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Information Class: Proprietary
Outsourced Maintenance Works Contract Management under NEC TSC model
NEC Asia-Pacific Users’ Group conference
10 November 2015
Chris Cheung
Information Class: Proprietary
Contract Management under NEC TSC model
1. Business Needs & Identification
2. Preparation
– Setting Up Contracts
– Choosing NEC Partners
3. Implementation
– Governance & People
– Administration
– Managing Delivery
4. Review and Learning
Slide 2
Information Class: Proprietary
Contract Management under NEC TSC model
1. Business Needs & Identification
2. Preparation
– Setting Up Contracts
– Choosing NEC Partners
3. Implementation
– Governance & People
– Administration
– Managing Delivery
4. Review and Learning
Slide 3
Information Class: Proprietary
1. Business Needs
Business Needs in GBG
– Safety performance
– Operational Excellence
– Cost management
Challenges in Power Station
– Retirement trend & unstable
contractor workforces
– Aging plant & equipment
– Managing numerous maintenance work from planning to execution
– Contractor bearing all risks in maintenance tasks
Slide 4
Information Class: Proprietary
1. Business Needs: Vision
Slide 5
Mix of CLP and different
contractors in maintenance, high
worker turnover complicating
safety and quality control
Traditional
Less Critical Systems maintenance taken up by
Partnering Contractors; CLP resources on
managing and maintaining critical systems,
alongside with asset management and engineering
Partnering
Information Class: Proprietary Slide 6
2007
2008
2010
Learnt from UK power stations about benefits of NEC partnering contract
GBG Senior Management approved the pilot run of NEC partnering contract in CLP
Two pilot contracts: • Integrated Facility Management • Coal Mill Maintenance
1. Business Needs: Identification
Jan
FebM
arApr
May
Jun
Jul
AugSep
OctNov
Dec
HK
$
Planned Year To Date Actual
Information Class: Proprietary Slide 7
2007
2008
2010
Learnt from UK power stations about benefits of partnering contract
GBG Senior Management approved the pilot run of partnering contract in CLP
Two pilot contracts: • Integrated Facility
Management • Coal Mill Maintenance
2012
Wider application after successful pilot run
1. Business Needs: Identification
Information Class: Proprietary
Contract Management under NEC TSC model
1. Business Needs & Identification
2. Preparation
– Setting Up Contracts
– Choosing NEC Partners
3. Implementation
– Governance & People
– Administration
– Managing Delivery
4. Review and Learning
Slide 8
Information Class: Proprietary
Long Term Contract: 5 years
Partnering in nature:
– NEC : Collaboration tool for contractors as if they are one of CLP’s sections
– Ownership & Flexibility: 1 PO for whole year’s services
– Annual Budget but not Lump-sum, i.e. Target Cost for the whole year’s services
– Risk sharing, i.e. pain or gain share within the service period
Performance driven:
– Clearly define the Safety and Technical Key Performance Indicators (KPI)
– Closely monitor cost expenditure vs Target Cost by both parties
– Pain/Gain share linked to Safety and Technical KPI’s on sliding scale
Slide 9
2. Preparation: Setting Up Contracts
Information Class: Proprietary Slide 10
2. Preparation: Setting Up Contracts
Turbine and Generator Auxiliaries
Coal Plant and FGD Auxiliaries
Balance of Plant (BOP) BP & CPA
Electrical and Instrumentation
Safe Access and Associated Services
Specialized Ancillary Services
Balance of Plant (BOP) CPB
Boiler and HRSG Auxiliaries
Information Class: Proprietary
Expression of Interest
Credentials Presentation
Relationship Workshop
Tendering
Pre-qualification process
Assess contractor’s
company and financial
background
Assess contractor’s safety and technical
capabilities
Evaluate contractor’s partnering
intent
Evaluate contractor’s
proposal on safety, technical and
economic aspects
11
2. Preparation: Choosing NEC Partners
Information Class: Proprietary Slide 12
2. Preparation: Choosing NEC Partners
Contractor Partners Responsible System
Kum Shing E&M Ltd. Boiler and Heat Recovery Steam Generator Auxiliaries
Wai Luen Development Ltd. Turbine and Generator Auxiliaries
Hargreaves Industrial Services (HK) Ltd. Coal Plant and Flue Gas Desulphurization Systems Auxiliaries
M Y Cheng & Co. (Engineering) Ltd. Balance of Plant
Control Automation Ltd. Electrical and Instrumentation
Cape Hong Kong Fuji Co. Ltd. Safe Access and Associated Services
Fugro Technical Services Ltd. Specialized Ancillary Services
CLP Engineering Ltd. Balance of Plant
On 19 November 2013
Information Class: Proprietary
Contract Management under NEC TSC model
1. Business Needs & Identification
2. Preparation
– Setting Up Contracts
– Choosing NEC Partners
3. Implementation
– Governance & People
– Administration
– Managing Delivery
4. Review and Learning
Slide 13
Information Class: Proprietary
GBG NEC Management Team provides strategic direction and leadership
Partnering CRO (PCRO) collaborates with NEC Partner to set performance targets, monitor performance achievements, and drive for continuous improvement.
Departmental CRO (DCRO) is the key departmental representative, who consolidates the departmental needs and monitors the departmental performance. DCRO also supports and deputizes PCRO’s duties
RO monitors the NEC Partner’s performance toward safety, technical, cost and quality for his/her task .
