task a2
TRANSCRIPT
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Task A (942 words)
Motorways of the Sea (MoS) project procurement/delivery system proposal
Maritime transport is the backbone of international business or commercial exchanges. As a
result of globalisation, there is still more capacity of maritime transport in comparison with
road networks. Bottlenecks because of traffic congestion will hinder socio-economic
developments. Motorways of the Sea project is a concept that provides higher quality and
reliable Short Sea shipping experiences initiated by the European Commission and the EU
Member States. This is to promote cargo traffics from road networks to environmentally
friendly sea-based logistical routes. Financial support if available from European Union for
Implementation Projects such as port infrastructures, waterways, canal infrastructures;
Facilities for logistics, safety, security, administrative, customs procedures, icebreaking and
dredging operations and Studies for the project and pilot actions.
Construction is the industry that involves in the infrastructure works of Motorways of the Sea.
Construction provides the port infrastructures, waterways and canals and all the structures to
be sued in the facilities. To be able to construct structures, the project needs materials,
equipment, people and other resources that follow efficient progression. This efficiency
requires a project delivery system. In this industry, there are common types of project
delivery system which are Owner-provided delivery, Traditional design bid-build, Design-
build and Design-build variation. In Owner-provided delivery, owners perform the design
services and the construction work. On the other hand, Traditional Design Bid-Build is ideal
on projects where the owner needs both professional design services and construction
services while the Design-Build the owner contracts with a single company to provide the
design and to construct the project according to the design.
In the case of the construction of the structures of Motorways of the Sea projects, the ideal
delivery system is the design-build. In this system, the client has the single contract for the
design and construction in which the design-build contractor has the full responsibility of the
whole operation and the owner give all the control of the projects.
The projects of Motorways of the Sea involve totally different kinds of infrastructure works
that will require various forms of expertise that will call for the interest in using single vendor.
Being a single entity of the vendor, there is an easier level to manage for the part of the owner.In this time of system, there is the advantage of time. Lesser time is involved in the whole
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process of design and construction compared to the other systems. It is also believed that
design-build system can reduce the over-all cost of the project. Cost can be saved in the
streamlining the process and the creativeness of the vendor during the design development.
The Owner also has the security of a single responsibility compared to the other systems.
Base on the history of constructions, this type of system has been always favoured for
transportation and communication facilities and industrial projects which are included in
Motorways of the Sea projects. This system also has lesser claim exposure, has newer
technology and more innovative. There is also an over-all project optimisation compared to
design-bid-build system. Other advantages of this system that is applicable to the projects of
Motorways of the Sea can be seen on Figure 1.
Figure 1: Advantages of Design-build delivery system
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Project procurement strategy and Risks
In order to streamline the process of the Design-build delivery system of the
projects of Motorway of the Sea, it is best to choose Partnering strategy. In
partnering strategy objectives are agreed upon and dispute resolution and plans
are established but partners still maintain their respective independence and may
individually suffer or gain from the partnership while in alliance the parties
develop a single cohesive unit that jointly shares all risks and rewards based on
an agreement. Therefore if the project fails parties jointly share the agreed
penalty. Alternatively, if the project succeeds both parties share the rewards.
Partnering strategy is ideal to be used in the establishing of Motorways of the
Sea since this will aim to nurture development of initiatives and encourage
private sector involvements. Partnering strategy will support the type of
projects of Motorways of the Sea particularly the requirement of high quality
projects which will demand high frequencies and huge investments. In this case,
one of the partners will be responsible of the operations of a project of
Motorways of the sea. This partner is an equity joint venture that is developed
by both partners by their respective capital contributions.
Like any most partnering strategy, although the partners retain respective
independence there is risk-sharing. One of the risk involve is competition risk.
This is a significant factor in Motorways of the Sea as European Governments
are unable to enforce legal admission barriers for other competitors even to
protect the vested interests in Motorways of the Sea. Therefore, partnering for
projects of Motorways of the Sea will not be conformed to franchises as
partners are still threatened by competitors like any business entities trading or
operating in the same industry.
Other underlying risk for partners in projects for Motorways of the Sea is
demand risk. This is present due to the fact that there are alternatives routes that
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is based on quality-price ratio, reliability of the service and time efficiency. In
the case of Motorway of the Sea, demand risk is demonstrated on the change in
transport practices of users of the Motorway of the Sea.
Another risk is the operational risk that is usually present to moving markets
that will compose the partners cost of operation. One of this is the volatile fuel
prices, charter rate and ship prices thus compared to road infrastructures which
is lower in operating cost and lower volatility.