Project Solution

In determining the best Project Solution that it can offer to the Owner, each Proponent will identify, assess and compare options on the basis of potential cost and risk reduction. The activities and processes required to develop the Project Solution are decided as the team determines how best to produce the deliverables required by the Owner by the milestone dates, using information already known or as it becomes known and the resources are available.

For most projects these processes include design options development, assessment, design management, construction planning, procurement planning, risk analysis and value engineering of preferred options. Options should include preliminary assessment of construction methods, delivery methods and procurement strategies, assisted by estimating or cost benchmarking and targeted risk assessment and modelling if required.

It is in this stage that collaboration with the Owner produces the most valuable results as the Proponents tap into the Owner's experience and knowledge of the project and understand its VfM objectives.

Innovation of solution options in optimising physical quantities, resources and delivery methods has the most significant impact on pricing during TOC development as the solution is the primary driver for all other costs.

Selection of the preferred option will usually result in a 'design freeze' from which scope and quantities are defined for detailed cost estimating and commercial assessment as the designs, construction methods and associated procurement strategies are further developed towards the final Proposal.

Historically, in non-price selection a disproportionate level of attention is often focussed on the NOPs Fee. The Fee is usually of the order of 10% of the total TOC. The weight of focus of the Proponent and the Owner should be on the balance of the project price, representing the estimated cost of delivering the Project Solution. It is the Project Solution represented by the design solutions, construction methods, procurement and project management approach and contingency and escalation allowances that have a far greater impact on TOC and the VfM proposition to the Owner than the NOPs Fee.

The significance of the Project Solution on the TOC is illustrated in Figure 13 below.

An Owner focused on innovating the Project Solution and associated costs will have a much greater impact on the agreed TOC and a higher level of certainty that VfM is satisfied than an Owner who is a passive partner to the better informed Proponents.

Figure 13: Significance of innovating the project solution