Oct/Nov 2011

AHA! Moment Utah Transit Authority's "Reverse Incentive"

West Bally TRAX Hub The simultaneous opening of Utah Transit Authority’s West Valley and Mid-Jordan TRAX Mega Projects has been hailed as a massive success and a testament to UTA’s robust partnering program! The light rail lines, both located south and west of Salt Lake City, became fully operational in mid-August and represent tremendous outcomes for UTA. Many Partnering breakthroughs occurred on each job, but we will focus the AHA! Moment on a pilot “Reverse Incentive” conceived by CM/GC (Stacy & Witbeck and Kiewit Western) and UTA in the early stages of the West Valley TRAX light rail project.

What is a Reverse Incentive?

When the CM/GC was awarded the contract, they realized that in order for a money-saving Assertive Schedule to work for the West Valley TRAX job, the Owner/Client (owner) needed to secure a significant number of Right-of-Ways and Utility Relocations quickly. This can be time-consuming and thankless work, but can often lead to costly schedule delays.

So, prior to the release of the Guaranteed Maximum Price, UTA and the CM/GC developed a new “Reverse Incentive” to motivate the owner to adhere to milestone dates detailed in the Assertive Schedule. Ultimately, UTA’s “Reverse Incentive” could earn them a bonus of up to $1M, which would come directly from the CM/GC’s bottom line.

The $1M Incentive was divided into two parts – Milestone Dates ($800,000) and Project Engineering Performance ($200,000). If the owner could secure Utility Relocations, Right-of-Ways, and other permits prior to the milestone dates, they would receive the entire bonus. If they could secure the permits in time to avoid delays, they could receive a percentage of the bonus. The owner could receive the Project Engineering Bonus if they efficiently managed RFI’s, submittal responses, design changes and issue resolution. The PM’s from both UTA and the CM/GC would then present status reports on both Contractor Incentives and the Reverse Incentive to the Executive Committee at the quarterly (and sometimes monthly) Partnering Meetings.

West Balley TRAX over Roper Yard By all accounts, the effect of the Reverse Incentive on the Partnering for this job was tremendous. Early on, both PM’s realized that their project goals were interdependent. According to UTA PM Jim Webb, “It worked particularly well with RFI’s—Hot RFI’s could be executed in 7 days or less and others could be given 14-21 days. This allowed the contractor to provide feedback to the owner about what properties were of highest priority.” In addition, top-down sponsorship of the dual incentive program meant that issue resolution was a priority. Escalation ladders were created for both field work and securing difficult parcels of land, so the project team could continue working while Executives could assist with the most difficult project issues.

Stacy & Witbeck PM Ryan Snow mentioned how the dual incentive “increased the partnered relationship, since both sides could improve their bottom line when tasks were completed on time.” Further, when the Executive Committee comprised of mixed stakeholders, were confronted with owner/contractor issues, the dual incentive program helped remind everyone that a balanced approach to issue resolution helped everyone’s bottom line.

How well did it work?

Although it took a couple months to get the pilot program rolling, UTA gained momentum and eventually earned 70% of its “Reverse Incentive”, netting a $700,000 savings to its bottom line. The West Valley TRAX job finished nearly one year early and substantially under budget.

Can this “Reverse Incentive” Work in the Future?

Absolutely—according to UTA GM Mike Allegra, UTA has now expanded on this process for their ongoing Airport Extension light rail Mega Project. For the Airport Project, they have developed an Alliancing Agreement between UTA, the Contractor and neighboring cities. This agreement allows the owner, contractor and other stakeholders to share risk and earn bonuses related to acquiring land in a timely way so the contractor can again maintain a cost-saving Assertive Schedule!

For project teams interested in this type of incentive program, it is important to note that an orientation towards Collaborative Partnering is a pre-requisite for this type of “Reverse Incentive” to succeed. UTA has dedicated nearly 20 years to Partnering and cautions that if the contractor and owner do not share fundamental trust, disagreements over the bonus structure and keeping score can add a layer of conflict to an already challenging Mega Project.

If you would like to learn more about the UTA “Reverse Incentive” or read the Reverse Incentive proposal, please contact Rob Reaugh. Information like this will be hosted on IPI’s new “Members Only” site coming soon!

