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Procurement methods and specifications - influence on pavement design and project management

1

Robert Lundström

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Topics

1. Introduction

2. Procurement methods

3. Requirements and specifications

4. Arguments regarding procurement methods

5. Procurement methods and implications: technical design and

project/knowledge management

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Introduction

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Obtaining bread…….

Reciepe:

600 ml milk

100 g butter

50 g yeast

2 tsk. sugar

1 tsk. salt

1 tsk. cinemon

1 kg mjöl

Methodology:

Varm the milk together with the butter until it has melted. Disolve the yeast in water and add the remaining ingrediences. Put it into the oven at 175 degrees for 30 minutes.

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Make or buy decisions… - depends on type of business??

• Nuclear powerplant

• Road

• House

• Car

• Meat

• Bread

1. Cost

2. Frequency

3. Complexity

4. Uniqueness

5. Degree of

transaction

specific investment

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Theory on M&B decisions Transaction cost economics (Williamson, 1985)

15 aug 2012 NCC Roads 6

Uncertainty: 3 aspects:

Transaction frequency

Transaction-specific

investments

Opportunism

Fre

qu

en

cy

Investment characteristics

Re

curr

ent O

cca

tion

al

Non-specific Mixed Idiosyncratic

Ma

rke

t g

ove

rna

nce

(cla

ssic

al co

ntr

actin

g)

Unified

governance

Trilateral governance

Bilateral

governance

(relational contracting)

(neoclassical contracting)

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Another source of uncertainty - projects

Connection Connection

Contractor Client Consultant

Project 1 Project 2 Project 3

..the construction industry typically engage in organizational systems lying somewhere between traditional market and hierarchy models, normally procured based on a market model, while subsequently managed within a hierarchical but temporary project context, which depends on buying procedure and contract type used…

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Procurement methods

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Procurement methods - a definition

i.e.…the way a client invites contractors to tendering, including the type of contract, requirements and payment mechanism used.

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Design-Bid-Build (D-B-B)

Design-Build (D-B)

Design-Build-Maintain (D-B-M)

B W

B W D

B M D

Procurement methods - Contract length and scope of activities contracted

W

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Historical reflection on road procurement - Most contracts has historically been the traditional Design-bid-build (DBB) - The number of D-B (-M) projects is increasing

80s 1992-1993 2002 2005 Efter Jacobsson, L

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Procurement methods - Effect on project organization

D-B-B

Client

Contractor

Consultant Client

Contractor Consultant

D-B(-M)

Supplier Supplier

Consultant

≠

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Procurement methods - effect on specifications

•The D-B approach can be characterized by that the

product is specified by performance requirements, and

consequently, not as in the case of the D-B-B approach

by procedural specifications.

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Requirements and specifications

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”sharp in by clear agreement,

General: - Contractual aspects on specifications

1. All measurement/testing should be based on a METHOD, i.e. clearly

refer to which standard (e.g. SS-EN) that is applicable.

2. REQUIREMENT LEVEL should be clearly adressed.

3. CONSEQUENCE that a given defect results in.

2013-02-06 Technology & Market Days 2013 15

sharp out by clear performance”

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26-May-14 NCC Roads 16

1. User demands

2. Surface

3. Construction

4. Composite mtrl/layer

5. Material

accessibility, safety, comfort, travel time, sustainability

evenness, friction, noise reduction

bearing capacity, strength, durability

resistance to fatigue and permanent deformation, stiffness, durability, thickness

material spec's, aggregate quality, grading, binder content, void content, binder characteristics etc.

DoF

# of demands

General: - requirements and specifications used

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Procedural specifications - mix design objectives

To adress:

Deformation resistance (stability)

Fatigue resistance

Low temperature cracking resistance

Durability

Moisture damage resistance

Skid resistance/friction

Workability

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Main mixture types

Dense graded asphalt

Stone mastic asphalt

Open-graded asphalt

Mastic asphalt (gussasphalt)

Differ in particle size distribution and binder content

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Parameters distinguishing different mixtures

Binder content

Binder type

Void content

Stone aggregate quality

Gradation

Additives

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Mixture requirements - binder content

[%-by weight]

Dense graded 6.0-7.0

Stone mastic 5.5-7.5

Open-graded 5.5 -7.0

Mastic 7.0-9.0

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Bitumen specification frameworks

Penetration grading

Viscosity grading

Superpave performance grading

and more...combinations etc.

