Hart: Waterfront project completed on time

A scanned copy of Professor Uff’s 512-page report, bearing his signature and the signatures of commissioner Desmond Thornhill and commission secretary Judith Gonzales, was obtained by Newsday and published exclusively on April 4. The report was laid in Senate on Tuesday.

6.11. Thus, on the Government Campus Plaza, the issue was not that the projects were being managed by the same client (Udecott) but that each project was let on a design-tender basis, each with the same recurring problems. Only in the case of design-build could disputes between contractor and consultant be avoided. Thus, the Minister’s conclusion was that the problem cannot be characterised simply as local verus foreign: the problem is the methodology. Where a contractor took responsibility for design and construction, problems were minimised; but there was no instance of local contractors and consultants combining to tender for design and build projects. The Minister also illustrated his points by reference to the Interchange Project on the Churchill Roosevelt Highway and the Uriah Butler Highway.

Local contractors were not prepared to bid and only one foreign bid was received. Mr Joseph stated that local contractors did not bid because the project required expertise unavailable locally, and potential local bidders were unable to source foreign partners. Mr Joseph attributed this inability to the limited tender period which was not extended. Mr Winston Riley of JCC added that local contractors were deterred because the original design for the Interchange was in structural steel which was outside the experience of local contractors.

6.12. Mr Caesar for Nipdec endorsed the comments of the Minister with regard to consultants and incomplete designs, while acknowledging that part of the reason may be the tight schedule for production of designs and tendering. There was also a problem with identifying local contractors with sufficient resources, whether managerial or labour resources, the latter being a particular problem in Tobago. Mr Samaroo continued, stating Nipdec employed local contractors for their road Enhancement Programme. For the Health Sector Programme, conversely, there were few local contractors or consultants with capability, so that foreign consultants in particular and some foreign contractors were selected. Nipdec also supported licensing of construction trades for Trinidad and Tobago.

6.13. Mr Calder Hart, in response to APETT, stated that Udecott initially worked exclusively with local consultants and contractors but became aware that there would be capacity issues. Foreign contractors were employed in the expectation that this would lead to partnering arrangements and technology transfer. On the Waterfront Project, around 80 percent of the workforce of 1300 were local workers. In terms of numbers of construction sector, whereas the Chinese workforce on the academy of the Performing Arts amounted to less than 700. The project had the aim of achieving a local content of 25 percent.

When these projects were let, the local construction market was operating at full capacity and there were labour shortages, which rendered the issue of training academic. Mr Calder Hart supported the Minister’s view on the need for foreign input, but saw this as a transitional strategy leading to local contractors participating in design-build and developing stronger project management skills than at present. Mr Hart stated that both the Waterfront Project and the Prime Minister’s residence and diplomatic centre had been completed on time and budget. Additional cost had been incurred on the Prime Minister’s residence, but this was for additional works. With regard to quality, there were issues on the Ministry of Education/Social Development Tower involving local architects and designers and involving foreign contractors for the curtain walling, where delay had resulted from the need to certify the materials.

6.14. One of the major challenges had been to move the financing of Government development programmes from a state driven model to a private sector driven model, in order to tackle problems of late payment. The Government traditionally financed its development programme as part of expenditure. A move towards private financing would allow improvement of cash-flow and encourage better achievement of time and quality targets. On the Waterfront Project the contractor was involved in training local workers, particularly tower crane operators. Udecott was working with foreign firms to increase local content and to encourage joint ventures.

6.15. In response to the Chairman’s question, the Minister stated that, while the Central Tenders Board had a percentage for local content, there was no minimum quota for other projects. Mr Riley pointed out that some local trades such as plumbing were subject to licensing and therefore had to be carried out by local tradesmen, although a foreign contractor could simply employ one local licensed tradesman to work with its own workforce. Mr Riley commented that to achieve a particular level of local content, MOUs were insufficient and there should be a system for points to be awarded to tenderers for local content and developing local skills. The local content needed to be handled at the design stage, for example to ensure that sizes are within the capacity of the local industry.

6.16. In general discussion it was agreed that there was a problem with the adequacy of soils investigations and with identifying responsibility or inadequate soils data, which was a common cause of delay and additional cost.

6.17. Mr Gary Turton, President of the TTIA expressed concern that the Commission was overlooking the fact that local architects had been responsible for many successful projects. Architects and Engineers are registered in Trinidad and Tobago so that foreign architects and engineers could not simply set up practice. There was nothing, however, to prevent buildings being constructed in Trinidad and Tobago to designs furnished by foreign architects and engineers. The practice of the International Union of Architects is for foreign architects in a host country to engage in a joint venture relationship with a local firm, which facilitated technology transfer.

Initial conclusions

6.18. In the Commissioners’ view no convincing comparison has yet been presented from which reliable conclusions can be drawn as to the relative performance of local and foreign contractors or consultants. The Commissioners readily accept that some foreign contractors and some foreign consultants have levels of expertise which is unmatched by the local industry. However, the Commissioners also accept that some local contractors and some local consultants have high skill levels in certain areas which compare favourably with foreign contractors and consultants.