IPI Mega Projects Collaborative Roundtable Roundup

NGA Campus East Members from six federally funded Mega Projects gathered to participate in IPI’s Mega Projects Collaborative Roundtable Meeting on September 21st. The Projects included: BRAC #133 at the Mark Center (Alexandria, VA), the Defense Information System Agency (Ft. Meade, MD), Fort Belvoir Community Hospital (Belvoir, VA), the San Antonio Military Medical Center (San Antonio, TX), the Walter Reed National Military Medical Center (Bethesda, MD), and our host the National Geospatial-Intelligence Agency Campus East (Springfield, VA).

During this dynamic meeting, Project Teams shared how each job was Partnered, what worked well and what did not work as well. They also developed a list of Lessons Learned and Standout Takeaways. The group’s findings not only validated IPI’s current 10 Success Factors, they discovered a new 11th Factor!

Among the Key Findings were:

The 11th SUCCESS FACTOR! - Increasingly, Information Technology must be incorporated from design through construction for vertical buildings. Late incorporation of both Passive and Active IT can be devastating to a project’s schedule, particularly when IT specialists need to be supervised while accessing secure job sites.

Project leaders are often tempted to treat IT as a traditional sub and incorporate them into the project team when a substantial portion of the design is complete. Underestimating access requirements for IT becomes increasingly problematic as buildings become more automated—not only in computing, but also with the Building Automation System, which interfaces with heating and cooling, fire safety, the security management system, and telecommunications systems.

(continued top of next column)

Caltrans 2012 Partnering Awards Applications Due November 7!

The 2012 Caltrans Partnering Awards applications are now available on line. The Excellence in Partnering Award is a statewide award from completed projects and the Partnering in Motion Award is a District wide award for projects still underway.
You can find the applications on the Caltrans partnering website at
www.CaltransPartnering.com

IPI Awards Coming Nov. 1, 2011

IPI Awards go online November 1st, 2011! Make sure to reconnect with the Project Teams from your Partnered projects and apply for IPI’s Partnered Project of the Year Awards!

This year we have added a New Mega Projects Category, so your Partnered Horizontal or Vertical Project of any size should apply for an Award!

Mark your Calendar so you can join us on May 17, 2012 for the IPI Awards Celebration! Plan to be there to hear more about the Award Winning Projects!

Click Here for more details!

IPI Calendar

OCT
Marketing & Events Committee - Thursday, 10/06 8:30a-9:30a
Awards Committee - Friday, 10/7 8:00a – 9:00a
Research Committee -Thursday, 10/20 7:30a – 8:30a
Awards Committee – Thursday, 10/27 8:00a - 9:00a
Board of Advisors Teleconference Friday, 10/28 10:00a-noon

NOV
IPI Awards Applications Released Tuesday, 11/1 (Applications Due 2/10/12)
Marketing & Events Committee Thursday, 11/03 8:30a-9:30a
Research Committee TBD
Caltrans Partnering Award Applications Due Monday 11/07 5:00p
Vertical Construction and Mechanical Buildings Committee TBD

IPI Mega Projects Collaborative Roundtable (continued)

The most successful Mega Projects have a strong owner/leader who provides a vision of the project and keeps the entire team vested in a successful project outcome – no matter what it takes.

On some occasions it is necessary to make painful changes to the project if conflicts are derailing the project timeline.

Implementing an effective feedback/feed-up system that works is essential. Management must be able to implement changes and Project Teams should be encouraged (not discouraged) to escalate problems when they cannot be solved timely in the field. The most successful projects allow for transparency and provide resources to those who identify issues and resolve them at the lowest possible level.

If you would like to receive a copy of the meeting minutes or read more about the lessons learned from this event, please contact Rob Reaugh.

IPI Resources

Explore one of the hundreds of available resources that are available to our Members!

Learn from IPI’s Mega Project Success Factors!
Many Mega Projects have been studied to identify how they went wrong. The Denver International Airport, the Hong Kong International Airport, the Boston Artery (Big Dig)… all of these Mega Projects suffered tremendous setbacks to both cost and schedule.

IPI studied more than 20 successful Mega Projects and thousands of traditional construction projects and identified Success Factors that have most often translated to successful project outcomes. Share IPI’s 10 (and new 11th) Success Factors with your Megaproject team to help measure how your team is doing and ensure that your project will finish successfully!

Mega Projects Success Factors

Get Involved! Wishing Will Make it So!

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