Banedanmark Signalling Programme Managing risks in the Signalling Programme
IDA Risk Conference
6th of June 2013
Gunnar Lohmann and Lars Frisk
Teaser
How has Risk Management been an integrated part of the Signalling Programme, which saved 4,8 billion DKK during contracting – and how will Risk Management be used further on
in order to secure the savings remain.
Agenda •
Introduction to the Signaling Programme
•
Key risks to the programme
•
Procurement strategies
•
Procurement execution
•
Outcome of procurement
•
What are the key risks today?
•
Presentation of applied Risk Management Process and System.
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Danish signalling needs to be renewed now Banedanmark is the owner of DK railway infrastructure: • Replacement • Maintenance • Operation 60% of all signalling will exceed absolute final service-life within 15 years Life of DK- ATC expires in 2020 It takes 10-12 years to renew all signalling assets. More systems have risk of serious breakdowns even today. 50% of today’s train delays are due to signalling failures.
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Two different systems Conventional network (Fjernbanen): •
ERTMS 2 and modern centralized signalling infrastructure and onboard
S-banen:
•
Modern metro/urban system - CBTC
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Time schedules Phases Fjernbane and S-bane
2009
Fjernbane 2021
S-bane 2020
2010
2011
Procurement (2.5 years)
Procurement (2 years)
2012
2013
2014
Design (3 years)
Design (2 years)
Test (1.5 years)
2015
2016
2017
Test (3 years)
2018
2019
2020
Roll-out (4 years)
Roll-out (4 years)
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2021
2022
Financial key figures
Total renewal of all assets
Central government reserve 30% Total costs
Fjernbane
S-bane
11,4
3,1
3,4
0,9
14,8
4,0
All figures in Billion DKK
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Activities improving the infrastructure are closely related
The Signalling Programme
–
Enables new projects
–
Influences timing of other projects
–
Reduces costs of other projects
–
Potentially delays other projects
–
Must be planned in close cooperation with other projects
–
If delayed: serious risk for other projects in general !!
In focus the coming years–in addition to the SP
Copenhagen – Ringsted Landworks in relation to Fehmarn Belt fixed link Freight corridor between Sweden and Germany Electrification The ”1-hour Model” The side lines
Key risks to the programme Top of mind in the programme and procurement phase •
Achieve political buy in to the SP
•
Build an organisation within BDK, capable of executing the SP
•
Achieve real competition during tendering and high quality contracts
•
Failure in system integration
•
Poor collaboration during execution
•
Delays in safety approvals
Procurement strategy •
Early dialog with suppliers and supplier analysis
•
Functional and performance based requirements: let the Supplier supply existing well proven systems
•
Minimum development risk approach.
•
New operational rules: remove national monopoly barriers
•
Negotiated procedure
•
Keep all prequalified bidders in the game until the end
•
“Sell” BDK as reasonable customer
•
Strong mindset of transparency and equal treatment
•
Risk must be placed with the party best able to mitigate it
•
BDK overall responsible for system integration
•
Large contracts
•
Fixed scope/time/price contracts
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Procurement strategy - continued Design Build Maintain contracts – 5 to 25 years of maintenance •
2 Contracts on main & regional lines (East and West). Possibility of same supplier for East and West excluded
•
1 Contract for on-board main & regional rolling stock
In addition a number of other contracts (GSM-R, Civil work etc)
TMS Coordination by suppliers
East contract
West contract
All supply & implementation from track to TMS
Rolling stock contract
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Procurement execution The tendering process a.
Prepare tender material, including peer review
g.
Adjustment of tender material
h.
BAFO (Best And Final Offer)
b.
Prequalify bidders
c.
First Negotiation Tender
d.
Evaluation
i.
Negotiation with each awarded supplier
e.
Clarification meetings
j.
Contract signing
f.
