Iraq Reconstruction – Shifting Strategies …a Contractor’s Perspective
Kathye A. Johnson Hill International, Inc. November 5, 2004
Who we are • Hill International, Inc. – International Program / Construction Management Consulting Firm – Headquartered in Marlton, New Jersey
• Member of Stanley Baker Hill, LLC (SBH) – Stanley Consultants, Inc. (Muscatine, IA) – Michael Baker Jr., Corp. (Pittsburgh, PA) – Hill International, Inc. (Marlton, NJ)
• Construction Management and General Architect / Engineering Services Contractor supporting the U.S. Army Corps of Engineers in Iraq
Iraq Reconstruction – Shifting Strategies
Basic Elements of Good Strategy 1. Establish A Clear Mission / Definition Of Success 2. Understand Your Starting Point 3. Recognize Key Challenges 4. Develop A Sound Strategy & Implementation Plan 5. Align Personal Objectives 6. Allocate Resources To Achieve Success 7. Manage Stakeholder Expectations 8. Measure Performance
9. Adjust the Strategy…!!!
Strategic Objectives in Iraq ‘Our goal is to give the Iraqis a country based on democracy, freedom, individual rights of men and women, a free market system; an Iraq that will live in peace with its neighbors and with the world community.’ —Secretary Colin L. Powell— March 19, 2004
Democracy/ Freedoms
Economic Development
Security
Outcomes
Exit When: • Secure Environment • Economic Stability Achieved • Democratic Processes In Place
Four Steps to Iraqi Freedom Step
`
Mission
Overthrow
Oust Saddam
Liberate
Rebuild Iraq
Partner
Nation Building
Exit
Diplomacy
Rebuilding Iraq • Means rebuilding the Infrastructure – 2800 projects spread over six sectors • Electricity • Public Works & Water • Oil • Buildings, Health and Education • Transportation and Communications • Security and Justice
• Exit when infrastructure rebuilt
Strategy for Implementation • Private Sector Driven • Schedule Driven; Focus on Speed – Pay for Contractor Mobilization – ID/IQ Task Order Contracts – Cost Plus Award Fee
• Baghdad Centric – Iraqi Ministries are the customer, i.e. set priorities
Implementation Organization CPA Program Management Office (PMO) The Project and
Within the Scope of the SOO
CPA Governing Contracting Office Council Iraqi Ministries
Needs
Needs
PM Office
Regional Governates
International Comm. Donors IO’s NGO’s
Iraqi Donor Coordination Mechanism
Implementation
Sector PM Offices*
Oil
Electricity
Public Works/ Water
Security/ Justice
*PMO and Sector PM Offices Federal/Coalition Employees Sector PM Contractor Iraqis (capacity bldg) Iraqi Ministry Sector Rep
Trans/ Comm
Bldgs/ Housing/ Health
Director of Construction
North
Central
South
Regional Constr. Mgmt. Offices
Project and Contracting Office and Construction Contracts Project and Contracting Office (PCO) Services (Up to $50M) AWARDED 10 Mar 04 to AECOM (CA-USA) $21,610,501
PCO Services Electrical Sector (Up to $55M )
AWARDED 10 Mar 04 $43,361,340 to
Iraq Power Alliance JV (Parsons Energy and Chemical Group (PA-USA) & Parsons Brinckerhoff (UK )
PCO Services Public Works/Water (Up to $55M )
AWARDED 10 Mar 04 $28,494,672 to CH2M Hill and PWI JV (CH2M Hill (CO) & Parsons Water Infrastructure, Inc (CA)
PCO Services Comm/Transp (Up to $15M )
AWARDED 10 Mar 04
$8,458,350.05 to Berger/URS JV (Louis Berger Group (DC) & URS Group, Inc (CA)
PCO Services Bldgs/Edu/Health (Up to $15M)
AWARDED 10 Mar 04 $10,754,664.07 to Berger/URS JV Louis Berger Group (DC) & URS Group, Inc (CA)
PCO Services Security/Justice (Up to $30M)
AWARDED 10 Mar 04 $8,458,350.05 to Berger/URS JV Louis Berger Group (DC) & URS Group, Inc (CA)
PCO Services Oil (Up to $30M )
AWARDED 10 Mar 04 $8,416,985 to Foster Wheeler (U.K.)
