2006 INTERNATIONAL CONSULTING ENGINEERING CONFERENCE Budapest 2006 International Consulting...
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2006 INTERNATIONAL CONSULTING ENGINEERING CONFERENCE Budapest 2006 International Consulting Engineering Conference 2006 « Where the Roads Meet » Workshop Reports
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Transcript of 2006 INTERNATIONAL CONSULTING ENGINEERING CONFERENCE Budapest 2006 International Consulting...
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Budapest 2006
International Consulting Engineering Conference 2006« Where the Roads Meet »
Workshop Reports
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Conference Objectives
1. To define the trusted advisor who is an essential player in prudent infrastructure investment.
2. To determine what is required to offer quality services in a sustainable way.
3. To explore the following key themes
» Emerging issues
» Project implementation
» Procurement Best Practice
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Emerging IssuesEmerging Issues
The Consulting Engineering Firm The Consulting Engineering Firm TomorrowTomorrow
____________________________________________________________________________
Chair: Chair: Dr Martin Güldner (Germany)Dr Martin Güldner (Germany)Facilitators: Kok King Min (Singapore)Facilitators: Kok King Min (Singapore)
Richard Stump (USA)Richard Stump (USA)
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The Consulting Firm of Tomorrow
How are markets evolving?
Main trends and drivers:
- PPPs are of growing importance- Financial engineering services- Engineers need to be able to work in both the “real” and
“virtual” worlds- Increase in mega-projects; often social or soft sciences
are needed
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The Consulting Firm of Tomorrow
How are markets evolving?
Main trends and drivers:
- Adopt a proactive approach to the marketplace- Teaming arrangements for larger projects should be carefully considered- There is a role for small and medium companies in the
future (SMEs)
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The Consulting Firm of Tomorrow
What is the Role of Innovation?
Observations:
- Large and small firms can be innovative- Innovation culture is the most important pillar - Profit center-culture can harm innovation- Young professionals are often the innovators- Incentives must exist for staff to innovate- Mix of skills and professions needed
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The Consulting Firm of Tomorrow
What is the Role of Innovation?
Observations:
- Role of process vs. product innovation- Partnering with universities / research centers- Low fees are barriers to innovation
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The Consulting Firm of Tomorrow
Recommendations for the Federation
- Federation and the MAs should be proactive in identifying and responding to market trends
- Federation should share market knowledge, success stories, and “lessons learned” between MAs
- Federation should promote and share innovative project and process solutions by member firms
- Federation can assist MAs and member firms with guidelines for growing innovative cultures
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Questions and Comments
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Emerging IssuesEmerging Issues
Business Opportunities – New MarketsBusiness Opportunities – New Markets____________________________________________________________________________
Chair: Chair: Peter Heil (Hungary)Peter Heil (Hungary)Facilitators: Patrick Batumbya (Uganda)Facilitators: Patrick Batumbya (Uganda)
Dusan Samudovski (Slovakia)Dusan Samudovski (Slovakia)
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Business Opportunities – New Markets
1. Strategy for Developing Business Opportunities
- Question: what sorts of things are necessary to facilitate investors / businesses / engineers coming in?
- Understand what must be done for the projects that have been developed to be accepted?
- Help consulting companies to develop capacity, to exchange people, and address their gaps. Being able to form and work in teams.
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Business Opportunities – New Markets
2. Issue of Capacity Development
- Capacity - Local knowledge - Ability to meet local expectations
- You need co-operation with local companies that understand the applicable laws, selection procedures and requirements.
- The selection process has to be totally separate from price. It has to be quality based (QBS).
- The federation can help by developing better selection procedures, by developing best practices, with education, by improving Clients / Consultants relations.
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Business Opportunities – New Markets
3. Partnerships
- Need to develop balanced and equal partnerships of international and local firms.
- Networking through the federation for the member associations to develop local, regional and international partnerships.
