Talha Asif — Infrastructure & PMO Executive

Author: admin

  • From PFI to PF2: What the UK’s Public Private Partnership Correction Teaches Saudi Arabia

    The PFI Model and What It Was Trying to Solve

    The UK’s Private Finance Initiative was launched in 1992 as a response to a genuine problem: the government wanted to invest in public infrastructure but was constrained by public sector borrowing limits. PFI offered a solution — private sector capital finances the construction of public assets, which are then leased back to the government over long concession periods in exchange for availability payments. The private sector bears construction and performance risk. Government avoids upfront capital expenditure. The public gets new hospitals, schools, and transport infrastructure.

    The logic was sound in principle. By 2018, the UK had signed more than 700 PFI contracts with a combined capital value of approximately £170 billion. Contracts spanning hospitals, schools, prisons, defence facilities, and transport infrastructure. Some of the world’s most complex infrastructure P3 transactions were structured under the PFI banner.

    What Went Wrong

    The problems that eventually undermined PFI’s political credibility were not accidental. They were structural features of the original model design that produced predictable outcomes over time.

    The refinancing windfall problem emerged clearly within the first decade of PFI contracts. Many early PFI transactions were financed at relatively high interest rates reflecting the uncertainty of a new and untested model. As the model proved itself and lender confidence grew, consortia refinanced their project debt at lower rates — generating significant financial gains that under the original contracts flowed entirely to the private sector. The National Audit Office documented cases where refinancing gains ran to tens of millions of pounds on individual transactions. Public perception of these gains — representing public subsidy being converted to private profit — created significant political damage.

    Flexibility constraints created operational problems that compounded over time. A hospital PFI signed in 1997 under a 30-year concession needed to manage the introduction of new medical technologies, changing clinical models, infection control requirements, and evolving maintenance standards. The contract’s variation mechanism — designed for occasional changes of limited scope — was not equipped to manage the pace and scale of change that healthcare delivery underwent. Simple changes that could be accomplished in a directly managed public facility in days required weeks of formal variation process and often resulted in pricing disputes. The transaction cost of managing contract variations became a significant operational burden on NHS trusts.

    The financing premium — the difference between PFI financing costs and equivalent public borrowing — proved larger and more persistent than the model’s architects anticipated. The National Audit Office estimated financing costs approximately 2-4% higher than public sector equivalent borrowing across the program. Across £170 billion of commitments, that differential compounds to an enormous aggregate cost over concession lifetimes.

    The PF2 Reform and Why It Fell Short

    The government’s 2012 PF2 reforms were a genuine attempt to address the most documented PFI problems. Public sector equity participation of 25% would give government a share of refinancing gains and a governance presence in consortium management. Risk transfer was to be refined toward risks the private sector could genuinely manage. Standardized contracts would reduce transaction costs. Benchmarking requirements would keep facilities management pricing competitive.

    The reforms were technically sound. But the political environment around PFI had deteriorated beyond the point where technical reforms could restore confidence. By 2012, PFI had become politically toxic in a way that transcended the specific structural problems. The announcement that no new PFI contracts would be signed effectively ended the program before PF2’s innovations could be tested at scale.

    Lessons for Saudi Arabia’s National Privatization Strategy

    Saudi Arabia’s NPS is structuring a P3 program with the full visibility of what went wrong in the UK. That visibility should be used deliberately, not merely acknowledged.

    Design risk allocation around what the private sector can actually control. Construction execution, lifecycle maintenance, and operational performance are risks the private sector manages well when the contract gives them genuine control. Regulatory risk, policy change, and public sector interface risks should be retained or shared — not transferred at a premium the concession cannot absorb.

    Build refinancing sharing from the beginning. This problem is entirely preventable through contract drafting. Revenue sharing, clawback provisions, and equity participation arrangements exist as well-documented contract structures. There is no reason for Saudi P3 contracts to recreate the UK’s refinancing windfall problem.

    Invest in contract flexibility architecture. The variation mechanisms in Saudi P3 contracts need to be designed for the pace of change in their sectors — particularly in health, education, and technology-dependent infrastructure. Pre-agreed pricing methodologies and structured variation procedures reduce the transaction cost of managing change throughout the concession period.

    The UK’s experience is not an argument against P3. It is an argument for structuring P3 correctly. Saudi Arabia has that opportunity. The question is whether the pace of the NPS program allows time to apply these lessons carefully as each sector is brought into the framework.