USAID Iraq Infrastructure II – up to $1.8b Bechtel -USA, Parsons-USA, Horne Engineering-USA
Electrical
Capacity Contracts $500K Minimum Up to $1,500M Generation $500M Ceiling AWARDED 11 Mar 04 Fluor-AMEC JV (Fluor: CA/SC in USA & AMEC in UK)
Transmission & Distribution NORTH $500M Ceiling AWARDED 12 Mar 04 Washington Intl Inc
Public Works/Water Capacity Contracts $500K Minimum Up to $1,700M
Public Works NORTH $600M Ceiling AWARDED 23 Mar 04 Fluor-AMEC JV (Fluor: CA/SC-USA & AMEC (UK)
Public Works SOUTH $500M Ceiling AWARDED 23 Mar 04 Fluor-AMEC JV
(ID –USA)
(Fluor: CA/SC in USA & AMEC in UK)
Transmission & Distribution SOUTH $500M Ceiling AWARDED 12 Mar 04 Perini Corp
Water Resources $600M Ceiling AWARDED 11 Mar 04
(MA-USA)
AFCEE
Wash Intl (ID in USA) & Black & Veatch (KS in USA)
PenRen
Comm/Transp Capacity Contracts $500K Minimum Up to $ 400M
Communications $75M Ceiling AWARDED 23 Mar 04 Lucent Technologies World Services, Inc. (VA-USA)
Transportation $325M Ceiling AWARDED 23 Mar 04 Contrack/AICI/OCI/ Archirodon JV (VA-USA) JV Partner Members: Contrack: DC-USA AICI: MD-USA OCI: Egypt Archirodon: Netherlands/ Panama/UAE
Army
Bldgs/Educ/ Health
Capacity Contract $500K Minimum Up to $500M
Bldgs/Educ/Health $500M Ceiling AWARDED 25 Mar 04 Parsons Delaware, Inc. (CA-USA)
Security/Justice Capacity Contract $500K Minimum Up to $900M
Security/Justice $900M Ceiling AWARDED 26 Mar 04 Parsons Delaware, Inc. (CA-USA)
Iraqi Military Bases $239M AWARDED 29 Jan 04 EarthTech (CA-USA) Parsons Infrastructure Tech Group (CA-USA) Shaw Environmental (LA-USA) Weston Solutions (PA-USA)
Navy
USAID
Oil*
Capacity Contract Up to $827M NORTH $415M Ceiling Awarded: 16 Jan 04 Parsons Iraq JV (Parsons CA,USA Worley – Australia)
SOUTH $412M Ceiling Awarded 16 Jan 04 KBR Inc. (VA-USA) *Total contracts are for up to $800M and $1.2B respectively, but only $827 can currently be funded from the Fiscal Year 2004 Supplemental appropriation
27-Mar-04
Manage Stakeholder Expectations Stakeholder
Interest
Iraqi Ministries
Set Priorities; Our Customer
Local Politicians
Want To Be Part Of The Process
Coalition Forces
Achieve The Peace
Department of State
Guide The Program; Interface With Iraqi National And State Governments
Corps Of Engineers
Provide Construction Management
Iraqi People
“You Can Put A Man On The Moon; You Can Fix Iraq”
Understand Your Starting Point • Dilapidated Infrastructure • War Torn; Worse than we expected • Electricity • Rolling availability; 5,000,000 people without electricity • Post War: 4200 MW Available; Demand 6500 MW
• Water • 40% without potable water • 94% of sewage untreated • Infant and child mortality greater than 10%
• Open Borders…
Sadr City Road Side Junk \Yard
Sadr City Street
Raw Sewage
Raw Sewage Back up
Sweet water Canal
Mosul Dam
Illegal Taps
Water Pipe With Bullet Holes
Iraq Flares Enough Gas to Produce 9000MW of Power
Key Challenges • Increased Insurgency / Security Requirements – Campaign of Intimidation – Delayed Definitization of D/B Task Orders
• Escalating Costs – Security & Housing 16%+ of Construction Budgets – Construction Costs 25-50% over Budget
• Difficult Communications Infrastructure • Growing Impatience – Military – Iraqi Population
• Communicating the “Good News”
New Allocation of Resources ($ Billions) Initial
Reprogrammed
Current
Buildings, Health & Education
1.1
+0.1
1.2
Electricity
5.5
-1.1
4.4
Oil
1.7
Public Works & Water
4.2
-1.9
2.2
Security and Justice
4.7
+2.2
6.9
Transportation and Communications
0.9
Private Sector Development
0.2
Admin Expense (USAID, State)
0.2
Sector
Iraqi Debt Relief
Total
18.4
1.7
0.9 +0.3
0.5 0.2
+0.4
0.4
0.0
18.4
Dealing With Key Challenges • Managing Our Own Moving & Changing Parts – 6+ Military Commands / Eliminating the Insurgents – 10 D/B Contractors / 6 Engineering Contractors – Multiple IT Support Contractors – 200+ Security / Life Support Contractors
• Securing the Borders – MNSTC-I – Iraqi National Guard
• Communicating the “Good News” – Success stories become “targets”
Is The Private Sector More Efficient? A Few Thoughts • Private Sector Implementation – Western or Local? – Cost Plus Contracts – Follow Regs? – Interface Costs Between Moving Parts
• Government / Military – Experience – Politically Driven – Rules, Regs, & Audits
