How can we accelerate municipal project delivery?

By Bill De Angelis

Something often mentioned by our municipal clients is how they have huge capital plans to deliver but are challenged to do so. Consultants face the same issues, impediments and challenges. There are three groups that must engage and coalesce into a single entity in order to meet delivery expectations: the client, the consultant and the contractor.

There are parallels in each of our operations that contribute to project delivery delays. Answering a few questions should clarify the situation and identify a way forward: What’s the problem? Whose problem is it? How can we resolve it to speed up project delivery?

What’s the problem?

Industry feedback suggests several reasons for failing to meet project delivery expectations. These include: too few staff; organizational silos; shortage of experienced engineers and managers; having unrealistic timelines and project scopes imposed; setting unrealistic timelines for delivery; and lack of (and application of) rigorous project controls to ensure success.

Consultants have often achieved limited success in addressing and resolving these issues. Looking to other sectors for parallels to our own situations can sometimes uncover things we may overlook, or identify and quantify factors that can help the consulting and municipal capital delivery process.

An interesting take on overall project delivery is described by Mankins and Steele in the Spring 2013 Harvard Business Review OnPoint journal article, entitled “Turning Great Strategy into Great Performance.”
They looked at the average performance loss in a group of financial companies. Research showed that, on average, most companies’ strategies delivered only 63% of their expected financial value. It begged the question of whether they needed better execution, or better strategy. The 37% performance loss was attributed to a group of factors that included:

• 7.5% Inadequate or unavailable resources.
• 5.2% Poorly communicated strategy.
• 4.5% Actions required to execute not clearly defined.
• 4.1% Unclear accountabilities for execution.
• 3.7% Organizational silos and culture blocking execution.
• 3.0% Inadequate performance monitoring.
• 3.0% Inadequate consequences of
  rewards for failure or success.
• 2.6% Poor senior leadership.
• 1.9% Uncommitted leadership.
• 0.7% Unapproved strategy.
• 0.7% Other obstacles (including
  inadequate skills and capabilities).

Each of the above factors contributes a small percentage to overall performance loss, but, collectively, they impede the ability of an organization to effectively deliver projects. Not surprisingly, they are often cited in our business as reasons behind the ability to effectively deliver, or not deliver, on capital programs.

Whose problem is it?

The same weaknesses can permeate public and private sector entities as well, with the same impacts on programs and delivery. Being able to achieve a firm or owner’s business strategies requires a re-think around how we plan and deliver work. Key elements related to creating less complex plans, setting expectations during planning, forecasting resource requirements in advance, clearly identifying priorities, monitoring performance, and motivation and development of staff were all raised by Mankins and Steele, and are echoed in other sectors.

Impediments to project delivery in the public sector can include: politics, internal team, approvals processes, external pressures, contract language, shifting of risk and procurement. These can influence a project’s timing, as well as direction. Political needs sometimes determine how internal resources (budgets) are allocated, often to the detriment of a particular project.

Beyond the capital program itself, the needs of various departments, all vying for a large piece of the same capital “pie,” can result in delay, deferral or cancellation of planned projects. Much of this is outside of the purview of the project managers and engineering divisions in our clients’ organizations.

Approvals are an area where we see delays. The approvals environment is both loosening and tightening for project proponents. The Modernization of Approvals group in the Ontario Ministry of the Environment (MOE) has moved towards self-approval of projects, under the Environmental Compliance Approvals (ECA) banner. Similarly, the Municipal Class Environmental Assessment Study (MCEA) process is essentially proponent-driven, with the proponent (owner) scoping and driving the process.

Beyond MOE and MCEA requirements, the sheer number of approvals from a variety of agencies, public interest groups, municipal departments, conservation agencies and various ministries is increasing. Timelines related to overall delivery are being both eroded and extended.

The environmentally conscious and sensitive public that we work with now are more questioning than ever. They want to know what we are doing, why we are doing it, and what negative (or positive) environmental consequences might result from our work. This faction can and does lobby politicians, either directly or through the Municipal Class EA Part ll Order process.

Councils themselves tend to be risk intolerant. They want certainty around scope/schedule/budget before approving projects.

