Project Execution Planning and Management: Best Approaches for Delivery Method and Financial Contract Type

This paper discusses the intended massive project that will see the expansion of the M4 motorway to four lanes; a massive project covering 39 kilometers that is scheduled to be completed by 2023 at a total cost of AUD 16.8 billion. The paper recommends the best approaches for the project delivery method and the financial contract type suitable for this type of project.

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Project Execution Planning and Management
Name
Date

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Introduction and Background
The successful execution of a project depends to a great extent on the project management
techniques, and importantly, to the project delivery method, among other factors. Public
infrastructure projects are usually massive and complex, involving high amounts of money, and
having far reaching economic and social impacts, usually for a long period of time (Haidar, 2016).
The objectives of governments and authorities is to provide the public with quality services and
entities, including roads and other infrastructure, while ensuring the public get the best value for
their money. As such, it is important that authorities take every step to ensure such objectives are
achieved (Leslie, 2015). In the context of this, this paper discusses the intended massive project that
will see the expansion of the M4 motorway to four lanes; a massive project covering 39 kilometers
that is scheduled to be completed by 2023 at a total cost of AUD 16.8 billion. The project is in
response to the increased traffic in the Sydney motorways M5 and M4: during the execution of the
project, the daily traffic of up to 140000 vehicles must be kept flowing even as the contract
proceeds. Because of the large scale and complexity of the project, the NSW Government, after a
careful evaluation, and in agreement with the bidders, decided the project cannot be executed by a
single contractor, and so settled on a joint venture (WestLINK) formed by the top bidders KLG
Solution, TOP Construction, and JPM Co. The joint venture company, in conjunction with the NSW
government, have to deliver stage 1 and 2 of the project, with the NSW government providing an
AUD 1.5 billion concession for the project.
The rationale for opting to use a joint venture company was based on challenges faced by
the project, and the required deliverables by the NSW Government:
 The challenges include keeping daily traffic of more than 140000 vehicles moving in the
project corridor at speeds of 80 KPH
 Controlling costs tightly while maintaining a fast track schedule
 Ensuring the priority of public and workers safety during the execution of the projects
 Creating a cohesive, unified team of professionals and ensuring proper organization to
guarantee the smooth execution and delivery of the project objectives and involve all
stakeholders
 Delivering the project by the 2023 deadline, with minimal changes to the project scope and
within the provided budget, as well as delivering quality work as per specifications.
This paper gives recommendations on the best approaches to the project delivery method
and the financial contract type suitable for this type of project, after looking at all the factors. The
proposed methods (financial contract type and the project delivery method) will be arrived at using
a weighting and scoring system in which the major project delivery methods and the financial

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contract types are evaluated based on a weighting system. Rationale for the various weights used for
the scoring is provided, and then conclusions drawn.
Criteria Wights and Goals
The criteria weights and the goals to be used for weighting are based on the challenges listed
and the owner needs as shown below;
The suitability for the contract is given the highest weight at 25% because of the nature and
complexity of the project as described in the case. The ability to fast track the project is also given a
large weight of 20%, same s the ability to control costs; the project is massive involving tax payer
money, and so there must be great control and ability to deliver value for money, while ensuing
costs are not overrun. A unified cohesive team is essential and crucial for the successful
management and delivery of the project, and so is given a higher weight of 18% than ability to meet
the deadline since of all other challenges are overcome, it is likely the deadline will be met so
deadline is given the lowest weight of 17%
Project Delivery Methods
In this case study, the three project delivery methods to be considered are Design-Bid-build
(D-B-B), Design-build (D-B), and Construction management at Risk (CMAR). Before giving
weights, the methods are discussed, as well as their advantages and limitations, and suitability for
the M$ Motor way project.
Design-Bid-Build
This is project delivery method where a single entity is responsible for the design and
construction of a facility, working with the project owner under a single contract. The method
entails using a single unified flow of work from the inception to the completion of the project
(Shorney-Darby, 2012).
Table 1

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Advantages of D-B-B: One of its main advantages is potential for cost savings since the
design and construction is done by a single entity. Projects can start early as well, and it enables the
active involvement of the project owner in all aspects of construction. This method ensures greater
control of costs beaus there is a fixed cost agreed upon before the project can commence. The
model makes it possible to sufficiently develop design and make any changes before the project can
start and is suitable for projects that are very large and complex (LaBonde, 2010).
Disadvantages of D-B-B: The architect has a limited capability for accurately establishing
the cost estimate for the project. As such, the owner may not know the cost of the project until the
bids for the project are received, and in cases where bids exceed the budget, costly redesigns are
necessary. The owner is also responsible for how complete and accurate the designs and drawings
are, contractor plays no role in ensuring greater cost efficiency, and the contractor and architect can
experience adversarial relationships. To get the job, contractors must use the low cost approach; this
does not usually guarantee quality (LaBonde, 2010)
Construction Management at Risk
This is a common method of construction project delivery in which the construction
manager commits to deliver the project as per the owner requirements within a guaranteed
maximum price (GMP) reached at based on the specifications and construction documents; it also
include any tasks or items that are reasonably inferred. In this method, risks to the owner are greatly
reduced because all sub contract agreements are held by the CMAR. Usually, the CMAR also
becomes the contractor (Gransberg & Shane, 2010)
Advantages of CMAR: The CMAR gives the project owner useful advice on price and
schedule as well as scope for the project and its viability. Value engineering advice can be given to
the owner, saving time and money for the client. The budget and schedule for the project is the
responsibility of the CMAR and also provides the GMP. The construction can start without
complete development of the designs, and the owner is made aware of any changes and their costs
(Kubba, 2012)
Disadvantages: Requires high communication levels between the CMAR and the owner, the
architects’ cooperation is needed in developing design details before and during construction, and
constructions costs may exceed budget if not effectively managed or detected early. Further, in
entails negotiating two different contracts; this needs careful negotiation to establish the
responsibility of both parties (Levy, 2012).
Design-Build (D-B)
Involves a single contract with an entity to offer both the design and construction services
for a contract. The goal of D-B is fostering team work between contractor and the architect early to