Frame
wo
rk & P
roce
du
re O
wn
er : G
ED / C
&P
To
deve
lop
framew
ork an
d p
rocess d
etails for co
nsisten
ce and
con
tinu
ou
s imp
rovem
ent
3. Implementation: Governance & People
Information Class: Proprietary
Champion
Partnering CRO &
Departmental CROs
ROs
Senior Management
Resident Representative
Work Team: - Planner - Safety Officer - Engineer
Oversight of NEC contract Business relationship management Partnering development & cultural change
Technical Best Practices
Best Practices Sharing & Development Platforms
SHEQD
GA
CPPS
GED
Leading Party
Safety Management
Productivity
Innovation & Quality
Business Practices
BPPS
Lead
ersh
ip
Leve
l Ex
ecu
tio
n
Leve
l M
anag
eria
l Le
vel
Safety Practices Technical skill & knowledge exchange Quality improvement Cost management
Safety culture development Technology advancement Productivity improvement Cost improvement Innovation culture development
CLP NEC Partner
3. Implementation: Governance & People
Information Class: Proprietary
Generation Partnering Contract System (GPCS): – Newly developed IT system for NEC
– “Open Book” principle: captures all cost elements under the contract
– Communicates with other IT systems, such as work planning (EWMS), purchase-to-pay systems (EFMS) and contractor’s entry system (TES)
Internal Procedures: – Outline the operational process for key
activities under NEC contract, e.g. Target Cost setting, Compensation Event, Pain/gain sharing, etc.
– Align with the requirements stipulated in CLP’s policies and procedures, such as CMAM and POI
– Define the roles and responsibilities of key stakeholders , including GBG NEC Mgt Team, Champion, PCRO, DCRO, etc.
Slide 16
Key Risk Preventive Control T Control to be Tested
Automated Control Detective Control
Contractor dCRO / RO CROBH of GED / Commercial
Remarks
Appendix 4: Payment Verification (1)
Email to dCROand CRO for Payment Application(1) Complete
data input in IT System
(2) Relevant supporting documents stored in the Shared Folder*
(1) dCRO follows up with relevant teams (i.e. RO) in the dCRO’sdepartment for task review (5% sampling check)
(2) dCRO/RO review & accept/reject each task (i.e. WO)
Clarify with the Contractor for any query before acceptance
Respond promptly to the query and Update in the Shared Folder
CRO reviews and accepts/rejects the following items (5% sampling check): :(1) Resident Team (2) Workforce record(3) Inventory record
Roles Responsibilities
dCRO / RO
Task review - Manpower requirement- Use of special equipment- Use of Material / subcontractor
CRO - Resident Team attendance record- Workforce timesheet vs TES record- Sampling check on the Inventory record
Legends*: refer to the format of Shared Folder
R7 C7bC7a C7c
R8 C8a C8c
If task and items are accepted and endorsed in the IT system, dCRO informs CRO
4
R9 C9a
C8b
3. Implementation: Administration
Information Class: Proprietary
Performance Payment
Relationship Risk
Slide 17
3. Implementation: Managing Delivery
• Keep “Defined Cost” component in the IT System as an “Open Book” approach.
• RO to review the work reasonableness
• PCRO to keep the overall process control
• Conduct quarterly survey to measure Partnering Behavior attributes such as mutual objective, problem solving, open & transparency, continuous improvement and innovation
• Measure the performances and review monthly with PCRO and quarterly with Mgt Team
• Escalate to Champion and Mgt Team if adverse performance
• Compensation Event (CE) as a NEC tools to cater any risk
• Provide channel, i.e. PCRO and Champion for any early warning
• Contract Audit to provide further verification
Information Class: Proprietary
Contract Management under NEC TSC model
1. Business Needs & Identification
2. Preparation
– Setting Up Contracts
– Choosing NEC Partners
3. Implementation
– Governance & People
– Administration
– Managing Delivery
4. Review and Learning
Slide 18
Information Class: Proprietary
* Reference to “Good practice contract management framework” (2008) by Office of Government Commerce (OGC) and National Audit Office (NAO)
4. Review and Learning
Governance
Structure
People
Administration Delivery
Management
Strategy & Development
Slide 19
• Leadership from Senior Management Team to implement change and development
• Champion by Department Head to manage the partner’s performance
• Right CRO, in term of authority, competency and attribute
• Right partners, in term of capability and partnering behavior
• Cultural and operational change for all the users
• Need for training and development
• New procedures and New IT system require more communication, training and dedicated person to walk through for both CLP staff and NEC Partners, e.g. payment process, CE, etc.
• Keep communication with key stakeholders to review and adopt the best practices
• Supplier development to maintain the competitiveness in the market
• Contractor development to uplift the competency of the incumbent to take up more systems
• Overall strategy to review the direction in the next cycle, e.g. longer term
• Clear, understandable and agreed KPI to drive the performance and to measure the effectiveness.
• Payment process to strike the balance between control and trust under open book arrangement
• Need effort to bridge the cultural gap and change the mindset
• Close communication and involvement at all levels, e.g. PCRO, C&P, Champion, Director, to mitigate any potential risk
Contract Management Framework*
Information Class: Proprietary Slide 20
“Now this is not the end. It is not even the beginning of the end.
But it is, perhaps, the end of the beginning.”
Winston Churchill