- Federation “Policing” – to support Clients and CEs to follow the rules and procedures.
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Business Opportunities – New Markets
4. Opportunities in all infrastructural sectors
- The issue of a shortage of skills is present in all countries. This is an opportunity for joint ventures of international and local companies to solve the tasks.
- Local partners have a better view of the local culture, the legislation, the client.
- Challenge – to attract young engineers and keep them in the CE industry.
- Federation can offer a platform for training, and networking.
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Business Opportunities – New Markets
5. Partnerships for Knowledge Transfer
- Huge opportunities developing e.g. in Africa. For consulting engineers and engineers in general.
- Partnerships are needed with international firms to develop capacity
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Business Opportunities – New Markets
6. Profitability of companies
- Most profitable companies are management companies. CE firms want to come in there.
- In order to attract governments to hire CEs, you need in-house capacity; better turn ourselves into also providers of other kinds of consultancy.
- How do we sell services? Business relations to higher levels of management will help increase the perceived positive impact of the services provided.
- Federation, as an integrated professional organisation could help to develop a bridge between the two consultancy worlds.
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Business Opportunities – New Markets
7. How can the Federation assist MAs?
- Help re-define the issue of conflict of interest, which is often laid out too restrictively.
- Help delineate needs of large – medium and small firms, which are different.
- Federation cannot assist in business opportunities, but it can help develop the rules, and Human Resources.
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Business Opportunities – New Markets
8. The Market for CEs
- Market conditions: there should be a decent and transparent legal framework (procurement, intellectual property)
- Framework to be developed in co-operation with the clients. - Clients not fulfilling those rules to be put on a “Black list of Clients” – an
idea hotly debated. - Engineers should not just wait for the Client, but be active in promoting
their services in order to create opportunities. - Developing opportunities
- Do work with locals (applies either way)- Change /improve profile, be able to take more risk. - Increase the ratio between fees and risk assets- Educate clients (involve Federation)- Involve in non-engineering advice (“Soft engineering”)
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Business Opportunities – New Markets
9. Necessity for Good ToRs
- The subject of the contract must be understood; Interpretation will be different in different parts of the world;
- Dialogue with the clients, governments, and capacity building are of key importance. Federation can help a lot there
- Nothing of this can be achieved, without partnerships with local firms.
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Business Opportunities – New Markets
10. Available Business Opportunities
- Hungary’s case exemplifies the generic opportunities in developing and developed countries.
- What is important is to find the ideal partnership and mix of local and international competencies.
- Federation should develop guidelines to develop MAs and engineers’ skills in non-engineering consultancy areas.
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Thank You !
Asante Sana
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Questions and Comments
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Emerging IssuesEmerging Issues
The Role of Consultants TomorrowThe Role of Consultants Tomorrow____________________________________________________________________________
Chair: Chair: William Howard (USA)William Howard (USA)Facilitators: Han Lin Toh (Singapore)Facilitators: Han Lin Toh (Singapore)
Andrzej Michalowski (Poland)Andrzej Michalowski (Poland)
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The role of Consultants Tomorrow
1. Will the role of consultants fundamentally change? If so, how?
2. Should independent advisors be engaged by clients and, if so, under what circumstances? Who will they be? Will we serve in these roles?
3. What will consultants do differently in the future and why? Will we have to use engineers differently to meet global needs?
4. Will project management be considered an integral part or independent service from consulting engineering firms?
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The role of Consultants Tomorrow
Most believe that our role will change, but not all agree it will be fundamental.
The biggest desired change will be to move up the food chain.
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The role of Consultants Tomorrow
Moving up the Food Chain
» Client alliances – understanding what they do – Trusted Advisor
» Thinking ahead – involvement in embryonic stage of projects – create projects- Consult and not just comply- Developing total solutions- More trust- More innovation and less disputes
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The role of Consultants Tomorrow
Future Projects
» More complex
» Multiple stakeholders
» Sustainable
» “Global Teams” with diverse skills- Large firms – multi-skilled- Small firms – niche/local expertise
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The role of Consultants Tomorrow
Conflict of Interest
» Should we redefine?
