Ch2 m hill amer khan presentation to meed 15.09.14

Company Confidential – Not For External Distribution

“Managing and delivering the world’s largest and most complex megaprojects through an effective and

integrated program management strategy in KSA”

Amer Khan, Country Manager CH2MHILL

Faisaliah Hotel, Riyadh, 15 September 2014

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Contains Confidential and Sensitive Data – Copy or Distribution Prohibited CH2M OLAYAN

CH2MHILL

■ Global leader in full-service program management

engineering, procurement, construction, and operations

for public and private clients

■ Headquartered in Denver, Colorado

■ Offices in 40+ countries

■ 26,000 employees

■ $7 billion in revenue

■ Employee owned

Note: Engineering News Record (ENR) is a McGraw-Hill publication focused on the global engineering and construction industry. Rankings referenced in this brief relate to ENR's

independent assessment of CH2M HILL's market position. More details on the basis of rankings and ENR in general can be found at www.enr.com.


CH2M HILL – International Megaproject Experience

Airports High Speed Rail and Metro Roads and Bridges

O’Hare International Airport

Modernization Program

Chicago, IL

ROLE – PM US$6.6 billion

Mumbai International Airport

Expansion and Renovation

Program Mumbai, India

ROLE – PM US$2 billion

Haramain High Speed Railway

Kingdom of Saudi Arabia

ROLE – within the

PM Consortium

US$1.8 billion (phase 1)

High Speed Rail 2

United Kingdom

ROLE – PM US$50 bn

London’s Crossrail High

Speed Rail Program

London UK

ROLE – PM US$22 billion

Golden Ears Bridge

Vancouver , Canada

ROLE – CM US$800 million


CH2MHILL – International Megaproject Experience

Ports and Waterways Water and Wastewater Mega Sports Facilities

Busan Newport Container Terminal

Busan, Korea

ROLE – CM US$900 million

Panama Canal Expansion Program

Panama

ROLE – PgM US$5 billion

Abu Dhabi Sewerage Company Strategic

Tunnel Enhancement Program

Abu Dhabi, UAE

ROLE – PgM US$1.5 billion

London Tideway CSO Program

London, England

ROLE – PgM US$4.4 billion London 2012 Olympics

ROLE – PgM US$11Bn

Qatar 2022 World Cup

ROLE – PgM US$200Bn


CH2MHILL – KSA Megaproject Experience

KAUST & Thuwal Riyadh PTP KSA 11 Stadiums

Client - Saudi Aramco

Program Management Services:

• University building, classrooms and

laboratories

• Residential units

• Research Park development

• Infrastructure and community facilities

in town of Thuwal

• Infrastructure and community facility

for National Guard housing

World’s Largest Public Transport

Infrastructure Program

Client – Arriyadh Development Authority

The Metro Program

• 3 Design and Build contracts total $23bn

• 2 Project and Construction management

Consultancy contracts – total $820m

The Bus Program

Traffic Management

Traffic Signal Design

Client – Saudi Aramco

Program Management Services

11 new state-of-the-art stadiums in

Madinah, Eastern Province, Northern

Border Province, Hail, Tabuk, Al-Jouf,

Baha, Najran, Jazan, Asir and Qassim.


What is Program Management?

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P r o g r a m M a n a g e m e n t

P7 P6 P5 P4 P3 P2

The coordination of resources to plan and deliver related projects to

obtain benefits that would not be attainable if managed separately

• Managing interdependencies among projects

• Combining and dealing with escalated issues among the

projects

• Tracking the contribution of each individual project to the

overall program benefits

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8 CH2M HILL Confidential and Proprietary—Disclosure Prohibited

Programs optimize resources to deliver benefits not attainable

using a project-by-project delivery model

Projects

• Coordinate activities for single-

purpose outcome

• Project risk and change management

• Individual management of functions

• Manage project-specific opportunities

and activities

Programs

• Multiple integrated projects delivered

together

• Portfolio or program-wide risk and

change management

• Coordinated management among

functions

• Manage opportunities and activities

among projects to achieve overall

program goals


Tools for Program Management

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CH2MHILL Program Management Framework

• We have developed a method of

executing programs which is embodied

in the CH2M HILL Program

Management Framework.

• This is a suite of tools and processes

that provide the basic framework for

successful delivery of programs.

