The value of good (dredging) Consultants

Introduction

It has long been recognised by industry insiders that proper preparation for a marine development be it a greenfield development or an expansion to an existing facility is the cornerstone to a successful project. A developer of a project may not have the necessary technical expertise in-house to perform the feasibility study and the detailed design, or the project management skills to ensure delivery both on time and within budget, so it will seek industry expertise by approaching consulting engineering organisations both nationally and globally.

Over the past 50 years with the infrastructural challenges in the maritime, coastal and delta regions of the world including the construction and maintenance of ports and waterways, land reclamation, coastal protection and marine projects related to offshore energy, the consulting engineer has played a pivotal role in such projects. The phrase “consulting engineer” is combining “engineers” and “consultants” in one. In practice there is often overlap but also one can experience a distinction of generally large engineering firms focussing on (detailed) design, and technical consultants who advise the employer on all technical and managerial aspects of project development (including contracts, scheduling, risk assessment, etcetera).?

Knowledge clusters have been built up in various countries, with universities specializing in these sectors, producing graduates and performing academic research. Various consulting firms from developed nations such as the UK, USA, France and the Netherlands have expanded globally using such expertise and are in direct competition with national consulting engineers in developing countries. The top 225 consulting engineering organisations generated US$70 billion in design revenue in 2014 from projects outside their home countries[1] .

Many of these firms are affiliated members of Fédération Internationale des Ingénieurs-Conseils (FIDIC) which is the International Federation of Consulting Engineers. One of FIDIC’s objectives is to “improve the business climate and promote the interests of consulting engineering firms globally and locally consistent with the responsibility to provide quality services for the benefit of society and the environment”.

Selection of the consulting engineer

FIDIC publishes a suite of contract conditions for use by its members in construction works in which the Engineer plays a key role through the life of a project from inception to completion and project close out. It should be realised that a FIDIC Contract is a contract written to maintain the function of the Engineer. With this in mind if using any of the FIDIC suite of contracts the selection of a competent consulting engineer is paramount and proper preparations on employers side is crucial. This is also true for many other contracts commonly used in international contracting. ?So how do you recognise and select a good consulting engineer?

It’s important to realise that “bigger is not always better”. Whilst the consulting engineering profession has seen the rise of large, global consulting engineering firms, at the end of the day it all comes down to the people who may be involved at the front end and not what the glossy brochure promises. It is a knowledge industry after all.

As an Employer intending to put a project out to tender make sure you are well prepared with a team of professionals (either in-house or temporarily insourced). Careful vetting of the proposed team members is required, and in fact it doesn’t matter where they come from: Experience, knowledge, and ability to perform and co-operate in the team are the key criteria.

Outsourcing of specific and well-defined tasks is perfectly possible. Often the choice is made to put all of this with one large consultant, however the employment of a number of smaller and specialized consultants should be evaluated carefully as these specialisms exist for a reason: it is the detail that counts. Assignments like master planning, hydraulic modelling, meteocean studies, navigation simulation, economic feasibility can best be contracted to consultants or firms being top expert in these respective fields. In an increasingly complex and rapidly changing world, with increasing specialisation there is a role for small ‘boutique’ consulting engineering firms who have personnel with the required expertise which may not be readily available in a large consulting engineering firm. With the interconnectivity of the internet and knowledge based platforms without any restrictions of national borders it is increasingly easier for employers to find consulting engineers who may not have a national or regional office, and the smaller consulting engineering firms can compete on a like for like basis. The value of primary, independent information and insight has never been more important in providing knowledge to employers and stakeholders alike.

Specifics of dredging and reclamation projects

With respect to any dredging scope which may be required for a port development project the investment costs are usually high (often half of the total investment in a capital port project)

The classic engineering (structural & detailed design) is not the main task here. The key and crucial advice is on the following parameters:

·?????? Ground investigation

·?????? Construction schedule and cost estimate

·?????? Risks and mitigation

·?????? Technical Specifications

·?????? Measurements (hydrographic survey, geotechnics)

·?????? Specifications and conditions

·?????? Provide input for EIA

Coupled with this the consulting engineer may have valuable input for the drafting of the contract (with specifications and conditions etc) as input for the tender procedure. It is often thought that this should be left to project managers and/or lawyers however the consulting engineer must have a vital role in identifying the key project risks and developing a realistic risk allocation between the parties.

Specialized experts in the field of dredging and reclamation are recommended, simply as it is the specialization (combining technical, commercial and contractual knowledge and experience) that provides the added value to the Employer project team.