  • Availability Payment Regimes: How Performance Deduction Frameworks Shape Concessionaire Behaviour

    Why Availability Payments Work

    The availability payment model is the payment structure that makes P3 infrastructure delivery function in contexts where demand risk transfer to the private sector is inappropriate or unaffordable. Instead of the concessionaire earning revenue from users — and bearing the risk that those users will not appear in the numbers the financial model assumes — the government pays a service fee conditional on the asset being made available and performing to defined service standards.

    The model elegantly separates the risks the private sector can genuinely manage (construction quality, lifecycle maintenance, operational performance) from the risks it cannot (user demand, which is driven by public sector service and policy decisions). A hospital P3 concessionaire has no control over whether the clinical services in the hospital attract enough patients to justify the facility’s size. They do have control over whether the facility is clean, well-maintained, and operationally available to deliver whatever level of clinical service the health authority chooses to provide. The availability payment pays for the latter. The clinical activity risk stays with the health authority.

    How the Deduction Framework Works

    The availability payment is not a fixed annual fee. It is a baseline payment subject to deduction when the facility fails to meet the performance standards defined in the contract. The deduction framework is the mechanism through which the payment structure creates operational incentives for the concessionaire.

    Well-designed deduction frameworks share several characteristics. They are proportionate — the deduction for each performance failure reflects the severity of that failure’s impact on service delivery, not an arbitrary penalty that may be too small to motivate performance or too large to be commercially sustainable. They are certain — the concessionaire can calculate the financial consequence of any performance failure precisely, which allows them to make rational investment decisions about maintenance and operational staffing. They are focused — monitoring a small number of indicators that genuinely drive service quality produces better outcomes than monitoring a large number of indicators that create reporting burden without improving performance.

    Poorly designed deduction frameworks produce predictable problems. If deductions are too small relative to the cost of compliance, the concessionaire will rationally choose to accept deductions rather than invest in performance. If deductions are too large, the concessionaire will adopt risk-averse operational strategies that reduce service flexibility and add cost. If the monitoring framework is too complex, disputes about measurement methodology consume governance resources that should be focused on service delivery.

    The Response Time Trap

    One of the most common deduction framework design errors is calibrating response time requirements to the availability of resources in a high-performing major city. A requirement to restore a failed HVAC system in a hospital to full operation within 4 hours might be achievable in London or Toronto, where specialist maintenance contractors are available 24 hours. In a remote location, or during extreme weather, or during a period of supply chain disruption, that same requirement may be structurally impossible to meet regardless of how capable and well-resourced the concessionaire is.

    Deduction frameworks that do not account for location, access constraints, and supply chain realities produce deduction charges that the concessionaire disputes — correctly — as arising from conditions outside their control. The disputes consume governance resources. The relationship deteriorates. The contract’s commercial framework is undermined by provisions that were not designed for the actual operating environment.

    Designing for Saudi Arabia’s Infrastructure Context

    Saudi Arabia’s P3 program is deploying availability payment structures across a diverse portfolio of infrastructure types and geographic locations — from urban social infrastructure in Riyadh to remote industrial facilities in the Eastern Province. Calibrating deduction frameworks to the specific context of each concession — not importing frameworks developed for European urban programs and applying them to desert-climate, remote-location Saudi facilities — is essential for producing frameworks that actually incentivize performance rather than incentivize disputes.

    The frameworks being developed for Saudi Arabia’s water sector — building on three decades of BOOT experience — provide a valuable starting point. The commercial discipline embedded in those frameworks, and the institutional knowledge of what works and what does not in the Kingdom’s operational environment, should inform the structures being developed for new sectors as the NPS expands P3 delivery beyond water into health, education, and transport.

  • The OnCorr Model: What Metrolinx’s Mega Transit Contracts Teach About Large-Scale Delivery

    The Background

    To understand what OnCorr was designed to solve, you need to understand what came before it. Metrolinx had spent more than a decade delivering transit infrastructure through traditional procurement models — design-bid-build contracts, consultant-led design with contractor construction, sequential delivery stages. The results were mixed. Some projects delivered within budget and schedule. Many did not. And the scale of the programs being contemplated under Ontario’s transit expansion commitments — GO Regional Express Rail, the Ontario Line, the Eglinton Crosstown extensions — exceeded the capacity of traditional procurement to manage efficiently.