• Adaption to KSA requirements

underway


CH2MHILL Framework provides a common system to

describe program activities

Program Management Framework

Delivery Phases Pursuit Phases

Development Phase

Initiation Phase

1

Closeout Phase

Execution Phase

Assurance Functions

Management Functions

Planning Phase

2

3 4 5


CH2MHILL Framework Components

Component Description Benefits

Initiation Guide

Program

Platform

Program

Portal

Maturity Model

Get started right

Understanding and

continuity of work

expectations

Transparent and

meaningful reporting

Staying focused

Our Guide that includes differentiating concepts with

detailed checklists, outlines, tools, agendas, and

guidelines, to assist us all in the timely and efficient

startup of a high functioning team.

Our Platform contains our standards, processes,

guidance and tools, accessible to all participants,

that establishes operating protocols that will be used

throughout program execution.

The Portal is our proprietary web-based information

portal for visualizing and accessing critical

program data.

This assessment tool is used to evaluate our program

leadership team’s progress, periodically evaluating the

developmental status and operational effectiveness.


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The Standard Platform can be Easily Customized for any

Megaproject


An effective and integrated program

management strategy for KSA


Recap from September 2013 Megaprojects Conference

The Bare Facts

• In KSA, there are at least 80 mega projects with a value of $1bn or more

• Their combined value is $365bn to the year 2030

• This represents 75% of the total value of Middle East projects


Recap from September 2013 Mega Projects Conference

6 Key Action Areas with 20 Recommendations

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1. Quantification of the megaproject market to 2030

2. Upgrading the methodologies used in procuring megaprojects

3. Improvement of the megaproject delivery process in Saudi Arabia

4. Adoption of world-class sustainability principles in operations and

maintenance

5. Expansion of partnerships in megaproject

6. Redefinition of public policy to take into account the demands of

megaprojects


1. Quantification the Saudi Arabian Megaprojects Market

Recommendations

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1. Include the delivery of megaprojects as a strategic topic for the 10th five-

year development plan (2015-19)

2. Establish a Saudi megaproject Management Information center

3. Consider an alternative approach to managing the flow of investment into

megaprojects that will provide a higher degree of stability

4. Establish a building materials information center

5. Introduce measures that will help reduce the potential for unpredictable

and unsustainable building material price increases

6. Quantify the volume and quality of labor required to deliver megaprojects.

7. Improve the management of foreign labor working in construction sector

8. Increase the number of Saudis working in the projects sector

• Visas, quotas, nitaqat

• Training, shortage of engineers

• Labour mobility


2. Procurement models for Saudi Arabian megaprojects

Recommendations

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9. Identify optimal procurement models and documentation; to capture

relevant information about both and to facilitate the dissemination in the

megaprojects supply chain.

10. Carry out a review of existing public procurement models to establish

best practice for all government procurement departments

• Role of Ministry of Finance, executing Ministry / Authority

11. Identify centers of excellence in megaproject procurement where the

transfer of knowledge to Saudi Arabian future megaprojects can be

implemented


3. Megaproject delivery in Saudi Arabia

Recommendations

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12. Prepare a comprehensive study of the supply chain from planning to

project completion and how it needs to change to meet the megaproject

challenge

• Favourable trading nations,

• tarrifs, duties,

• Sponsorship system

• Culture of delivery/close out as well initiation


4. Megaproject sustainability and operations and

maintenance - Recommendations

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13. Investigate viability of early design and engineering into future

megaprojects. Promote value engineering across projects and teach in

university courses

14. Mandate full-life economic studies for future megaprojects and accessible

to relevant stakeholders. Provide incentives to encourage project delivery

and operations and maintenance companies to invest in labour-saving

technologies.

15. Regulate high standards of energy and water efficiency and ‘green building’

for all future megaprojects. Establish construction waste gathering, sorting

and disposal centers close to megaprojects. Local stakeholders to be

encouraged to engage with sustainability and environment initiatives

developed in association with megaprojects.


5. Partnerships in Saudi Arabian megaprojects

Recommendations

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16. Conduct a review of the existing rules and laws to adapt them to the

special needs of megaprojects. This should encompass dispute

resolution systems.