A well-known proverb is “If you pay peanuts you get monkeys” alas the same is true with respect to the perceived budgets for consulting engineers in marine infrastructure projects. Often consultants face the commercial pressure of meeting an employer’s unrealistic budget for this crucial stage of any project. When a race to the bottom is the result, this is not likely to provide for the best qualified consultants.. Port projects of several hundred million US$ are commonly spending 5 to 10% on employer costs. Most expensive are site investigations, design work and Environmental Impact Studies. The actual costs on consulting engineers is usually less than half of the employer costs (say 2 to 4%). The risk profile for contingencies (‘unforeseen’ costs) for such a project value may amount to 10 to 20% of the project sum .

If we assume a 30% variance in consultant’s fees, this variance would amount to less than 1% of the project sum. In the perspective of a risk profile of 10 to 20% this is so small, that the employer should genuinely investigate whether any saving on consultants fees could backfire by means of getting less experienced people in his team coupled with the reduced capacity to mitigate risks, negotiate key terms of the contract and possibly an increased risk of an expensive dispute resolution process or arbitration.

With the cost of a usual arbitration hearing running at between US$150,000 and US$200,000 per day it does not take much to calculate that the costs of any arbitration would soon wipe out any perceived savings by selecting consultants on price alone.

More than “Build-only” contracts

Design & Construct contracts or PPP or Early Contractor Involvement is often advocated as saving the Employer time and/or money during tender preparation. However these contracts are usually quite complex, and require extensive knowledge and experience of the employer team during the preparation and negotiation phases. A combination of technical, commercial and contractual knowledge is required. Most employers do not have all this readily available so should look to the advice of consultants for this. So the Employer might well save money on "detailed engineering" but this needs to be spent at some stage by the Contractor: it is only a matter of to whom it is allocated. A real benefit is that the Contractor can perform the detailed engineering tailored towards the intended construction methods and the equipment available, instead of making it a “desk-exercise” only.

An interesting development on large scale design & construct projects is the deployment of a combined tender & project team under a competitive tender environment where consulting firms team up with contractors to design and execute the project. This allows the development of innovative solutions which are for the ultimate advantage of the employer. However such an approach does have high up-front costs for tenderers with only a single group being awarded the project so unsuccessful tenderers do have a high risk of non-recoverable and abortive costs. Ideally the tender process should include provisions that tenderers recover some of their tender costs in return for delivery of Intellectual Property of the submitted tender and designs. ?

Rotterdam Port Expansion (Maasvlakte 2): The Employer

The Port of Rotterdam Authority was the principal for the Maasvlakte 2 development. A project team was composed by means of a combination of Port of Rotterdam staff together with external experts, both being insourced into the team. The team developed organically, with experts hired when necessary and as long as necessary.

The majority of the actual preparations and project tasks were performed in-house, like scheduling, functional specifications, cost estimates, drafting contracts, tender procedures, lenders agreements. Only specific studies were executed by third parties on assignment by project team members. No tenders have been applied for consultancy work, with the exception of the EIA.

The contract for phase 1 was a Design, Construct and Maintain contract with functional requirements as the basis for the design, to be developed by the contractor. This allowed for ample optimization possibilities.

It is believed one of the key attributors to the success is the remarkably constant team composition throughout 2004-2014 (true for both Port of Rotterdam staff and insourced experts).

Rotterdam Port Expansion ( Maasvlakte 2): The Contractor

Innovation is a key characteristic of Maasvlakte 2 the new port extension in Rotterdam, the Netherlands: from design to realisation and maintenance. Between 2008 and 2013, the? consortium of Boskalis and Van Oord? realised the first phase of Maasvlakte 2 on behalf of the Port of Rotterdam Authority. Maasvlakte 2's first phase comprises 700 ha of new port area, 8 km of sea defence and 3 km of quaywall. Headed by experienced engineers of Boskalis and Van Oord, and working in partnership with a variety of engineering firms the team developed and implemented a variety of innovative aspects in the design and execution of the sea defences. . The innovation (instead of just repeating what has been done before) reduced the construction and maintenance costs and also the required amount of building materials hence the environmental footprint of the project.

?Conclusion

In the consultants engineering field the technical consultants can assist the developer/employer based on background and practical technical knowledge and experience in performing/managing? projects, they can advise the employer in defining the strategy (the right type of contract) and deal with operational challenges such as planning, estimating, tendering, reviewing contractor’s proposals and the like. So one can see that the consulting engineer has a valuable role to play in the entire life of a project from inception, feasibility, design preparation through to project execution, contract management and any issues surrounding ongoing maintenance.

Employers have various excellent alternatives for a“one-stop-shop” at global consulting engineering firms. Experience, knowledge and competence are the key parameters in selecting the individual consultants and subsequently trusted to manage the development of the project professionally, in close cooperation with the Employer’s team.

[1] Source – ENR.com