» Education
» What is important/real and what is not?
» The Federation can help redefine COI much better than individual consultants
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The role of Consultants Tomorrow
Human Resources» Need more engineers and scientists – baby boomers
retiring and more complex projects» Advertise the benefits that engineering brings to society –
can the Federation play a role?» Do more with less» Need multi-skilled engineers and scientists
- Technical- Social- What will the Federation’s role be in executive education?
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The role of Consultants Tomorrow
Project Management
» Develop excellence in PM and leadership
» Some “independent” project management will exist depending upon the nature of the project and philosophy of the client
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The role of Consultants Tomorrow
Closing Thoughts
We must change or we will become more of a “commodity”, lower in the food chain, working for firms who have become our clients’ trusted advisors
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Questions and Comments
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Qualiy Project ImplementationQualiy Project Implementation
Funding Mechanisms - PPPsFunding Mechanisms - PPPs____________________________________________________________________________
Chair: Chair: Wilhelm Reismann (Austria)Wilhelm Reismann (Austria)Facilitators: Aki Hirotani (Japan)Facilitators: Aki Hirotani (Japan)
Flemming Pedersen (Denmark)Flemming Pedersen (Denmark)
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Project Mechanisms
PPP is a matter of trust.
» Create trust.
» Develop partnership.
» Trust and professionalism are required.
» Professionalism creates trust.
PPP is subject to political risk.
» Make sure government is committed.
» Central government support is essential.
» Legal framework must be firm and clear.
» Government often has “too many faces”.
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Project Mechanisms
PPP needs mature partners
» Public side has to be prepared.
» Private sector has to be mature enough.
» Adequate insurance must be available.
» Knowledge must be on all sides, with all project participants.
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Project Mechanisms
Lessons have been learnt
» Sufficient lessons are available in the world.
» Let´s discuss failures openly.
» Develop tailor-made PPP models. A role for consultants.
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Project Mechanisms
Transparency and integrity are essential.
» Involve independent consultants. A role …
» Support adequate selection procedures. A role …
» Do not leave public employees alone with the selection risk.
» Prepare “public comparators” before tendering. A role for consultants.
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Project Mechanisms
Risk management is the key.
» Assess all the risks in the early project stage. A role for consultants.
» Risk shall not be transferred only. It must be reasonably allocated. A role for consultants.
» Read the small print in tenders and contracts.
» Focus on the end user. In the end he pays.
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Project Mechanisms
Why use PPP only for large and complex projects?
» Solve local, regional problems.
» Find models for municipal, regional infrastructure projects.
» Develop adequate structures for different projects.
» Find innovative income generating models; reasonable split P/P.
» A role for consultants.
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Project Mechanisms
Great need for PPP in transition countries, emerging markets.
» Institutional learning from each other.
» Education and training, case studies.
» A role for the Federation, for consultants
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Project Mechanisms
The role of consultants
» We shall be very clear who our employer is, who is paying us.
» We are afraid of losing our role.
» We are afraid of being “squeezed”.
» Let´s define all possible roles.
» Let´s define scope, responsibility, contract models.
» Why don´t we consider taking the leading role? In smaller projects?
