pricing options lump sum, target cost, cost plus

Clarity and Simplicity

Written in ordinary language Simple clause structure; avoids legal terms Subjective decisions minimised Provision of guidance notes and flow charts

Stimulus to good project management

The ECC is a management tool as well as a set of legal terms Requires timely and clear decision making process Clear allocation of responsibility Proactive risk management procedures Encourages collaborative working


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Main Option(A)

SecondaryOption

(X1)

SecondaryOption

(X2)

SecondaryOption

(X3)

SecondaryOption(X15)

SecondaryOption(X18)

SecondaryOption

(Y(UK)2)

Contract Data Parts 1 & 2

Main Option(B)

Main Option(C)

Main Option(E)

Main Option(F)

Works Terms Contract

SecondaryOption

(Z)

Core Clauses Mandatory

Must select

one mainoption

All secondaryoptions areoptional (W2Incorporatedin Core Clause

10 )

Incorporatedin WPEP

Works Terms Structure


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E m p

l o y e r

R i s k / R e w a r d

Contractor Risk / Reward

F

C

D

B

A

E

Financial Risk / Reward


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Governance

WPEP Contract for each stage of the Gateway Process preliminary work

options

scheme design

production design

construction WPEP Annex

Annex contains all documents referenced in the WPEP

WPEP must be kept up to date by amendments introduced as necessary in accordance with the BAA Work Terms

Drafted for Heathrow can be amended to apply to all other BAA airports

Signatories Project Manager = BAA Contracting Officer


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Any questions?


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embedding evm in good contracts for good governance

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