ORBIZ-Case-Study-successfully-managing-alliance-contracts

SUCCESSFULLY MANAGING ALLIANCE CONTRACTS

THROUGH VISUAL MANAGEMENT OF COMPLEX COMMERCIALS

Business Case

A construction alliance was formed to remove a series of railway level crossings throughout the metropolitan area of a large city in Australia, as part of the state government’s estimated $12b program.

With five percent of the project value dependant on strategic deliverables and the prospect that under-performance would result in the loss of future work packages, our client recognised a need to increase commercial governance and introduce new performance management practices. These strategic deliverables translate as Key Result Areas (KRAs).

At a program-level, the KRAs related to innovation, workforce development, social inclusion, and effective engagement. At a work package-level, the KRAs related to safety, environmental impact, sustainability, network disruption, relations with the local community and stakeholders, effective engagement, and on-time delivery.

Additionally, the alliance was required to develop a system and culture of Innovation and Continuous Improvement (I&CI). The impact of this I&CI development would be measured through KRA performance over the life of the contract.

Scope

ORBIZ were initially engaged during the bid phase to conduct a full systems review of the current project control methods to identify and recommend improvements that would meet the requirements of the prospective commercial terms of the Alliance contract.

With the alliance contract successfully secured, ORBIZ was engaged to develop an operating system based on Lean Construction principles that would enable effective management of the complex commercial aspects of the contract, whilst supporting the I&CI system and cultural development.

Project Summary

The initial system review highlighted a series of opportunities that would support the alliance to meet the contract requirements whilst also generally improving overall project performance:

  • Implement a short interval control strategy to increase efficiency at the work package level
  • Introduce visual management centres to increase performance transparency through improved commercial governance and overall accountability
  • Develop a management system framework that would foster an enduring I&CI culture
  • Streamline reporting to improve information flow and strengthen project governance

During the mobilisation phase, the alliance introduced an Earned Value Management (EVM) software tool to oversee the progress and performance of each work package from engineering through to construction.

A project-level Visual Management Centre (VMC) was developed incorporating data from the EVM tool to enable effective management of the project by the Alliance Management Team through weekly governance meetings. This VMC would also provide oversight of the full set of KPIs set by the customer through a series of customised charts that visualised each data set in a manner that was simple to interpret and manage.

Functional VMCs were then developed to govern the performance of Engineering and Construction utilising a detailed level of data from the EVM tool to create a short interval control system and catalyst for I&CI activity through a platform of performance monitoring and problem-solving.

Structured problem-solving and continuous improvement practices were introduced with comprehensive training and coaching provided to internal champions who would lead the ongoing facilitation of innovation hubs and improvement workshops.

Results

  • $8m (57% of opportunity) forecast from delivery of program-level KRAs over first five-years
  • $3m (65% of opportunity) forecast from delivery of package-level KRAs over first five-years
  • A holistic performance management system is established underpinning a culture of ICI
  • The alliance has a long term strategy to continue developing its I&CI systems and culture