The nature and structure of contracts and agreements can extend project development and delivery. Where they were once mainly technical in nature, there is now, by necessity, major input from legal, financial and purchasing departments. They focus on non-technical elements of execution, i.e., insurance, indemnification and allocation of risk.

How can we speed up delivery?

There are several keys to successful delivery that are neither complex mythical. Rather, they are founded on business principles, inclusion, common sense and clear goals. They require us as an industry to work closely with our clients. For each project or program, we need: achievable plans, partnering, collaboration, communication and progress tracking.

Most successful projects are realistic in scope, cost and schedule. Of course, ongoing rigorous tracking and documentation of progress must be done. Otherwise, there will be no baseline from which to gauge project and individual performance versus expectations.

Contract delivery mechanisms can be adjusted to improve delivery timelines. Traditional design/bid/build contracts are used by many municipalities. We are, however, beginning to see contract approaches that are partly aimed at hastening delivery. Examples would include design/build, public-private partnerships, bundling, and the application of pre-approved consultant roster approaches. What may hasten adoption of alternate project delivery approaches is the availability of funding from Infrastructure Ontario, P3 Canada, and other provincial and federal agencies.

Service level agreements are being seen as a means of improving project delivery. They set out the conditions and obligations that each party to an agreement (client, engineer, contractor) must adhere to, and in essence agree to, prior to project commencement. These agreements establish key performance indicators and metrics against which each participant is measured. The challenge is to set realistic metrics.

In the public sector, many internal entities have a role to fulfill, including: operations, engineering, planning, purchasing, legal, asset management, risk management, committee and council. Particular attention needs to be paid by technical staff to proactively communicating project concepts, challenges and mitigation elements to procurement, legal and risk management groups that are not normally versed in technical concepts around design and execution.

Prior notification of pending projects has been successful in expediting internal approvals. Setting up an internal project review panel with representation from all groups, meeting regularly to discuss upcoming projects and possible issues, is one means of improving project delivery.

External delays can occur in procurement. The current construction environment in Ontario is seeing a shortfall in highly qualified contractors to meet the capital works demands of municipalities. In recognition of this, municipal project managers are discussing with their counterparts the timing of the release of large capital projects, to try to ensure strong contractor response.

Improving consultant and contractor selection processes is another way clients can reduce overall project timelines. Prequalification of consultants and contractors is one means of ensuring a selection of strong teams. Rigorous evaluations following project completion will raise the quality of the consultant and contractor pool for future client assignments.

To help expedite the overall requirement to improve on project delivery timelines and efficiency, Consulting Engineers of Ontario (CEO) have begun to engage their members in discussions on this topic. They have also reached out to the larger project delivery community for discussion and input. They are currently working with Metrolinx and Infrastructure Ontario to formulate contract documents that will expedite project delivery of new infrastructure.

As well, they have initiated discussions with RPWCO (Regional Public Works Commissioners of Ontario). CEO are looking to improve procurement processes through a review of: request for proposal (RFP) structures; evaluation criteria; alternative procurement models; contract terms and conditions; and consultant performance and evaluation:

a) RFP Structure Elements

• Development of draft RFPs and circulation to key consultants for comments and suggestions.
• Further development of objective, measurable criteria for proposal evaluation.
• Consultant selection on the basis of a technical RFP submission, followed by negotiation of fees within an approved funding envelope. Also, working in collaboration to adjust scope, timelines and payment terms to meet project requirements.

b) Contract Terms and Conditions

• Ensuring a balanced risk allocation between consultants and proponents.
• Reviewing indemnification clauses.
• Insurance types and limits.
• Review of holdback provisions in the context of the Construction Lien Act.

Ultimately, the entire project delivery community of client, engineer and contractor share the same goals. We all want to deliver high quality engineering projects at fair prices, in a timely fashion. It is going to be a busy time in the Ontario market as we accelerate efforts to replace, upgrade and build new vertical and horizontal infrastructure.

Accelerating project delivery requires the same level of commitment from all parties, to clarity in scoping, strong project management and controls, development of internal efficiencies, collaboration and partnership, and, above all, clear communication, strategy and leadership.

Bill De Angelis, P.Eng., MBA. This article appeared in ES&E’s November/December 2014 issue.