    OnCorr — the Corridor and Station Infrastructure programs — was Metrolinx’s response. Rather than procuring individual projects through traditional competitive tendering, the agency structured large-scale, long-term contracts covering entire transit corridors. The theory was that corridor-scale contracts would produce better outcomes: deeper contractor investment in the program, more efficient supply chain development, better coordination across interdependent work packages, and more meaningful risk transfer to parties with the capacity to manage it.

    The Consortium Structure

    OnCorr contracts were structured as joint ventures between major infrastructure firms with complementary capabilities. The corridor contracts attracted some of the most significant infrastructure companies active in the Canadian market.

    For Lines 1 and 2 (now identified as the Bloor-Danforth and Yonge-University subway corridors), the BACS consortium — bringing together major contractors with deep subway rehabilitation experience — took on the program. For Line 3, the ANM consortium led delivery. For Lines 4, 5, and 6 — the Sheppard, Eglinton, and Finch corridors — the FAST consortium structured the delivery approach.

    The consortium model was intended to concentrate capability. A single consortium responsible for a full corridor could develop systems knowledge, supplier relationships, and workforce capacity that individual project contractors could not. The theory was sound. The execution created challenges that were not fully anticipated at the time of contract structuring.

    What the Model Revealed

    Large transit programs are not merely engineering challenges. They are commercial, financial, and governance systems that need to function together across very long delivery horizons. The OnCorr model revealed several structural tensions that deserve serious analysis, particularly for anyone structuring ambitious transit programs in the Gulf.

    Corridor-scale contracts create market concentration in ways that reduce the competitive discipline that large programs normally benefit from. When a single consortium controls the delivery of an entire corridor — potentially across a decade or more of work — the owner’s leverage in commercial negotiations progressively diminishes as the program advances. The consortium has made significant system investments. Replacing them creates disruption that the owner cannot easily absorb. The contract must be designed to maintain commercial tension in the absence of competitive market pressure.

    Scope uncertainty in transit rehabilitation programs — where the condition of aging underground infrastructure is only fully understood once the work starts — creates systematic change order pressure that the commercial framework needs to be designed to manage. In a corridor-scale contract, that pressure accumulates across a very large scope base. Change management frameworks that work for individual projects may not scale to program-level delivery without modification.

    Governance at the program level is structurally more complex than project-level governance. The interfaces between the consortium’s delivery approach and Metrolinx’s operational requirements — maintaining service during construction, coordinating with other transit agencies, managing community impacts — require governance mechanisms that were still evolving as the programs advanced.

    Lessons for Saudi Arabia’s Transit Ambitions

    Saudi Arabia’s rail and transit programs — including Riyadh Metro’s ongoing expansion, Saudi Railway Organization programs, and the transit elements of giga-project delivery — face analogous structuring challenges. The scale is larger. The timeline is more compressed. And the institutional experience with transit P3 and progressive delivery is less developed than Canada’s, which itself was still learning.

    The lessons from OnCorr that apply most directly to the Saudi context: ensure that contract scope is as well-defined as possible before award, build structured change management frameworks that can handle scope evolution without creating adversarial dynamics, design governance structures that match the pace of progressive delivery rather than the cadence of traditional procurement review, and maintain commercial mechanisms that keep consortium performance incentivized across the full program duration.

    The OnCorr model’s ambition was correct. The execution challenges it encountered were instructive, not disqualifying. Saudi Arabia’s program authorities have the advantage of this experience to draw on as they structure their own corridor-scale delivery programs.

  • The Preconstruction Phase: Where Progressive Contracting Wins or Loses

    What Preconstruction Actually Is

    The most expensive mistake on a CMAR or Progressive Design-Build program is treating preconstruction as a formality — a period of CM engagement before the ‘real’ project starts. Preconstruction is not a courtesy invitation. It is the core delivery mechanism through which progressive contracting produces better outcomes than traditional procurement.

    Everything that makes progressive contracting superior happens in preconstruction — or it does not happen at all. Design decisions get informed by construction knowledge. Costs get tracked as they develop rather than discovered at tender. Risks get identified and mitigated while there is still design flexibility to address them. The GMP reflects reality rather than optimism. When preconstruction is done properly, construction proceeds with fewer surprises, fewer disputes, and better alignment between the cost committed and the cost delivered.