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…and test methods used, e.g:

Sweden (Europe)

Penetration@25 °C

Softening point

Resistance to hardening

(RTFOT): retained

penetration, DSoftening

point, change of mass

Flash point

Solubility

Viscosity@60 and 135 °C

Fraass breaking point

USA (pg)

• Viscosity

• Complex shear modulus

• Low temp. stiffness

• RTFO Aging

• PAV Aging

• Flash Point

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Example: Penetration grade

40/60

50/70

70/100

100/150

160/220

330/430

Temperature, traffic

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Comparison regarding particle size distribution

0

10

20

30

40

50

60

70

80

90

100

-1.25 -0.75 -0.25 0.25 0.75 1.25

Sieve size [mm]

Pa

ssin

g [%

-by w

eig

ht]

Dense 16 mm

SMA 16 mm

Open 16 mm

Mastic 16

0.063 0.25 1.0 420.5 5.60.125 8 11.2 16 22.4

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Performance specifications - basic idea

Measurement of actual field behavior

Preferably, relates to driver comfort, security, speed etc.

Mainly based on surface characteristics:

ruts

IRI

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Performance requirements at Level 4: - road surface characteristics

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Longitudinal and transversal evenness

NCC Roads

AB 2011-

01-12

27

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Characterizing different parameters

NCC Roads

AB 2011-

01-12

28

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Characterization of longitudinal evenness - IRI

Simulation of a quarter car running at 80 km/h

Accumulated movement between body and wheel

divided by distance (observational distance)

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IRI-measurement - example of results

0

1

2

3

4

5

6

4900 5400 5900 6400 6900 7400

Sektion [m]

IRI [m

m/m

]

Höger spår

Vänster spår

RosenkällaMossen

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Measurement & evaluation - results from different projects

0,0

0,5

1,0

1,5

2,0

2,5

Norrortsleden 34 Målilla Tvärleden Osby E4 Enånger E6 Solhem

IRI 2

0m

Project 1 Project 2 Project 3 Project 4 Project 5

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Transversal evenness - ruts

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33

0,0

0,5

1,0

1,5

2,0

2,5

3,0

3,5

4,0

4,5

5,0

Norrortsleden 34 Målilla Tvärleden Osby E4 Enånger E6 Solhem

Rut depth

2,6

m2

0m

Measurement & evaluation - initial transversal evenness (P95)

Project 1 Project 2 Project 3 Project 4 Project 5

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34

0

2

4

6

8

10

12

14

16

18

20

2007 2008 2009 2010 2011 2012 2013 2014

P9

5[m

m]

År

Linjär regression

Undre gräns prediktion 95 %

Measurement, prediction & evaluation - estimating performance and risk

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Arguments regarding procurement methods

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Procurement methods - 5 basic arguments where main contractors often are pro D-B(-M) contracts (and other actors emphasize cons)

•The single-point responsibility

•Project delivery time

•Quality

•Cost

•Price certainty (limited cost overruns)

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Single-point responsibility

+ High degree of integration of design and build activities.

+ Less risks for client since contractor assumes higher responsibility.

+ Simpler, one counterpart (bilateral governance).

+ Contractor better suited to assess certain uncertainties (e.g.

climatic and site- specific circumstances).

+ Less conflicts due to contractor´s design responsibility.

- Down-played role of consultants.

- Difficult to monitor/safeguard the construction works.

- Difficult for clients to articulate technical solutions.

- Compromised design.

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Delivery time

+ Parallel design and construction.

+ Active design during construction.

+ Extended contractor responsibility: less re-design.

+ Empirical support.

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Quality

+ Experiences of previous projects becomes more important.

+ Increased commitment from contractors.

+ Promotes technical development.

+ Logical connection between performance specification and

user demands.