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Questions and Comments
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Quality Project ImplementationQuality Project Implementation
The Design Build Operate ContractThe Design Build Operate Contract____________________________________________________________________________
Chair: Chair: Michael Mortimer Hawkins (UK)Michael Mortimer Hawkins (UK)Task Force: Des Barry, Erica Lund (Ireland)Task Force: Des Barry, Erica Lund (Ireland)
Axel Jaeger, Toni Bauer, Christophe Axel Jaeger, Toni Bauer, Christophe Theune (Germany)Theune (Germany)
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Design – Build – OperateThe New FIDIC Form of Contract
Advantages of DBO
Time: Minimizing delays and optimizing construction activities
Financial: Single point responsibility and long-term commitments
Quality: Fitness for purpose and long-term reliability
Optimization of life-cycle cost1
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CONTRACT PERIOD ( AGGREGATE OF ´DESIGN-BUILD PERIOD´ AND ´OPERATION SERVICE PERIOD´
DESIGN - BUILD PERIOD
Letter of AcceptanceCOMMISSIONING CERTIFICATE
COMMISSIONINGPERIOD
3 months
RETENTIONPERIOD
SECURITY D - B RETURNED
COMPLETIONCERTIFICATE
2 YEARS 1 YEAR 19 YEARS
OPERATION SERVICE PERIOD
Release 50% ofRetention Money
Release 50% ofRetention Money
Releaseof Sec. 0
MaintenanceRetention Fund
Releaseof MRF
5 years
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Principal Parties: Employer
Contractor
Employer’s Representative
Principal Stages: Design and Planning
Build and Construction
Operate and Maintain
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New Terminology in the DBO Document
“Design-Build” and “Operation Service”
“Cut-Off Date”
“Cost plus Profit”
“Financial Memorandum”
“Licence Agreement”
“Auditing Body”
“Commissioning Certificate”
“Asset Replacement Fund”
“Maintenance Retention Fund”
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Risks and Insurance Sequence
The flow from Risk to Insurance is:
» Risk
» Responsibility
» Liability
» Indemnity
» Insurance
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Questions and Comments
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Quality Project ImplementationQuality Project Implementation
Risks & Responsibilites in Risks & Responsibilites in Infrastructure DevelopmentInfrastructure Development
____________________________________________________________________________
Chair: Chair: John Roberts (USA)John Roberts (USA)Facilitators: Ewan MacGregor (UK)Facilitators: Ewan MacGregor (UK)
Michel Ray (France)Michel Ray (France)
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Risks and Responsibilities in Infrastructure Development
QUESTION 1
Should the Federation establish a task force to address inappropriate risk transfer to consulting engineers?
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Risks and Responsibilities in Infrastructure Development
GROUP RESPONSE –
There is a critical need, especially in developing countries, for a comprehensive (federation) document that provides guidelines for all parties involved in infrastructure development projects for the following >
» Risk factors (including definitions)» Logical mechanism of risk sharing» Education on the transferability of risk and compensation for
risk acceptance» Risk controls» Risk management
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Risks and Responsibilities in Infrastructure Development
QUESTION 2
If the risk transfer movement continues from the owner to the consultant, how can consultants manage this risk, and price for
it?
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Risks and Responsibilities in Infrastructure Development
GROUP RESPONSE –
» Risks should be listed and allocated to the party best able to evaluate, control, bear cost of, and benefit from risk
» Some risks are not transferable to the engineer
» For some unknown risks, contracts should include clauses addressing the issue, and including a process to address and allocate the unknown risk
» The Federation would be of great service to engineers if they produce a risk mapping and transfer guide
» Pricing of risk transfer should be possible provided risks are properly listed and appropriate limits are negotiated
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Risks and Responsibilities in Infrastructure Development
QUESTION 3
Under what circumstances should the engineer accept guarantees, warranties, liquidated damages, and other similar
contract provisions?
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Risks and Responsibilities in Infrastructure Development
GROUP RESPONSE –
» Determine total risk on a project» With low profitability, unforeseen circumstances, owners may pay for
something that may never happen» Risk allocation should take account of clients’projects and the
engineers’ own projects» Insurance may not be there when you need it and may not be
adequate to cover risk» Engineers could accept terms if they can limit the overall liability on
the project» Consulting engineers can learn from contractors, who are less risk
averse. This may be a role for the Federation» Can the Federation help with a formula or approach for evaluating
risk vs reward?
