Wise in Choose The Appropriate Dredging Contract

This article is a resumed from "Managing Risks : How to Select the Appropriate Dredging Contract" a paper has been prepared by the Central Dredging Association (CEDA) Working Group on Effective Contract Type Selection (WGECS), TERRA ET AQUA

So, I'll make a simple resume for you to more understand how to be wise in choosing the appropriate dredging contract.

There are 6 main steps in choosing a dredging contract :

Step 1. Project Basis (Scope/Owner Requirements)

At this step, first we need to considered type of our dredging. Is that a maintenance dredging, capital dredging, land reclamation, coastal protection or offshore/seabed dredging. 

After we know it, we can prepare the dredging elements like doing preliminary studies which include surveys (multibeam, hydrographic, soil, environmental, UXO - Unexploded Ordnance, underwater installation/infrastructure, archaeological, morphological. Then we can start to prepare design, engineering, permits and financing design.

Then on the third step of project basis we can prepare the execution elements such as contract management requirements; monitoring; inspections; surveys; and research internally.

Step 2. Packaging of Work

In this step we can make WBS (Work Breakdown Structure) for our project. We can see what type of dredging we need, the available capacity or expertise; elements of projects and how we bundle outsourced elements. In some area, due to lack of material, we need to double think about how to manage our equipments and materials. We need to thinking more about the risk which we will face if we outsourced some elements.

Step 3. Risk/Opportunity Analysis

After we understand enough about what we do and what we need, we can start to analyze the risk. Nowadays, some company already used ANN (Artificial Neural Networks) for analyze the risk of their project.

In general, we can do risk and market analysis for our project. Considering technicala, legal, financial, geographical, spatial and safety elements is one of important things we can do. We need to know client knowledge/expertise level and know who is best suited to manage the various types of dredging and other aspects of risks. We can accept or avoid the risk. When we avoid, at that time we invite the insurance for accept our risks. Surely, the decisions will taken based on some deep analysis. At this stage also we need to know when or how to involve contractors.

Step 4. Contract type selection

At this step we need to know well the type of contracts according the risk and analysis we got from step 3. At the bottom table, there's some characteristics, responsibility allocation and boundary conditions for several contracts.

Step 5. Procurement Method
At this step, we start to prepare and evaluate design; awarding on price/quality (value for money). On this stage, the output of a value engineer is important. Because they will choose which method based on the comparison between value and cost. On this procurement method we will decide contract management and tender procedure. A good market analysis, including an estimation of the equilibrium of demand (for services) and supply (of providers), is very useful in procurement.
At this stage, we need to legally required to follow public procurement procedure, private tendering procedure. After following both of that procedure, we will get results : a contract with or without prequalification, competitive dialogue, BAFO/ Best and Final Offer, Negotiation. After that only we reach the next level is Contract Award. In some cases, there's no negotiation so that we can reach Direct Contract Award.

Step 6. Procurement process leading to contract award
After we reached the Contract Award, then the next things to do are:
- Relying on quality management and certificates of the contractor;
- Monitoring systems or mankind control of amounts or constructions;
- Independet inspection to be hired.

Here I attached the flowchart of this 6 steps.

In general, there's 5 key aspects we can consider while we choose the dredging contracts. That 5 keys aspect are:

1. Project Scope

2. Physical/environmental site conditions

3. Risk Allocation/liabilities

4. Owner's control/contractor's flexibility

5. Time&Schedule

6. Price and valuation

Okay, hope this resume can help you!!! :)