PAPER N. BC 116/2000 QH 12/2000 THE HONG KONG HOUSING AUTHORITY Memorandum for the Building Committee QUALITY HOUSING : PARTNERING FOR CHANGE Project Partnering and Value Management PURPOSE To inform Members on the way forward and note the implementation and progress status of Project Partnering, and Value Management. BACKGROUND 2. To address the increasing community concern on the quality of public housing, HA conducted a public consultation after publishing a document entitled Quality Housing : Partnering for Change. After consolidating the views of stakeholders and respondents, 50 recommendations were made to enhance the quality of public housing. 3. At its meeting on 14 April 2000, HA endorsed a strategy and Implementation Plan to implement the 50 recommendations (Paper No. HA 24/2000 refers). Recommendations No. 1, 2, 4 and 5 of the Quality Initatives propose a number of areas conducive to establishing a partnering culture with our stakeholders could be injected with partnering practices. In addition, Recommendation No. 39 also advocates to uphold the industry s ethical integrity by working closely with the Independent Commission Against Corruption (ICAC) to curb corruption. On 14 April 2000, the Housing Authority endorsed the initiatives vide Paper No. HA 24/2000 as a matter of priority for progressive implementation. Candid and continuous
- 2 - communication amongst stakeholders is indispensable to fostering a cordial partnering framework. 4. Seen in the above light, Value Management (VM) Note 1 is an effective tool to enable various stakeholders to partner for effective decision making in the early stage of a project, whereas Project Partnering will enable various stakeholders to partner for effective teambuilding to achieve a common project goal. PROJECT PARTNERING 5. At contract commencement, the Department s project teams will hold partnering meetings with all project consultants and contractors so that the implementation approach can be mapped out and agreed beforehand. Thereafter, we shall continue with our established monthly meetings to monitor the progress of projects. These progress meetings should also facilitate the resolution of works-related problems. After project completion, the Department s project teams will conduct review workshops with consultants and contractors to appraise the overall implementation process and identify areas for improvement. Note 1 (Extracted from Value Management in Construction : A Client's Guide - CIRIA 1996) Value Management (VM) focuses on the aspects of strategy, including the first stages aimed at resolving multiple project objectives and occurring in the early stages of design. VM should be pursued if only there is an underlying willingness amongst the key project stakeholders (who may involve the client in most of the situations) to agree. Value Engineering (VE) seeks to improve the cost effectiveness of the project design, when project objectives are confirmed. This part should be taken as a technical activity and improvement process to be undertaken by the Project Manager with active participation of the design and construction team. The Fanling project, which is already developed to the detailed design of the external works, will be subject to VE consideration.
- 3-6. Effective project partnering requires facilitation. We appoint Independent facilitator to assist respective project teams to form and then work together within the partnering arrangement. Before launching the project partnering arrangement to all projects, we have been launching pilot schemes using different facilitators. Since November 1999, eight pilot projects have been initiated with the joint efforts of consultants and contractors. Note 2 7. Taking the opportunity to inculcate integrity mindset, we have invited ICAC to give presentation at the partnering workshops. The objective is to establish a healthy working relationship amongst HA, consultant and contractor s staff at working level. The response from the participants of the workshops was very positive, and we will continue to involve ICAC in future partnering workshops 8. Each team signs a Quality Partnering Charter after the start-up workshop to pledge their commitment in producing quality buildings through partnering. They set up formal structures in individual projects to strengthen teamworking on specific aspects (a) to identify the common goals for success; (b) to define roles and responsibility of the key stakeholders to maximise benefits of their contributions and communication at the right levels; (c) to set out a common resolution ladder for reaching decisions and solving problems; and (d) to identify the targets that provide continuous measurable improvements in performance. 9. Monitoring of the partnering relationship will be self-driven under the collaborative action of the partners at the regular project meeting. Note 2 The eight pilot projects include five building contracts (Po Lam Estate Phase 1, Lam Tin Estate Phase 5, Tseung Kwun O Area 74 Phase 3, Cheung Chau Subsidized Housing), and three piling contracts (Tseung Kwun O Area 73A Phase 3 and 4, and Redevelopment of Shek Pai Wan Estate Phase 1)
- 4 - In order to help project teams implement partnering, post-workshop mentoring has been arranged for giving advice to and answering questions raised by workshop participants and HA. The individual Project Managers and Contract Managers have been invited to drive and nurture the success of the partnering relation at this budding stage. 10. Initial feedback from pilot projects proves very useful. Partnering workshop for building contract should best be arranged three months after commencement, when the contractor has formed their team and key subcontractors are identified. For piling contract, with a limited number of key subcontractors and a shorter contract period, partnering arrangement should be launched upon mobilization. Benefits will be greater if key personnel from both HA, consultants, contractors, and subcontractors project teams are willing to adopt a partnering approach in their projects. In general, participants at all levels can strengthen communications through the partnering arrangement. VALUE MANAGEMENT (VM) 11. A number of VM awareness seminars have already been organised by the Department s Training and Development Centre (T&DC) to introduce the VM concept to the works professionals of the Department in March and September 1999. 12. VM is particularly relevant for projects looking for the best value of money where (a) Objectives are ambiguous, varied and not well shared by key stakeholders. (b) A structured way to clarify project functions is required. (c) Substantial investment / resources is involved. (d) Identifying alternative design options.