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Risks and Responsibilities in Infrastructure Development
QUESTION 4
How could we influence the way risk assignment enables us as consultants to take on our value-added role in project
innovation?
How can the Federation assist in this process?
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Risks and Responsibilities in Infrastructure Development
GROUP RESPONSE –
» There is now a unique opportunity and necessity for the consulting engineering industry to develop a proactive role on innovation and project optimisation – in that respect, we must avoid those risk assignments which would kill the incentives for this evolution
» Our industry should develop the creative leadership which enables multi-disciplinary brainstorming - At project level- And also by anticipating challenges to be ready for future
projects, and effectively take opportunity of existing co-financing
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Risks and Responsibilities in Infrastructure Development
» The Federation should improve the contract documents on how consulting firms could be selected also on a basis of their capacity of innovation, pertinent for a given project
» Possibly, a special committee on “innovation/project risks/and appropriate anticipation of future challenges” could help- Identify the most interesting examples of good practice- Convince members about the necessary evolution of our role
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Questions and Comments
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Budapest 2006
Best Practice ProcurementBest Practice Procurement
Developing & Utilising SkillsDeveloping & Utilising Skills____________________________________________________________________________
Chair: Chair: Bayo Adeola (Nigeria)Bayo Adeola (Nigeria)Facilitators: Subhash Mehrotra (India)Facilitators: Subhash Mehrotra (India)
Andras Rev (Hungary)Andras Rev (Hungary)
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Budapest 2006
SESSION BACKGROUND
Changing Business Environment
- Different procurement approaches
- Greater roles of the private sector
- New clients emerging
- Globalisation and New World Order
- Emerging Economies
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Budapest 2006
SESSION BACKGROUND
Changing scope of consulting engineering services
- New products such as sustainability, integrity and disaster management
- Broadening scope to include marketing, finance, human resources management
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Budapest 2006
SESSION BACKGROUND
Operational Challenges
- Attracting and Retaining Competent Staff
- Remuneration, excitement and image
- Career Prospects
- Training – scope, form and finance- Work opportunities for experience
management
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Budapest 2006
SOME FIDIC TOOLS
- Guide to Practice
- Business Integrity Management
- Sustainability Management
- Quality Management
- Contracts Training
- Training Partnership with MAs- Lobbying IFIs for Private Sector Training
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SESSION BACKGROUND
- Building appropriate competences in the work force is one of the ways of addressing these issues.
- Four main questions are to be addressed at this workshop
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Budapest 2006
TOPIC 1
Identify the competences needed for modern day consulting
engineering practice and suggest ways of acquiring such
competences
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TOPIC 2
Beyond the university degree and professional registration, there is no other standard method of measuring consulting engineering competences. Should the Federation embark on a certification process to fill this gap?
How should it be structured?
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TOPIC 3
Consultants from developing countries complain that they are caught in the
experience trap. They do not get choice projects because they do not have experience. They do not have experience because they cannot get the job. What is the way out of this
dilemma?
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Budapest 2006
TOPIC 4
The challenges of recruiting and retaining competent staff in
consulting engineering have been reported by several firms. Identify the key issues involved and how training and work experience can
improve the situation
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Questions and Comments
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Best Practice ProcurementBest Practice Procurement
Liability and InsuranceLiability and Insurance____________________________________________________________________________
Chair: Chair: Adam Thornton (New Zealand)Adam Thornton (New Zealand)Facilitators: Martin Hohberg (Switzerland)Facilitators: Martin Hohberg (Switzerland)
Jacque Robert (France)Jacque Robert (France)
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Do we as Consultants understand enough about our risk environment? If not should FIDIC/EFCA have a role in promoting greater understanding?
- Mixed response- Consultants working in mature insurance/risk environment
generally understand their local environment well- Very few have a good understanding of global variances and
cultural differences- FIDIC/EFCA actions ?