    Five Core Preconstruction Activities

    Constructability reviews are the foundational preconstruction activity. The CM’s construction specialists review design documents at each milestone with a single purpose: to identify design decisions that will create problems during construction. Not aesthetic issues. Not scope additions. Design decisions that are going to be difficult or expensive to build as drawn, or that will create safety, sequence, or access problems in the field.

    The value of constructability review is almost entirely a function of timing. A constructability comment at schematic design — before structural and mechanical systems are sized, before details are drawn — costs almost nothing to incorporate. The same issue identified at 90% design development requires a change to coordinated drawings, updated structural calculations, revised specifications, and a change order notice. The same issue identified after construction starts costs a change order, a delay, a crane stand-down, and a relationship problem. Early identification is where the value is created.

    Cost estimating in preconstruction is not a point-in-time activity. It is a continuous process, run in parallel with design development, that maintains a current and accurate assessment of where the project cost is tracking against the owner’s budget. The CM’s estimating team builds and updates the open-book estimate as design decisions are made, keeping the project’s financial trajectory visible in real time rather than as a surprise at GMP establishment.

    Value engineering is one of the most misunderstood activities in preconstruction. Genuine value engineering is not cost cutting. It is a structured analysis of design alternatives that identifies ways to achieve the same functional outcome with a different approach — one that costs less, takes less time, carries less risk, or is more buildable. When done properly, it produces alternatives that the designer and owner evaluate on their merits. When done poorly — which is common when the CM treats VE as a GMP negotiation tactic — it produces a list of scope reductions that the owner rejects and the CM uses as justification for a higher contingency.

    Schedule development in preconstruction means building a construction programme that reflects how the project will actually be sequenced and executed, not a theoretical schedule that satisfies a contract requirement. The CM’s planning team should be developing the construction method and sequence, identifying the critical path, and calibrating the programme against the resources that will actually be available. A schedule built this way is actionable. A schedule built to show the owner what they want to see is noise.

    Procurement planning addresses the materials, equipment, and subcontract work that need to be initiated before construction starts. Long-lead items — mechanical equipment, specialty materials, manufactured components — that require 16-24 weeks of lead time after order need to be identified and potentially ordered before the GMP is established, or the procurement timeline will control the construction schedule in ways that no amount of good programme management can resolve.

    GMP Timing: When to Commit

    The question of when to establish the GMP is one of the most important decisions in CMAR delivery. Establish it too early — at 40-50% design development — and the estimate is too uncertain, contingency is too high, and the GMP does not reflect reality. Establish it too late — at 95% design development — and the benefit of early contractor involvement has been largely consumed without the price certainty that the owner needs.

    The industry-standard range is 60-90% design completion, calibrated to the specific project type. Complex underground infrastructure warrants waiting for higher design maturity before committing. More straightforward above-ground programs can establish the GMP at lower design completion with acceptable contingency levels.

    Failure Modes

    The CM treats preconstruction as business development rather than delivery. They are focused on winning the GMP rather than producing value during preconstruction. Constructability reviews are thin. Cost estimates are padded. The schedule is aspirational. Problems that should be resolved during preconstruction arrive as construction-phase change orders.

    The owner is not available to make decisions. Preconstruction requires the owner to participate, not observe. When the owner’s governance process requires six weeks of review for every design decision, the collaborative tempo that makes CMAR valuable is impossible to achieve.

    The designer and CM do not genuinely collaborate. Constructability review degrades into a formality. The designer presents completed design. The CM comments. The designer’s response is minimal. The opportunity for genuine improvement is lost.

    For Saudi Arabia’s infrastructure programs — where the pressure to compress timelines and accelerate delivery is constant — the temptation to shortcut preconstruction is real and persistent. Resist it. The cost of rigorous preconstruction, typically 2-5% of total project value, is repaid many times over through cost certainty at GMP, reduced construction-phase change orders, and better schedule performance.

  • Risk Allocation in P3 Infrastructure: Getting It Right Before Financial Close

    Why Risk Allocation Is Everything in P3

    A Public-Private Partnership is fundamentally an agreement about who bears which risks over the life of the concession. Every other element of the P3 structure — the financial model, the performance framework, the governance arrangements — is built on top of the risk allocation. If the risk allocation is wrong, everything built on it is compromised.

    Getting risk allocation right means identifying every significant risk category, assessing which party is best positioned to manage it (which is almost never the same as which party should be forced to accept it), pricing the risk transfer correctly, and building the contract language that translates the intended allocation into operational reality.