+ Extended contractor responsibility: less re-design.

- Quality may be compromised due to cost concerns.

- Weak empirical support.

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Increased commitment

Use of specialized equipment and methods

Innovativematerials

Normal

life-length

S10-15% Increased

life-length

Increased life-length of 10-15%

Motives to utilize D-B(-M)

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Costs

+ Life-cycle costs rather than investment costs.

+ Active design reduces costs.

+ Earlier completion provides access to the facility.

+ Competition based on technical solutions reduces risks of

illegal cooperation.

+ Price dumping becomes difficult.

- In D-B-B it is easier to calculate bids and to evaluate them.

- Number of competitors due to design capacity/capability?

- Inconclusive empirical support.

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Price certainty

+ D-B projects implies responsibility for contractor regarding

design and construction and, hence, less additions and

change orders.

- D-B is based on incomplete drawings and descriptions.

Consequently, renegotiations may occur.

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Procurement methods and basic logics

Design-bid-build

o Classic economics; focus on:

- Price

- Many bidders

- Full information (detailed spec´s)

- Homogenous products (same offer)

Design-Build(-Maintain)

o Evolutionary economics :

- Dynamic (Schumpeterian competition)

- Learning- and knowledge perspective

- Innovation

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Procurement methods: - implications for pavement design and

project/knowledge management

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Layer thickness

Material properties

Loading

Response calcul.

Strain

Transfer function

N

D = S n / N n

D > 1 D << 1 Design thickness

Traditional ME-design in D-B-B projects

Flexible pavement design in D-B-B projects - reflections Mainly based on nominal material properties (not real).

Supports existing technical standards and descriptions (procedural specifications).

Weak empirical correlation (difficult to predict performance of individual projects).

Difficult to utilize new materials.

Conclusion: Mainly institutional tool providing clear responsibilities among actors rather than technical tool able to predict performance of a given road project. Limited need of new knowledge for any actor besides the client.

Flexible pavement design in D-B(-M) projects - reflections

Existing design tools lack ability to predict performance (=technical uncertainty)

A fundamental aim of D-B(-M) projects: introduce new materials and production methods and requirements are associated to real performance of the project.

How..?

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Measurement, prediction & evaluation - estimating performance and risk by performance specifications

0,0

0,2

0,4

0,6

0,8

1,0

1,2

1,4

1,6

0 500 1000 1500 2000

Ru

ttin

g [

mm

/år]

Traffic volume [AADT,heavy]

Example: rate of rutting for 6 highways

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Procurement methods and contract types - Risk, uncertainty, profit for contractors

Risk, uncertainty

Profit

D-B(-M)

+ Low risks/uncertainties (routines/standardization)

- Low development incentives

+ Competition based on product performance

- Contractor assumes design risks/uncertainties

D-B-B

Risk management

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D-B-B

• Analytical evaluation

• Nominal material properties

D-B(-M)

• Performance measurement

•Empirical evaluation of performance

Type of requirements

Design space(s)

New models

Procurement methods and pavement design

Procurement method

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Project management - design needs continous knowledge transfer

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Time

Focal projects

1990

D-B-B

D-B(-M)

12

3

5

1

2 8

9

10

11

4

6

13

16

14

7

2000 2010

15

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Knowledge management

Variation Selection

Replication Retention

Generate alternatives

•Materials

•Production methods

Select alternative based on:

•Predicted performance

•Costs

Performance evaluation

•Problem solving

•Knowledge sharing

Project management

•Establish project data base

•Establish work routines

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Conclusions:

Different procurement methods exist.

Each is associated with both pros and cons.

D-B(-M) projects provide possibilities to product/process differentiation but also

higher risk/uncertainty.

Choice of technical solution in D-B(-M) requires risk and cost assessment by

empirical inquiry rather than predetermined solutions based on proc. specs.

Performance requirements of a given road project is comparable with other

projects.

Knowledge management is necessary to determine whether and to what extent a

given product portfolio is competitive.

Explorative learning is in general more likely to occur/necessary if a mix of

different procurement methods is practiced – different procurement methods

support each other.