- Prepare proforma risk registers per discipline/region- Survey of regional/cultural risk environments- Prepare guidelines to assist Consultants educate their
clients on appropriate risk mitigation and management- Prepare guidelines that clearly spell out where risks can
best be managed (Client/Consultant/Contractor/Funder)
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Are there enough similarities between the different risk environments around the world for FIDIC/EFCA to develop some common policies and guidelines?
- Simple answer: yes to generic policies, no to detailed common guidelines
- Regional and cultural differences are currently too great to allow common detailed guidelines
- However generic guides and definitions are required to promote better understanding and detail guides are required on a local basis
- Don’t create a problem in “immature” markets where one doesn't currently exist.
- Let risk/insurance environment develop at its’ own pace but provide advice/guidelines so developing markets can avoid the pitfalls that others have been through.
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Budapest 2006
Is there value in tackling the issue of unlimited liability globally?
Simple answer “yes” Definitions and implications of unlimited liability required FIDIC/EFCA have important role to publish
information/guidelines on risk and liability management to enable MAs and Consultants to act as effective advocates for change
EFCA and FIDIC need to front up with MAs to the EU and central governments to influence consultant procurement policy – in relation to risk/liability management
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Budapest 2006
What is the best way to engage in meaningful dialogue with the insurance industry?
No easy answer as the real risk carriers are obscured by layers of brokers, primary insurers and re-insurers (multi-headed monster!)
Maturity of insurance industry also varies greatly Defer the question to the risk committee! Need accurate data before engaging in debate – survey of
MAs required
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Budapest 2006
Should FIDIC/EFCA take a position on uninsurable risk?
• Short answer yes
• Consultants generally don’t have a good idea of what they are covered for!
• Definition and schedule of uninsurable risks is required
• FIDIC/EFCA to produce rationale of why client is most appropriate/best placed to carry uninsurable risk
• Need to work with funders and clients
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Budapest 2006
Overall Key Points:
» Federations need to think (understand) globally but act locally.
» MAs and Consultants need the tools to act as effective advocates
» Federations need to lobby at the highest level for changes to procurement policy (risk and liability management)
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Budapest 2006
Questions and Comments
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Best Practice ProcurementBest Practice Procurement
Quality ProcurementQuality Procurement____________________________________________________________________________
Chair: Chair: John Gamble (Canada)John Gamble (Canada)Facilitators: Panos Panogopoulos (Greece)Facilitators: Panos Panogopoulos (Greece)
Xie Shaozhang (China)Xie Shaozhang (China)
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Budapest 2006
Quality ProcurementFor our consideration…
How to promote the benefits of QBSIdentifying expertise/resources required by clients to use QBS successfully Adapting qualifications to specific client needsDemonstrating transparency and fairness (in both selection process and negotiations)
QBS is our objective - but we need to work within (and hopefully improve) current realities
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Quality Procurement
FIDIC/EFCA must be an active advocate for and a resource to their members
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Quality Procurement
A clear and consistent definition of “Q”
» “Quality” vs “Qualification”
» “Q” is more than resumes and brochures- Local knowledge or specific experience- Allowance for staff development or innovations- Allowance for new firms or new technologies
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Quality Procurement
A QBS resource “library” for members
» Facilitate information exchange between member associations and firms
» Develop a Federation institution memory
» Develop case studies that illustrate successful implementation of QBS
» All FIDIC/EFCA documents should be mutually supportive
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Quality Procurement
Create resources to assist client capacity to implement QBS
» Best practice for developing terms of reference
» Best practice for establishing criteria and evaluating submissions
» IMS/due diligence document to address concerns over subjective criteria
» Training programs?
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Quality Procurement
Create an implementation strategy
» Identify priority clients and organisations- Receptiveness to QBS (potential for success)- Influence- Third party support
» Collaborate with local associations and members
» Review progress and revise strategy on a regular basis
» Never lose sight of our ultimate goal - QBS
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Questions and Comments