    Getting it wrong means creating perverse incentives, pricing excessive contingency into the concession structure, and building the conditions for disputes, renegotiations, or financial distress that will persist for the full 25-30 year concession term.

    The Risk Categories That Matter Most

    Construction risk — cost overruns, schedule delays, quality failures — is the risk category that the private sector is consistently better positioned to manage than government, when the project is properly scoped. The contractor-financier relationship in a P3 consortium creates aligned incentives: the equity investor’s return depends on the asset being delivered on time and on budget. That alignment produces delivery performance that consistently outperforms equivalent government-delivered programs.

    The condition for effective construction risk transfer is that the scope must be well enough defined at financial close for the private sector to price the risk intelligently. Transferring construction risk on an inadequately scoped project does not eliminate the risk — it produces overpriced contingency and, when conditions vary from assumptions, a claims and renegotiation dynamic that transfers the risk back to government anyway, at higher cost.

    Demand risk — the risk that the asset will not be used as intensively as the financial model assumes — is the risk category that the private sector is generally not well positioned to manage, despite pressure from governments to transfer it. Demand for a hospital, a school, a water treatment plant, or a transit system is primarily driven by public sector decisions: population policy, service location, complementary infrastructure, and economic conditions. Transferring demand risk to a concessionaire does not give them control over those drivers. It gives them financial exposure to risks driven by decisions made by others.

    Australia learned this lesson expensively through a series of toll road concessions that failed when traffic forecasts proved optimistic. The concessionaires had accepted demand risk without having any mechanism to manage it. The result was financial distress, government bailouts, and significant damage to the P3 program’s political credibility.

    Interface risk — the risk of delays and costs arising from the interface between the P3 project and other projects, systems, or decisions being made by the public sector — is one of the most commonly misallocated risks in P3 structures. The concessionaire is exposed to risk created by public sector decisions they cannot influence. That exposure either gets priced as contingency (expensive) or becomes a dispute (more expensive).

    Force majeure risk — extreme events outside any party’s control — needs to be carefully defined in the contract. The trend in modern P3 documentation is toward explicit enumeration of force majeure categories rather than catch-all language, combined with clear allocation of financial consequences for events in each category. Geopolitical disruption — particularly relevant in the GCC context — deserves specific attention in Saudi Arabia P3 contracts.

    The Saudi Arabia Context

    Saudi Arabia’s National Privatization Strategy is creating P3 frameworks across sectors — transport, water, health, education, and municipal services. The risk allocation principles being embedded in these frameworks will shape outcomes for the next generation of public assets.

    The sectors where Saudi Arabia’s P3 experience is deepest — water (BOOT and IWPP structures that go back 40 years) — provide a template for risk allocation that has been tested and refined through operational experience. Construction risk rests with the private sector. Offtake risk rests with the government through long-term purchase agreements. The model works because the risk allocation reflects who can actually manage each risk.

    The challenge as the NPS expands P3 into new sectors is to apply those allocation principles consistently, rather than being tempted by the apparent fiscal attractiveness of maximum risk transfer. Risk that cannot be managed by the party bearing it will be paid for — either in the form of premium contingency built into the concession price, or in the form of renegotiation costs when reality diverges from assumptions.

    Practical Guidance for P3 Developers in the Kingdom

    The risk allocation principles that consistently produce good outcomes are clear from global P3 experience: transfer risks to the party best positioned to control them, retain risks driven by public sector decisions, price residual risks explicitly rather than hoping they do not materialize, build structured variation mechanisms for anticipated scope changes, and design the contract to maintain a functional working relationship between authority and concessionaire across the full concession term.

    These principles are not complex. What is complex is the discipline to apply them under pressure from financing parties, procurement timelines, and political imperatives that can all pull toward risk allocation decisions that serve short-term objectives at the cost of long-term program performance.

  • The Right Stakeholders Problem: Why Governance Readiness Determines Progressive Contracting Success

    The Half of the Equation Nobody Talks About

    When infrastructure professionals discuss progressive contracting, the conversation focuses almost entirely on the model. Which framework? CMAR or Alliance? PDB or IPD? How do you structure the GMP? What does the pain/gain sharing look like? These are important questions. They are also, in my experience, only half the question.

    The other half — the half that actually determines whether the model delivers — is organizational readiness. The governance structures, decision-making culture, and stakeholder capabilities that sit behind the contract form.