Negotiations divided into topics
No short listing
Determining negotiation strategy Listen – explain and find solutions together Cable ducts Hidden installation
Risk for theft and vandalism Collateral
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Procurement execution - continued Structured price feed back •
Preliminary tender prices evaluated
•
6 bidders, each providing a bid for the East and the West contract
•
Benchmark: average of the 3 overall cheapest bidders
•
Process cleared by Kammeradvokaten
Step 1: Analysis of all prices submitted Step 2: Meeting all suppliers to ensure consistency between price submitted and contents of each cost figure are comparable Step 3: Analysis of each supplier compared to the benchmark
Step 4: Meeting on all major cost items with suppliers. Cost and tech experts. 10 meetings per supplier
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Procurement execution - continued Structured price feed back - what did suppliers say Above benchmark: Clear challenges Below benchmark: Good news ! But the benchmark will move downwards. Feed back: •
Clear pointers of where the price challenges is
•
Cost team used this towards their internal departments
•
Management shared the feed back to top management
•
Some areas lead suppliers to do more analysis and optimize the bid & price
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Outcome of procurement
•
2x6 competitive bids submitted for the Main Line (Fjernbanen)
•
Well below target budget. Contract signed January 2012 with Alstom for East and with Thales-BBR for West
•
5 bids submitted for On-Board. Within Target budget
•
Contract signed with Alstom March 2012
•
There is a high degree of similarity between the contracts, enabling good contract management
•
Post contract signing a consultant within procurement has assessed one of the contracts and reached the conclusion that the contract is well drafted and very comprehensive
Overall: A reduction in the overall SP budget of 4.8 billion DKK has been made, to a large extent due to savings from the Fjernbane contracts
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What are the key risks today? •
Failure in System integration
•
Rolling stock is not ready in time
•
Failure in education of TOC personnel (e.g. train drivers)
•
One of the Suppliers (East, West, On-board or CW, GSM-R, STM, FTN, ESB) is delayed impacting other Suppliers
•
Interdependencies with other projects (e.g. Electrification programme and 1-hour model)
•
Duration of level crossing approvals are more time consuming than expected.
•
Delays in safety approvals
•
Development of advanced functionalities
Presentation of applied Risk Management Process and System.
Agenda • Overall Purpose of Risk Management • Risk Objectives and Basis
• Risk Organisation • Risk Ownership • Risk Management Process • Risk Register • Risk Reporting
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Overall Purpose of Risk Management
•
Identify risks, that may have significant influence on a given projects objectives
•
Reduce the risks
•
Put risk on the agenda
•
Risk acceptance
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Risk Objectives and Basis •
Cost (budget and life cycle cost)
•
Time (delay)
•
Quality (channel punctuality)
•
Based on the principles from Prince 2 and MSP (Managing Successful Programmes)
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Organisation to handle risk management in SP Fjernbane Railway Programme Dir. incl. Sec., Programme and Contract management
Programme Risk Manager
Fjernbane Project East
Fjernbane Project West
On-board Fjernbane incl. STM
Supplier's
Supplier's
Supplier's
Risk Manager
Risk Manager
Risk Manager
Project
Project
Project
Risk Manager
Risk Manager
Risk Manager
EMO, ESB, FTN, MCP, Safety, GSM-R
CW, OI, PMO, SPOR20, OHS, Training
Project
Programme
Risk Manager
Risk Manager
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Principles for risk ownership
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Risk Management Process –
All external risk reporting outside the Signalling Programme is controlled by Programme Management.
–
All internal risk reporting is only controlled at project level.
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Main view – add/edit risks and opportunities
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Fjernbane status (2013-06-05) Risks
Controls (risk reducing measures)
New
67
Open
178
Closed
179
Discarded Total
78 502
Possible
159
Planned
127
Ongoing
325
Done
748
Discarded
118
Total
1477
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Risk reporting 1. Monthly one-page risk status from each project. 2. Monthly risk status at programme level to Programme Management. 3. Quarterly risk status report
to Programme Board 4. Risk status to Ministries when requested.
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Lars Frisk (
[email protected] and
[email protected]) Gunnar Lohmann (
[email protected])
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