6.19. Minister Imbert himself expressed the opinion that where projects ran into difficulties, the common feature of those projects was the use of the design-tender model rather than whether the parties involved were local or foreign. This is borne out by the evidence that delay and cost overruns attributable to incomplete and inadequate designs, inadequate site investigation data and general poor management practices can occur on any project using the design-tender model.

6.20. It is clear however, that there are areas in which the local construction industry does not presently have the capacity or ability, without assistance from foreign firms, to undertake certain types of projects which Government policy presently demands.

These include projects requiring complex structural steelwork, such as the Churchill-Roosevelt inter-change project. Such projects can be undertaken by local firms in collaboration with foreign firms with requisite capacity and expertise. The local industry also presently appears unable or unwilling to undertake substantial design-build projects. This is considered in the next following section of this report. It is clear that design-build requires co-operation between contractors, designers and other professionals which is presently lacking within the local industry. There is no reason to conclude, however, that if design-build is to play a significant and continuing role in construction projects in Trinidad and Tobago, the local industry would be unable to adapt to its requirements.

6.21. The Government must guard against the possibilities of the local industry facing unfair competition through foreign firms being able to offer inducements not available to local firms, such as soft loans. There must also be a level playing field, for example, by ensuring that foreign tenders are based on minimum wage rates. While that is a standard tender requirement, it appears that contractual arrangements are not always honoured. It seems clear that the construction market in Trinidad and Tobago should be open to both domestic and foreign operators. The question is whether local firms should be afforded protection, as considered in the discussion on the White Paper below. As pointed out forcefully by representatives of the local industry, the placing of one or more major projects in the hands of foreign contractors or consultants engages many different issues. These include the short-term social consequences of bringing in foreign workers and the long-term effects on the local construction industry, both positive and negative. We were not made aware of any systematic policy or practice being employed when making decisions about the use of foreign contractors and consultants. It is sufficient at this stage to say that we are firmly of the view that such policy or practice should exist and should be both transparent and open to review.

7. Issue (v) Effectiveness of turnkey or design and build, compared to traditional design and tender.

7.1. The Commissioner issued a paper on this issue which is included as Annex 12. Written Submissions were received from The Hon Colm Imbert, Minister of Works and Transport; Jack Bynoe, president of the Trinidad and Tobago Institute of Architects (TTIA); Nipdec; the JCC; Arun Buch and Associates Ltd and the Institute of Surveyors of Trinidad and Tobago (ISTT).

7.2. The Commissioners’ discussion paper pointed out that the Employer must provide a clear design brief and must accept the Contractor need only achieve minimum compliance with that brief. The tender process usually included a design competition which could result in wasted effort. There was advantages in terms of cost and time to the Employer and work could commence at an earlier stage in the design cycle. The Employer, however, could not maintain control over the design, as in the case of traditional design-tender, and design-build was more likely to produce quality issues.

7.3. Minister Imbert, in his written submission, took issue with points made both by the Commissioners and in the written statement of Mr Bynoe. In particular, Minister Imbert disagreed that design and build delivery systems could lead to the substitution of inferior or cheaper materials. The quality of design-build was more likely to produce quality issues. The quality of design-build projects has been good, as demonstrated by the International Waterfront project, including the Hyatt Regency Hotel. He also took issue that design-build resulted in waste of time and effort by consultants and contractors. That view was out of tune with economic realities and there were many examples of architects and contractors being willing to enter design competitions. Minister Imbert accepted that much depended on the quality of the user brief, which could be tied to published standards and industry norms, and the terms of the design-build contract. The quality of design-build projects in Trinidad and Tobago compared favourbaly to design-tender projects. The Government was of the view that the advantages of design-build far outweighed those of the traditional design-tender approach, particularly in having a single source of responsibility and the avoidance of a “blame game” between contractor and consultant.

7.4. Jack Bynoe on behalf of the TTIA was opposed to the use of design and build as currently used by Udecott and other Government entities as being a waste of consultants’ time and an unwise use of resources. The TTIA proposed, for the more efficient use of design-build, the use of an Owner’s Consultant to bridge the gap between owner and designers. Mr Bynoe agreed with the written submissions of the JCC which were presented by Mr Riley. Mr Riley quoted from the work of Professor John B Miller of MIT who stated that design-build was not inherently preferable to other delivery systems and that there was no delivery method that is uniquely and consistently best for all infrastructure projects. While design and build is said to account for some 35 percent of non-residential construction in the USA, procuring agencies were required to demonstrate that the method had clear advantages. There were several different approaches to design and build, most of which had not yet been tried in Trinidad and Tobago. Each approach would require the development of procurement rules.

7.5. Arun Buch, in a comparative paper addressing all procurement systems, noted that while design and build may provide an answer to the reported ills of time and cost overruns, it can run into difficulties in a number of situations and requires astute evaluation of tenders. Udecott’s method of “full open design-build” may not be the ideal approach: if it were clients the world over would be using it. Mr Buch produced a list of disadvantages of this approach and proposed a modified design-build arrangement with use of a designer commissioned to examine and evaluate alternative concepts. The report goes on to discuss alternative ways in which design and build may be successfully implemented to produce high quality projects.

