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Helping hand

On Tseung Kwan O, MTRC is using partnering to help contractors working on tight margins eliminate waste and make money

Section three project manager Roger Bayliss played a key role in introducing partnering to the Tseung Kwan O project. He and MTRC corporate efficiency manager Ringo Lo researched partnering for six months before the project reached the construction phase. Bayliss travelled to England to tap the experience of pioneering clients like BAA, the Highways Agency, the Ministry of Defence and oil company Conoco Chevron. He also consulted contractors Balfour Beatty, Kier, Costain and Amec.

The research convinced Bayliss that MTRC should look for ways to help contractors work more efficiently whether within formal partnering arrangements or not. 'Our objective is to help contractors drive out waste and reduce their costs, ' says Bayliss.

The approach was considered especially important given the tight margins contractors were allowing to secure work on Tseung Kwan O. British partnering firm John Carlisle was called in to help MTRC develop its strategy and provide facilitation support.

MTRC realised that it would have to take a proactive approach to help its contractors if they were to be convinced of the benefits of the new way of working. It has had to demonstrate its commitment by its effort to understand contractors' needs and limitations early in the procurement process.

An example was the depot piling job. Here contractors had to bid for two contracts which between them involved 820 deep piles through reclaimed land to support future multistorey housing developments. 'At the beginning of the design phase we spoke to all of the piling contractors to find out what plant and equipment they had, ' says Bayliss. MTRC used this information to produce foundation designs which could be built using the equipment contractors already had.

The results were encouraging. None of the contractors proposed alternatives.

The approach followed through on to site, where Gammon won both contracts. MTRC had imposed a tight checking regime, largely in response to concern about piling fraud which had surfaced on other Hong Kong sites.

This involved extensive testing of all piles for depth, concrete quality, and excavation profile. Testing is expensive and takes an average of half a day per pile, constraining programme.

MTRC engineers found no fault with any of Gammon's first 150 piles, so the contractor decided to test the partnership approach to work out a way of cutting down tests without compromising the checking regime. It suggested cutting piles tested from 100% to 50% and then just 25% with the proviso that MTRC could choose which of the piles it would check. The object was to save contractor and client costs and time.

MTRC agreed, which reduced the time that Gammon plant and labour stands idle while tests are carried out, and speeded up the programme as a consequence. For Gammon this has meant a 6% saving on plant costs. And it has reduced the amount MTRC spends on pile tests, while still meeting Buildings Department requirements.

Both parties are in a win-win environment, although savings are not neccessarily equal. 'In this case, Gammon's savings are more than ours, ' says Bayliss.

The other advantage of this regime is that resources normally allocated to dealing with conflict on site can be dispensed with.

But the true test of MTRC's relationship with Gammon came when the contractor hit a fault line which had not turned up on the MTRC site investigation. Most piles on the depot site run through reclaimed land made up of sand and mud before socketing into bed rock around 70m underground.

But the fault ran almost vertically, and Gammon was unable to find competent rock for another 50m. The contractor is shouldering unforeseen ground risk, but the contract provides for admeasurement, with the Engineer determining founding levels.

The contractor had to change technique in the fault zone, sinking 28 reducing diameter 'telescopic' piles instead of the conventional bored piles it was inserting elsewhere. This unusual situation led MTRC and Gammon to negotiate over the extra costs and extension of time. 'It was all resolved through discussion rather than through correspondence. There was one exchange of letters and then a supplemental agreement, ' says Bayliss.

Elsewhere on the project MTRC is attempting to negotiate agreements on contractural matters as various elements of the earliest stages of work draw to a close. By doing this it can eliminate risk for itself and the contractors who will know what they are being paid and when.

In this respect MTRC is helped by the fact that it operates along commercial lines. Project director Russell Black says MTRC can be more flexible in settling contractual disputes because it is free of the bureaucracy that affects public sector clients.

MTRC project managers also have ready access to the executive board and can more easily discuss issues where they feel they should settle with contractors rather than provoke a full scale dispute. With public sector clients, project managers have to go through many layers of management and bureaucracy to get decisions approved.

And with finance ministries keeping a tight rein on budgets, this gives them little room to manoeuvre when contractors want more money. The result is often a fight for cash.

So far the partnership approach appears to be working, MTRC's Tseung Kwan O project managers speak of the relationships they have with contractors in positive terms and contractors appear to be reciprocating. Gammon is even promoting partnering to its other clients as a result of its experience with MTRC. MTRC says it is encouraged enough by what is happening at Tseung Kwan O to consider extending partnering arrangements to include consultants on future projects. It is also reviewing possible changes to the future form of contract, consistent with the partnering ethics.

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