It Partnering Agreement

							Partnering
CEE 474 – Engineering
 Project Management
      Lecture 2
               Partnering
    "The significant problems we face
    cannot be solved at the same level of
    thinking we were at when we created
    them." Albert Einstein
   Partnering, the modern day
    handshake, works!
        Construction Old-Style
   Contractors would bring lawyers on
    the jobsite
   Totally adversarial between
    contractor and owner
   Claims were the normal
   Black Hills Area Office had a full-time
    claims engineer
   I spent two years on a $20M+ claim
    on a $24M project
            Partnering History
    INTRODUCTION
   The United States Army Corps of
    Engineers (USACE) began using
    Partnering, a process that seeks to
    promote dispute prevention, in
    construction contracts in 1990. Initially,
    Partnering was used primarily in large
    projects. As of early 1992, USACE policy is
    to develop, promote, and practice
    Partnering on all contracts (Commanders
    Policy Memorandum #16 on Partnering,
    February 18, 1992.)
         Associated General
            Contractors
   OK, so they don’t know how to spell
    partnering
              The Process
   The Project Partnering process
    creates a new team building
    environment which fosters better
    communication and problem solving,
    and a mutual trust between the
    participants. These key elements
    create a climate in which issues can
    be raised, openly discussed, and
    jointly settled, without getting into
    an adversarial relationship.
            Process (cont’d)
   Through this process of teamwork
    and problem solving on a
    construction project, the Corps’ goals
    of Safety, Quality, Schedule, Budget,
    and Disputes are more easily met.
    We want the quality of the work to
    be right the first time, the project to
    be completed on time, the final cost
    to be within budget, and disputes &
    litigation to be minimized.
           Process (cont’d)
    The goals of the contractor are very
    similar (Safety, Quality, Schedule, Budget
    & Disputes) , thus the process benefits
    both parties through the teamwork and
    pursuit of mutual goals. The use of formal
    and informal partnering techniques now
    has widespread use across the Corps
    during the construction phase of our
    projects, and has been adopted by many
    other Federal, state, and local agencies
    based on the Corps success.
              Corps ECB 2003-9
    1. Partnering, just like the Project Management Business
    Process, is a teamwork approach to achieving success. The
    team is made up of all the stakeholders in a project. This
    begins with the customer and includes others such as the
    Corps of Engineers, the Architect-Engineer, the construction
    contractor, and subcontractors. It is a way of doing
    business based upon trust, dedication to common goals,
    and an understanding and respect of each other’s
    expectations and values. Our business philosophy is to use
    a partnering approach in everything we do. This means all
    projects and actions, and with all customers. Our goal is to
    extend the concept to embrace any effort requiring
    significant communication and coordination. Partnering
    embodies a perceptual attitude that builds working
    relationships. It takes the commitment of the entire project
    delivery team to make partnering work effectively.
                     ECB 2003-9
    2. One of the most common complaints we receive from
    contractors is that the Corps does not uniformly practice
    construction partnering. Our response is that the policy on
    partnering has not changed. The policy is to offer to partner
    on all contracts, large and small, and whether it is to be
    formal or informal partnering. That policy evolved from a
    commitment to use partnering in all business relationships,
    especially on construction contracts. The reason that
    construction partnering is felt to be special is because the
    goals of the government and the contractor are so similar.
    The process creates a teambuilding environment which
    fosters better communication and problem solving, and a
    mutual trust between the participants. These key elements
    create a climate in which issues can be raised, openly
    discussed, and jointly settled, without getting into an
    adversarial relationship. In this way, partnering is a
    mindset, and a way of doing business. It is an attitude
    toward working as a team, and needs to be adopted for
    successful project execution.
                  Introduction
   Since the late 1980s we have seen the
    development and use of different partnering
    models in the construction industry. This has
    been a primary management strategy for
    improving organizational relations and project
    performance (Li et al. 2000). The driving forces
    for this strategy have been studies based on the
    concepts of total quality management (TQM) and
    business process re-engineering (BPR). These
    studies of the construction industry have
    documented an industry with low productivity
    and efficiency.
