www.fultonhogan.com

State of Play: Collaborative Contracting NZ-AU

12 July 2013

Peter KesslerCOO Construction, Fulton Hogan Australia

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Key Features Positives Negatives Future Enhancements

Limited Constructability input from Contractor

Generally poor tracking tools on varied work

Too many issues bank up to contract completion

Focus on getting the job done

Relatively short tender period

Fastest delivery start up Client retains flexibility to

change design/scope Client accepts more risk and

in return attracts lower industry margins

Cost Reimbursable Construct Only Generally referenced back

to Contract (AS or Bespoke) Typically 20% Contractor

share of TCE Underun TCE gets adjusted for

material variations to scope Typically 30% Non Price

Attributes adjustment (common)

KPI regime funded by Client + or -2% of margin

Some flexibility on KRA/KPI regime

Only lose margin

Specimen Design Design Initiative promoted Pain / Gain operates on

agreed KRA/KPI’s Non Price Attributes

adjustment (uncommon) Trend to blended

Contractor/Designer margin NOP’s can only lose their

margins Original principle that

excellent performance should return >BAU profits

Becoming expensive to bid Low TOC’s rewarded

(examples where no net R&O)

KRA Pool tends not to incentivise

Client can end up paying extra for Holden Commodore

Reduced margin by extending site overheads into corporate overheads

Occasionally short tender periods

Capable of fast delivery start up

2nd place getter stipend for release of design

Experts embedded in client team to chaperone complex projects

External R&O Adjustment, External Escalation Adjustment, KRA Pool increased, in exchange for Contractor accepting margin threshold

Mandate Start up constructability workshops

Standardise traffic management allowances

Reform wet weather provisions

State of Play: Collaborative Contracting

www.fultonhogan.com

State of Play: Collaborative Contracting

12 July 2013

Peter KesslerCOO Construction, Fulton Hogan Australia