7.6. The ISTT noted that, while no single factor can guarantee the success of design-build, one of the most important factors was the organisational framework of the construction project. While design-build was seen to be successful in the USA, the system there has been in operation for some 40 years and the ISTT suggested that the introduction of design-build in Trinidad and Tobago should similarly be a long-term aim. ISTT accepted the potential advantages of single point responsibility, the integration of design and construction and of quality competition. They emphasised, however, that design-build required a change of environment and attitude. The success of design-build also depended on the nature of the project and required precise definition of the Employer’s Requirements, for which a design consultant might be required. It is also to be borne in mind that design-build is championed by powerful vested interests.

7.7. Nipdec, in their first submission, state that they have not used design-build, but offer the comment that their failures, in some cases, to deliver projects within quality, schedule and cost requirements do warrant review of delivery methods. Nipdec accept that failures have occurred due to inadequate in-house expertise, poor site selection, poor design, deficient contract documentation and deficient project and construction management by both local and foreign consultants.

In their second paper on Issue (v) Nipdec comment on the Commissioners’ Discussion Paper. They agree that qualified design personnel should participate in the preparation of the design brief and that the Employer must undertake preliminary engineering to provide clarity in the brief. It is noted that design competition is not always desirable.

Nipdec disagreed that design-build was more likely to generate quality issues or that inspection requirements may be relaxed. Nipdec thus saw many advantages in design-build and believe that adequate protection exists within the Contract framework to achieve successful delivery.

7.8. Issue (v) was dealt with orally by submissions taken in the form of a round-table exchange, which took place on January 29 and 30, 2009 and was conducted between the following persons: Minister Imbert, Vaughan Lezama (APETT), Jack Bynoe (TTIA), Mikey Joseph, president of the TTCA, Mr Arun Buch (Consulting Engineer), Alan Cochran (IQS), Winston Riley (JCC), Professor Winston Suite (formerly of UWI) and Wendy Ali (Nipdec).

7.9. Minister Imbert explained the Government’s preference for design-build as providing a way out of the problems of time and cost overruns and of disputes about delay, quality issues, design errors and liability in general which have occurred on many projects. Design-build provided a single point of responsibility. The success of the system was demonstrated by the International Waterfront Development Project and the Prime Minister’s Residence and Diplomatic Centre, also the Performing Arts Academy. The Construction Sector Institutions, both contractors and consultants, had mounted tremendous opposition, based on preserving the status quo. The three projects had used the 1999 FIDIC Conditions of Contract for Plant and Design and Build. An alternative was the 2005 JCT Design and Build Form of Contract.

The three major design-build projects in Trinidad had all been undertaken by foreign contractors. In contrast, a number of high profile design-tender projects undertaken by local contractors had ended up in serious delay and with major disputes. On the Churchill Roosevelt-Highway Interchange Project, the contract had been switched to design-build and has been successfully completed. The Government was anxious that the local construction industry should embrace design-build, but there was much resistance.

7.10. Minister Imbert referred to Government statistics showing that between 2002 and 2008 the unemployment rate had dropped from 10.4 percent to 5.3 percent and the number of persons employed had risen from 525,100 in 2002 to 588,400 in 2008. The vast majority of additional employment occurred in the construction sector. The Government had had difficulty in getting bids from local contractors indicating that they were working near capacity and there were no more construction workers left to hire. Use of design-build has not therefore resulted in unemployment: the opposite was the case. Minister Imbert described Udecott as the major agent of change for design-build and the instrument of the Government. The Government was, however, willing to work with the local industry to deal with perceived problems with respect to design-build. There were clear criteria that can be used to establish the best bid.

7.11. Mr Riley said that the JCC had no position on the issue of delivery systems, which had been under discussion for some time. Design-build needed to be analysed with respect to conflicts, quality control and design problems. No single delivery system was appropriate in all circumstances and it was not necessarily the case that design-build was the lowest cost. Mr Riley said that no contract should be awarded without a priced and competitive tender. No design-build projects should be tendered without detailed owner requirements and performance specifications, and with the design completed at least up to design development stage. The largest area of disputes on design-build was where the owner’s requirements are not properly defined. Design-build proposals should be judged on life-cycle costs, not just capital costs. Furthermore, most design-build projects in Trinidad and Tobago had not finished on time or within budget.

7.12. Arun Buch commented on the incidence of disputes at the Government Campus project. This had been let to four different contractors, each of whom had blamed the others for delays with the result the client ended up paying. With regard to design-build, Mr Buch had been involved in four successful projects. However, the model generally adopted, including that for the Waterfront Project, was not open to design-build tender. This would run the risk that the lowest bidder would be the one paying least regard to quality control, which involved more cost. Achieving the best product required establishment of tender rules which allocated points to design quality as well as price. The rules could provide for unsuccessful bidders to be reimbursed for their design costs.