    I have watched a well-designed progressive contract underperform because the owner’s organization was not set up to participate collaboratively. And I have seen a relatively simple delivery model produce excellent results because the right people were empowered to make decisions quickly and held accountable for outcomes. The model matters. The organization matters more.

    What Collaborative Preconstruction Actually Requires

    Progressive models are built on a core assumption: that the owner, the contractor, and the designer will work together during design to share information, solve problems jointly, and make better decisions than any one party could make alone. That assumption sounds reasonable. In practice, it requires something that many organizations do not have — a governance structure that actually allows people to make decisions in real time.

    If the owner’s organization requires every significant design decision to pass through three committees, two review panels, and a 60-day approval cycle, then the collaborative preconstruction phase that makes CMAR valuable becomes a bottleneck instead of an accelerator. The Construction Manager is ready to provide input. The designer is ready to iterate on design alternatives. But the owner’s internal process cannot keep pace with the tempo of collaboration that the contract is designed to produce.

    I saw this firsthand on a major North American transit program. The progressive contract was well-structured. The financial model was sound. The CM had genuine preconstruction capability. But the owner’s governance framework was built for a traditional procurement environment where decisions could be sequential and deliberate. When that framework met a contract model that demanded fast, empowered, collaborative decision-making, the friction was immediate and persistent. The governance did not adapt to the contract. The contract’s potential was constrained by the governance.

    The Contractor Readiness Problem

    Owner governance is not the only readiness gap. The contractor matters equally. A CMAR arrangement requires a Construction Manager with genuine preconstruction expertise — not just a general contractor who wants early project access and will figure out preconstruction deliverables as they go.

    Real preconstruction capability means cost estimators who can maintain an open-book rolling estimate as design evolves, constructability specialists who can review drawings critically and propose alternatives, procurement strategists who can identify long-lead risks and develop mitigation strategies, and schedule analysts who can build and maintain a construction programme that reflects how the project will actually be sequenced. When that capability is thin, the preconstruction phase becomes a billing exercise rather than a value creation exercise. The owner is paying preconstruction fees without getting preconstruction value. The result is a GMP that does not reflect reality, followed by construction phase surprises that should have been resolved during preconstruction.

    The Designer’s Cultural Shift

    The designer is the third party in the readiness equation. In a traditional design environment, the designer is the technical authority and the contractor is the party who builds what the designer specifies. That hierarchy does not serve a collaborative preconstruction process. The CM needs to be able to say ‘this will be very difficult to build as drawn’ and the designer needs to be willing to explore alternatives rather than defend completed design decisions.

    That cultural shift — from technical authority to collaborative partner — is one that not every design firm has made, and not every project team can make it mid-project if it was not established at the beginning of preconstruction.

    Assessing Readiness Before Selecting a Model

    For anyone evaluating which delivery model to use on their next program, my advice is direct: spend as much time assessing your organization’s readiness to execute a progressive contract as you do assessing which progressive contract to select. The best model in the world will underperform if the stakeholders behind it are not ready.

    That readiness assessment should cover decision-making authority (who can approve what, and how quickly), governance design (how will the collaborative management team be structured and empowered), procurement culture (can the owner’s procurement framework accommodate a qualifications-based selection), and organizational capacity (does the owner’s team have the bandwidth to actively participate in preconstruction).

    Getting this right at the beginning is cheaper than correcting it mid-program.

  • CMAR Is the Most Misunderstood Model in Progressive Contracting — Here’s How It Actually Works

    What CMAR Actually Is

    Construction Manager at Risk is the progressive contract model I managed hands-on during the Bowmanville Train Line Extension — a $2 billion rail extension in Ontario, Canada, delivered under one of the most ambitious CMAR engagements in North American transit history.

    The model is two-phased, and understanding both phases is essential to understanding why CMAR produces the outcomes it does — both the successes and the failure modes.

    Phase 1: Preconstruction

    The owner selects a Construction Manager based on qualifications and fee — explicitly not on lowest bid price. This is the first and most important distinction from traditional contracting. The CM is chosen for who they are and what they can contribute during design, not for how aggressively they will price the work at tender.