• Contract forms – FIDIC

• Arbitration

• Client/Service provider relationship

• Accountability v Authority

• Client capacity building

17. Conduct a review of the foreign investment regulations which are

implemented by SAGIA and the Ministry of Commerce & Industry to

encourage FDI in projects sector


6. Policy and Saudi Arabian megaprojects

Recommendations

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18. Consider devising a comprehensive strategy for the megaprojects

sector to 2030 and invite all stakeholders to contribute to its

preparation. Incorporate as an important component of the 10th five-

year development plan for 2015-19.

19. The Government should consider appointing a senior official to be

responsible for devising the Saudi Arabian megaprojects strategy to

2030. • high level committee

20. The Government should consider hosting an annual Saudi Arabian

Megaproject Management Forum in Saudi Arabia to be attended by

representatives of relevant local, regional and international

stakeholders


The Critical Importance of the

Owner’s Role


1. The Owner owns and maintains the vision.

2. Defines the requirements and objectives in order to achieve the vision.

3. Is the overall design authority

4. Provides the land.

5. Provides the funding, approves and makes payments.

6. Facilitates the engagement with key stakeholders.

7. Ensures that Program-level risks are managed.

8. The Owner is the procurement authority – it awards and manages the

contracts.

9. Is responsible for managing the definition of the institutional arrangements.

10. Provides assurance to the Higher Authorities

11. Is the de-facto Program Manager.

12. Provides Program leadership

The critical importance of the Owner‘s Role

17-Sep-14 Slide 24


Program Management Role

17-Sep-14 Slide 25

1. Strategic planning

2. Development of the Program structure, organisation and governance

3. Development of an Integrated Program Master Schedule

4. Progress monitoring, reporting and governance

5. HSE leadership

6. Program integration


Recommendations for the Owner


1. It will save time and money if you have a fully developed

strategic approach from the outset with defined needs

– What do you really need? E.g. a public transport system

– Auditable programme level budgets and forecasts

– Advisors / Consultants

• Commercial

• Technical

• Financial

• Legal

– Your Governance Strategy

– Any existing departmental governance will not be designed nor fit for

purpose to manage and deliver a Mega program

– So what will work?

• It will be drawn from best practice

• It will be unique to you and your program


2. You may (will) need programmatic exceptions from Saudi

procurement regulations at some point

• KSA government tenders and procurement law never envisaged mega program

procurement. This is quite consistent with other countries experience

• The onus is on the Program leadership team to understand and lobby for

exceptions required

• This need to be done proactively so that the Owner is controlling negotiations

with bidders rather than responding

• International bidders will test the Owner. They will be concerned and will

obtain independent legal advice


3. You cannot resource the Owner’s role on a part time basis

• The programme is a multi billion dollar business and with it comes a

risk profile that can cause serious direct and collateral damage

• Effective delegation of decision making responsibility and capability is

essential for both you and your integrated team

• You are storing up future problems if you attempt to delegate to team

members who have other jobs

• Remember > Time has a schedule cost and this equates to more money

for contractors if you are not responsive


4. Consider and stress test your consultant strategy in advance in

order to be proactive

• Define what you need for entire programme life cycle

• Be strategic in allocating mandates

• One consultant cannot deliver everything the programme needs

• Worldwide it is a limited pool of consultants who can deliver

– They will get conflicted out early if you are not careful

• Much better to have Consultants help design a programme with you than

to have them rescue it


5. Be realistic and prudent when making risk transfer decisions

• Unlike smaller design build projects you will not be able to transfer all

risks to contractors

• Trying to do so will result in:

– Higher contingency pricing, making value for money unachievable

– Protracted negotiations in procurement and delays to the process

– Impacts on our wider contracting strategy and disconnects in the overall risk profile

– A lack of international contractor interest


6. There will be an international overlay and it will impact on

the parameters of your decision making process

• Corporately

• Through the supply chain

• Materials

• Other

– Often sits uncomfortably with requirement to be governed by Saudi law


Some Conclusions

1. Mega transport and infrastructure project delivery is already underway

2. Government and industry need to act on recommendations now

3. No problem is unmanageable and/ or unsolvable

4. Decision making has a real cost consequence and this only ramps up as

the procurement and program goes live

5. Program governance is critical

6. Assign priorities and action owners

7. Continuously monitor and evaluate

8. Instill delivery culture (complete, not just start)

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Company Confidential – Not For External Distribution

Thank you

Amer Khan, Country Manager CH2MHILL

[email protected]

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mailto:[email protected]

Ch2 m hill amer khan presentation to meed 15.09.14

Engineering

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