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enable early budgeting, financing, and scheduling. It allows for design to be reviewed as works
proceed; costs can also be reviewed (Halpin, Lucko & Senior, 2010).
Advantages: Suited for fast track construction works; results in cost effectiveness and are
less susceptible to delays. The contractor is responsible for all issues of design and construction and
results in reduced disagreements between contractor and architect (Sweet & Schneier, 2012).
Disadvantages: Removes the benefits of checks an balances usually achieved when the
architect and contractor are separate and the owner cannot verify if the best price/ cost has been
established for the construction project (Sweet & Schneier, 2012).
Weighting
Based on the advantages and disadvantages, as well as an understanding of the various types
of project delivery methods, the weighted scores were developed, based on the criteria weight
developed in table I. The scores for each of the project delivery methods are made based on the
methods’ suitability to solve/ overcome the project challenges, meet the objectives of the owner, and
ensure the successful delivery of the project. The scores are given between zero and one hundred,
based on the criteria of suitability for the project type and meeting the project challenges. The
scores are given below;
Based on the weighting and scores, the best approach for the project delivery method is
Contract Manager at Cost (CMAR)
Financial Contract Types
The financial contract types to be considered include Lump Sum, Guaranteed Maximum
Price (GMP), and Cost Plus Fee
Lump Sum
In this financial contract type, the owner agrees to pay the contractor a specified amount of
money, without having the costs broken down at completion of the project. The advantages of this

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type of contract is that there are low risks to the project owner, while the contractor faces higher
risks. The cost of the project is known at the outset of the project, and contractor selection is easy;
further, the best personnel are selected by the contractor. Its demerits are that changes are difficult to
make, and if made, are very costly, contractor can use lowest cost material, methods, and
equipment, and these can jeopardize the project quality. The contractor bears most risks and can
result in high contingency amounts included in budget and it may keep away competent contractors
wary of the high risks of a lump sum contracts ('The Project Definition', 2018)
Cost Plus Fixed Fee
Common type of negotiated contracts where the costs such as those of labor, materials,
equipment, and administration are included; the contractor is then paid a fixed fee to compensate for
expertise and includes the profit. The advantages of this contract type is that the amount of fee is
fixed, notwithstanding fluctuations in prices. It gives an incentive for the contractor to finish the
project quickly. Its demerits include cost increments when expensive materials and expertise are
used to complete the project fast ('Cornell Law School', 2018).
GMP
Is a contract with a guaranteed maximum price where costs are estimated by the contractor
with profit limited to a specified amount. If the actual costs are below the budget, the owner benefit
from the savings and if the costs exceed budget, the costs are borne by the contractor (Kerzner,
2013). The advantages of this approach are that the owner ha greater certainty as the amount takes
into consideration future changes in design and scope. It promotes upfront agreement on any
changes and their time ad cost implications, enables greater control over spending, encourages
teamwork, and requires less administration. Its demerits are that the owner can pay high to cover
risks for contractor, lacks a standard contract form, and scope changes can cost more (Stonebank,
2017).
Based on these factors, the weighted scores and goals for the financial contract type were developed
as shown in the table below. Based on challenges and owner requirements, price certainty and
control are given the highest weight of 30%, followed by reduced risks at 25%, teamwork and
cohesion is given 23%, while administration complexity is given 22%. The scores for the different
financial contract types were given based on these objectives, and given between zero and one
hundred as shown below;

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Based on the various weighting and criteria weights, the GMP is arrived as being the best
financial contract method for the project
Conclusion
In executing the M4 motor way expansion project, the NSW elected to use a joint venture
company made of three contractors, as well as five consultants and 180 sub contractors. The project
faced the challenges of keeping daily traffic of more than 140000 vehicles moving in the project
corridor at speeds of 80 KPH, controlling costs tightly while maintaining a fast track schedule,
ensuring the priority of public and workers safety during the execution of the projects, creating a
cohesive, unified team of professionals and ensuring proper organization to guarantee the smooth
execution and delivery of the project objectives and involve all stakeholders, and delivering the
project by the 2023 deadline. Using a weighting criteria taking these into consideration, and
knowing the nature, various merits and demerits of the possible project delivery methods and
financial contract types, this paper concludes by recommending the use of the Contract manager at
Cost project delivery method and the Guaranteed maximum Price as the best financial contract type.

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References
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