                  Intro, cont’d
    To increase productivity and efficiency in the
    construction industry, a strong focus has been
    set on better integration of the different parties
    (including the client, architects, engineers,
    general contractors, subcontractors, suppliers,
    etc.) in one integrated project organization. The
    different parties are normally independent firms
    and organizations, with separate goals and
    objectives and different operation procedures.
    Typically problems that occur are lack of
    communications and co-ordination leading to
    changes and alterations during the process. This
    again causes disputes, rising costs and reduced
    performance and quality.
          International Partnering
   From a website: Compared to the international arena, the
    development of partnering models in Norway started in the
    early 1990s. Our experiences started with the research
    project “The Integrated Building Process 1996 - 1999”
    (Haugen 1999), where we developed and tested partnering
    models in different small scale building projects. Our basic
    findings (Bølviken 2000) regarding the establishment of a
    successful integrated organization are:
   • Focus on the process
   • Common goals and objectives
   • Mutual trust - openness
   • Knowledge transfer between the parties
   • Teambuilding
   • Project management . routines
   • Commitment from top management
   • Rules for conflicts and sanctions
PROJECT PARTNERING IN THE
      INTERNATIONAL
 CONSTRUCTION INDUSTRY
       CHRIS SKEGGS
        BE Civil, MBA
  Project Manager, Abigroup
     Contractors, Sydney
           AN INTRODUCTION TO
            PROJECT PARTNERING
   1.1 Background and history
   1.1.1 American Initiative
   The first broad application of partnering in the construction
    industry was by the US Army Corps of Engineers in the late
    1980s. Traditional methods of competitive tendering
    together with one-sided contracts and ineffective
    administration were leading to cost overruns and late
    completion. Furthermore litigation was becoming a
    significant problem. The Corps proposed a process
    whereby, post-tender, the successful contractor and the
    employer would discuss the nature of the project they were
    building and their mutual expectations. Goals would be
    defined and issues of concern and potential challenges
    openly discussed with a view to identifying and sharing
    risks. The result was a partnering agreement or charter
    jointly signed by all participants outlining mutually agreed-
    upon goals and principles (Jones Day, 2002).
1.1.2 The United Kingdom introduces partnering
Partnering was first applied in the UK in the North Sea oil and gas
industries in the early 1990s. Major industry players such as BP were
driven to this new model in an attempt to achieve profitability from
what would have been otherwise uneconomic oilfields. The new
approach (also known as alliancing) proved successful in achieving
significant cost savings in platform construction for the employers and
in creating increased profits for the participating partners (Bennett,
2000). The form of partnering differed typically from the US Corps of
Engineers' approach with individual contracts between the employer
and each alliance member and an additional umbrella agreement
binding all parties to the alliance (the alliance members being the
employer, the contractor, the designers and the key subcontractors).
    Partnering in the UK civil engineering and building industry
    emerged from the background of the initial successes of
    this new approach in the oil and gas industry and the US
    building industry. In 1994 Sir Michael Latham,
    commissioned jointly by the government and the
    construction industry to conduct an independent review of
    what was generally accepted to be an under-performing
    construction industry, produced his Constructing the Team
    report. The central message of this report was that the
    employer should be at the core of the construction process.
    The use of teamwork and co-operation was advocated to
    improve employer satisfaction. One specific method
    recommended was the use of project partnering. When
    commenting on how to implement partnering, Latham
    noted that the New Engineering Contract (NEC) from the
    Institute of Civil Engineers (ICE) contained most of
    features./
         From Bruce Garwood,
       COE’s Transatlantic Division
    Successful partnering is the result of an issues-
    oriented process. Each contract is unique and
    each group of partners is unique, therefore each
    partnering session is unique. But I have
    concluded that there are seven fundamental
    conditions, the seven habits for successful
    partnering, that must be satisfied:
    Choose the right attendees.
    Choose the right facilitator.
    Identify the issues.
    Resolve issues with a formal resolution process.
    Create and sign the partnering agreement.
    Conduct periodic evaluations.
    Select an honest broker.
               Homework 2
   Write down, but bring to the next class:
   Goals for this course
   Desired outcomes
   Homework desires
   Term project desires
   Do “Moon Mission” ranking

   NEXT CLASS – We will partner