- 5 - (e) Evaluating the effectiveness of each option in terms of cost, buildability, and performance. 13. A pilot VM study has been launched for the Development of Eastern Harbour Crossing with initiative of our partner stakeholder in mid 1999. To better understand the benefits of this management tool and its results, we will launch VM workshops for two pilot projects, namely Project (a) Fanling Area 36 Phase 1, 2 and 3 Scope of Works for VM Effective external works design to promote environmental friendly objectives for the green estate (b) Lei Muk Shu Estate Phase 3 Design options for noise mitigation measures 14. For these trial projects, we will engage experienced facilitators for these VM studies to convene VM workshops. For project that requests for urgent VM studies, we can obtain VM facilitator seconded from other Works Departments (such as Architectural Services Department) of which in-house support have been established. WAY FORWARD 15. Implementation of the Project Partnering in one go at this stage is constrained by the handling capacities of experienced Partnering facilitators. The situation is aggravated by the lack of Cantonese speaking facilitator who can convene workshop fluently for the participation of site staff and subcontractors. 16. In the interim, we suggest to initiate the enhanced management systems for Partnering and/or VM via the following channels (a) We will select pilot projects to roll forward the systems, approach T&DC for commissioning facilitator, monitor and obtain feedback, and evaluate its effectiveness. Expenses so incurred are charged to the Project Vote.
- 6 - (b) Where our counterparts see the needs to adopt these systems on project basis, they will initiate actions to appoint facilitators and absorb all the expenses so incurred. (c) Where our project teams see the need to use the systems, they can initiate actions as follows (i) Approach T&DC for inviting tender/quotation for facilitator; (ii) Award and commission service under the delegated financial authority; and (iii) Hold initial workshop. 7. Using in-house facilitators who have adequate understanding of HA s organization and practices will be one of the future options. Hence, we will train up dedicated senior line managers to develop, monitor and review the system of implementing partnering in Development and Construction Branch (D&CB). Based on the current workload and resources, and with the help of external facilitators, we can handle about 30 workshops each year. For the implementation of Value Management, we need to obtain the service of private consultants to serve the ad hoc demand of the project teams. 18. We will conduct an interim review for the pilot systems by December 2000 and report to Members. We will work out the strategy and related guidelines for Project Partnering and Value Management to roll forward the systems progressively.
- 7 - FINANCIAL AND STAFFING IMPLICATIONS 19. The initial costs of running partnering workshops include international facilitators fee and cost of venue. These costs are ascertained through cost build-up and tendering at a cost of about $160,000 per workshop. The financial implication is relatively minor and the expenses are charged to the respective Project Votes. In the long run, we will compile a list of local practitioners to facilitate the start up workshop in order to modulate the running costs. 20. As regards the setting up of in-house facilitation teams, we will assess its impact on the manpower resources at the forthcoming review in December 2000. To allow for fluctuations of workload, we will continue to procure consultancy service to augment the in-house facilitation. EFFECTS ON QUALITY 21. The introduction of Project Partnering and Value Management will help to strengthen the communication, teambuilding and decision making process of the project stakeholders. Couple with other initiatives endorsed by HA under the Consultative Document, the instillment of partnering culture through Partnering workshops will foster a clear understanding of roles and responsibilities on project implementation, improve project decision, quality supervision and hence, prompt the delivery of quality products. PUBLIC REACTION AND PUBLICITY 22. Success in the instillment of genuine partnering relationship depends on the commitment of the participants. Opinion gauged in the public consultation exercise revealed general support for the proposal to provide quality housing together with stakeholders through partnering.
- 8 - Professional Bodies 23. Members from the leading professional bodies including the Hong Kong Institute of Architects (HKIA), Hong Kong Institute of Engineers (HKIE) and Hong Kong Institute of Surveyors welcome the initiatives of introducing partnering as one that will be inducing teambuilding and co-operation in the industry. The professional bodies see the benefits of partnering framework as one of the prerequisites in improving the construction quality as a whole. Hong Kong Construction Association (HKCA) 24. There is also an unequivocal support from the HKCA on the development of partnering framework with a view that mutual benefits could be attained based upon the development of shared values and trust with members of the project team. In fact, the early batch of pilot partnering projects was initiated by the contractor after such practices had been launched and sustained successfully in MTRC and other reputable developers. Staff 25. HD staffs are conscious of the additional workload implication due to the imposition of partnering at the intermediate stage of the project, notably when limited resources are to handle the requisite contract administration under the current production peak. Hence, we have carefully selected some pilot projects in different project sections, in order to nourish a win-win situation before full launching. ICAC 26. As a principle for partnering arrangement, ICAC have no objection to the drive for implanting mutual trust amongst the stakeholders of the Industry as far as the situation is not abused to prompt other corruption opportunities without upholding integrity of stakeholders. In this regard, ICAC have participated to deliver integrity message at the pilot partnering workshops since May 2000. We shall continue with this approach in future workshops.
- 9-27. Before we roll forward Project Partnering to all projects, we will continue our consultation with stakeholders based on the results of the pilot projects to ensure it meets with their general support. INFORMATION 28. This paper is issued for Members information. ---0---0---0--- File Ref. : HD(D)(QTF)7/1/5 Date : 18 August 2000