    Once engaged, the CM joins the design process as an active participant. Their core preconstruction deliverables are constructability reviews (applying field construction knowledge to design decisions before they are locked), cost estimating (building and maintaining an open-book estimate of the project as design evolves), value engineering (identifying alternative approaches that reduce cost or improve buildability without compromising the owner’s requirements), schedule development (building a construction schedule that reflects how the project will actually be built, not a theoretical programme), risk identification (surfacing and quantifying construction risks while there is still time and design flexibility to mitigate them), and procurement planning (identifying long-lead materials and subcontracting strategies that reduce cost and schedule risk).

    This phase is where the value of CMAR is created. The contractor’s field knowledge shapes the design before it gets locked in. Problems that would have become change orders in traditional contracting get solved collaboratively during preconstruction.

    Phase 2: GMP and Construction

    When the design reaches sufficient maturity — typically 60-90% complete, depending on the project type and the owner’s tolerance for residual uncertainty — the CM and owner negotiate a Guaranteed Maximum Price. The GMP is built on transparent, open-book cost data: the actual cost of the work (labour, materials, subcontractors, equipment), plus the CM’s fixed fee (typically 3-8% of cost of work), plus shared contingency.

    The financial logic of the GMP is based on transparency and shared risk. If the project comes in under the GMP, the savings are shared between owner and CM in a pre-agreed ratio — this is the ‘gain.’ If the project exceeds the GMP, the CM absorbs the overage — this is the ‘pain.’ This structure fundamentally changes the CM’s incentive compared to traditional contracting. They are now motivated to find efficiencies and avoid problems, not to identify claim opportunities.

    What Conditions CMAR Requires

    CMAR is not a magic fix for construction delivery. It is a model with specific conditions that need to be in place for it to perform. When those conditions are absent, CMAR can actually underperform traditional contracting — because you have added cost and time without getting the collaborative benefit.

    The owner needs to be capable of active participation in preconstruction. An owner who treats the preconstruction phase as a contractor activity to be observed rather than a collaborative process to be participated in will not get the benefit of early contractor involvement. The design decisions that preconstruction is supposed to inform get made without the CM’s input, and the preconstruction becomes a billing exercise.

    The CM needs to have real preconstruction capability — not just estimators who can produce a GMP, but constructability specialists, procurement strategists, and schedule analysts who can genuinely contribute to design development. A general contractor who wants early access to a project but has thin preconstruction capability will deliver thin preconstruction value.

    The governance structure needs to allow fast decision-making. One of the most persistent failure modes I saw in CMAR delivery was an owner’s governance framework designed for traditional procurement — sequential decisions, multi-committee approval — meeting a contract model that required collaborative, fast decisions during preconstruction. The friction was immediate and ongoing. The contract’s potential was constrained by the governance.

    The contract needs clear GMP amendment procedures. CMAR does not freeze scope at GMP establishment. When the owner adds scope or conditions change, the GMP needs to be adjusted through a clear, pre-agreed process. Ambiguity in this process is the single most common source of CMAR disputes I have observed.

    What Goes Right and What Goes Wrong

    When these conditions are in place, CMAR produces outcomes that traditional contracting consistently fails to achieve: cost certainty at GMP establishment, fewer change orders during construction, faster problem resolution, and a project team that functions as a partnership rather than an adversarial relationship.

    When the conditions are absent — and they often are, particularly on first CMAR engagements — the model creates overhead without creating value. I will continue to share specific failure modes from my experience in coming articles, because understanding what goes wrong is as important as understanding what the model is designed to do.

  • The Blind Spot in Infrastructure Delivery: OT Cybersecurity and the Triton Attack

    The Attack That Targeted Physical Destruction

    In 2017, a cyberattack hit a petrochemical facility in Saudi Arabia. Not the corporate network. Not the email server. The Safety Instrumented System — the engineered last line of defence designed to prevent explosions, chemical releases, and loss of life when process conditions exceed safe operating limits.

    The malware was called Triton. Also known as TRISIS. It was purpose-built to compromise Schneider Electric’s Triconex safety controllers — systems installed in facilities precisely because they are supposed to be the failsafe when everything else goes wrong. The intent of the attack was not data theft. It was not ransomware. It was physical destruction of the facility and harm to the people working in it.

    The only reason it did not succeed was a coding error in the malware that triggered a plant shutdown before the payload fully deployed. The attackers were sophisticated enough to develop malware targeting a specific safety controller platform. They made a programming mistake that triggered an emergency shutdown — which alerted the facility’s security team to the intrusion.