Is The Private Sector More Efficient? A Few Thoughts • Less than 5% of Projects valued > $50M • Over 80% of Projects valued at < $1M – 1,400+ schools less than $100,000 – Local Village Roads – Train Station Repairs – Police and Fire Stations
• Trend toward fewer Renovations and more new Facilities • Combining Resources
Adjusting the Strategy • Increased Military Participation in the Reconstruction • Creating community based programs – AIRP (Accelerated Iraq Reconstruction Program – DFI) – CERP (Commanders Emergency Relief Program)
• Use of Local Contractors – SAP (Simplified Acquisition Process)
• Co-locate D/B contractor camps with Military / USACE • The 19 city plan drives security and economic development on a city by city basis – Najaf Example: State Department, PCO, and Military worked jointly together on a focused effort to restore Najaf
US Mission Iraq Ambassador
MNF-I Commander
John Negroponte
2
Area Spt Group
MNF-I DCG
DCMA
Legal Office Corin Stone
Deputy Chief of Mission
MNSTC-I
James Jeffrey
Executive Secretariat Lew Lukens
Resident in Embassy but not under CoM
MGT*
POL
ECON
Anne Derse
Robert Ford 6 Regional 14 Ops
Treasury Kevin Taecker
Security
Consular
POL-MIL
Steven Browning
Bill Miller
Paul Boyd (acting)
Ronald Neumann
Language Services
714 PAO** 6 6
Richard 14 Schmierer
IRMO ^ William Taylor
MSG TBD DET
DoL
(vacant)
FAS
DoT
ORA
Bob Kandra
DHS
James Smith (acting)
Christopher McMahon
Douglas Melvin
RCLO Gregory Kehoe
Justice Charles Larson ATF
USAID RIG
Christine Byrne
USAID
FCS
Spike Stephenson
HHS
(vacant)
Jeff Brinkley
ECON
DoS OIG TBD
CPA OIG Scott Bowen
PCO/ CSO
Charlie Hess
OPDAT FBI
DCAA
Jim Carrera
Legend: 1050
Number of US positions under CoM
DoS
Other DoS Unit
141
427
DoD 260
Other Agencies 222
*
Management: includes CLO, FMO, GSO, HR, IMO, MED, OBO
^
IRMO includes IRMO Exec., Ministry Consultants, Comm. Public Integrity, and Redirected Scientists Program.
ICITAP USM
Adjustments In Strategy
Organizing for Construction Success Director PCO Charlie Hess
Military Assts to the Deputy Directors
Chief of Staff COL Mayer
LTC Fran DeSirant USMC Executive Assistant to the Director – Bonnie Corbin
Facilities DCAA Maj Pacheco John Doherty
Deputy for Construction BG Bostick
Personnel LTC Stewart
Finance Colonel Marin
Special Assistant to the Director Mr. Marcus Sani
Counsel Maj Mink
Deputy for Operations (MG Chip Long)
Information Management / Technology Denny Plockmeyer
GRD TDA
Public Affairs Colonel Phillips
Deputy for Outreach Lars Jensen
GRD Program / Project Management Bob Slockbower
Logistics Jack Holly
Security Colonel Sinnott
Operations Center CAPT WRAY Lt Col Schweitzer
North COL Ubbelohde
Central COL Thompson
Project Management
RPCO
South
Construction Management
COL Gerber
Area Office
Liaison
Regional Coordinator
Not Shown: PCO Washington
HCA
( BG Seay )
Adjustments In Strategy
Organizing for Construction Success MSC / GRD / PCO “Connections”
GRD District
MNB-NW ( Mosul )
MND-NC
Area Office
RPCO
(Construction Management)
(Project Management)
• Mosul GRN ( Mosul )
( Tikrit )
• Tikrit • Kirkuk • Anaconda
MNF-W
• Ramadi *
( Ramadi )
GRC
+ 4 RCT ROs
MND-Baghdad
( Baghdad )
• Baghdad
( Baghdad )
( Hillah )
MND-SE ( Basrah )
GRS ( Basrah Talil )
(Liaison)
Mosul Tikrit Kirkuk
Baghdad / Ramadi
Ramadi
Baghdad
Baghdad
• Hillah
Tallil / Hillah
Hillah
• Tallil • Basrah
Tallil / Basrah
Basrah
+ 5 BCT ROs
MND-CS
Mosul / Kirkuk / Tikrit
Regional Coordination
Path Forward – Near Term • Eliminate the Insurgents / Restore Security – Continuation of the 19 Cities Program – Secure the Borders
• Accelerate the Reconstruction Program – Military Led – Local Contractor Participation
• Increase Private Sector Investment – Currently underway in Northern Iraq
• Donor Nation Participation • World Bank and United Nations Funding • Communicate the Good News!!!
Summary 1.
Establish A Clear Mission / Definition Of Success
2.
Understand Your Starting Point
3.
Recognize Key Challenges
4.
Develop A Sound Strategy & Implementation Plan
5.
Align Personal Objectives
6.
Allocate Resources To Achieve Success
7.
Manage Stakeholder Expectations
8.
Measure Performance
9.
Adjust the Strategy…!!!
Final thoughts…
• We are there… • There is No alternative to Success!
Q&A
Opportunity of a Lifetime…
Opportunity of a Lifetime…