    That was 2017. The capability that failed in 2017 has had eight years to improve.

    This Is Not an Isolated Event

    In 2021, an attacker gained access to the SCADA system of a water treatment plant in Oldsmar, Florida, and attempted to increase sodium hydroxide levels to 100 times the safe concentration. The attack was spotted by an operator watching his screen in real time. There was no automated alert. No intrusion detection system. No OT network monitoring. Just a human who happened to be looking at the HMI at the right moment.

    In 2015 and 2016, coordinated cyberattacks on Ukraine’s power grid caused blackouts affecting hundreds of thousands of people. The attackers did not target the utility’s IT network primarily. They targeted the operational technology systems that control circuit breakers and distribution substations — the systems that physically switch power on and off across the grid.

    These are not IT security problems that the IT department should have caught and prevented. They are attacks on the Operational Technology systems that control physical processes — and they are successful precisely because OT environments are almost never designed with cybersecurity as a requirement.

    The Design Gap That Creates the Vulnerability

    Most infrastructure facilities being designed, built, and commissioned today have the following in common: the engineering team designed the SCADA architecture. The controls integrator programmed the PLCs and DCS. The facility was commissioned and handed over. And at no point in that process did anyone assess whether the OT network is properly segmented from the corporate IT network, whether the HMI workstations are running patched operating systems, whether the remote access paths used by the controls vendor for ongoing support are secured against unauthorized access.

    This is not a technology gap. The technologies for OT network segmentation, OT-appropriate access control, and OT network monitoring exist and are proven. It is a design gap. OT cybersecurity requirements are not included in project scope because they are not understood as engineering design requirements — they are perceived, incorrectly, as an IT operational concern that someone else will handle after commissioning.

    Why the Middle East Is a High-Priority Target

    The combination of factors that makes the Middle East a high-value target environment for OT-focused threat actors is well documented in the threat intelligence community. Concentration of critical infrastructure — energy, water, petrochemical, transport — in a geopolitically significant region. Rapid digitalization and connectivity of operational systems that were previously air-gapped. A geopolitical environment that motivates state-sponsored threat actors with the capability and patience to conduct sophisticated OT attacks.

    Triton targeted a Saudi facility. The most capable OT malware ever publicly analysed was built specifically to attack infrastructure in this region. That is not a coincidence, and it is not a threat that has diminished since 2017.

    What Infrastructure Engineers Need to Do Now

    OT cybersecurity should be on every infrastructure project’s risk register, from early design through commissioning and into operations. Not as a future consideration. Now. Specifically, this means including OT security requirements in the project scope at the design stage, engaging OT security specialists to review the control system architecture before it is locked, and ensuring that commissioning procedures include OT security validation alongside process safety validation.

    The frameworks exist. IEC 62443 provides the international standard for industrial control system security. In Saudi Arabia, the NCA’s Operational Technology Cybersecurity Controls (OTCC) establish the regulatory baseline that critical infrastructure operators are expected to meet. Understanding and designing to these frameworks is a professional responsibility for anyone delivering infrastructure in this region.

    Concept Dash’s OT cybersecurity team — working through our partnership with a NACSA-licensed cybersecurity firm — provides OT gap assessments and security design services for infrastructure projects in Saudi Arabia and the GCC. The cost of an assessment at design stage is a fraction of the cost of a compliance finding, a breach, or a physical safety incident after commissioning.

  • Why Traditional Design-Bid-Build Is Failing Large Infrastructure: A Structural Analysis

    The Pattern That Plays Out on Most Large Traditional Contracts

    The owner’s consultant produces a drawing set. The contractor bids on it — lowest price wins. Handshake. Construction starts. Then reality shows up.

    The drawings do not match site conditions. The contractor sends an RFI. The designer takes three weeks to respond. Crews are standing around burning daylight. A change order goes in. The owner pushes back. The contractor files a claim. Lawyers start circling. The project finishes 14 months late and 40% over budget.

    This pattern plays out on most large traditional contracts around the world. Not occasionally. Most. And it’s not because of bad people or incompetent organizations. It is a structural problem — one built into the design of the contract itself.

    Failure Mode 1: Misaligned Incentives

    In a Design-Bid-Build arrangement, the contractor profits by building fast and cheap. The designer’s fee is fixed regardless of how buildable the design is. The owner wanted quality but awarded on lowest price. Everyone optimizes for their own outcome — not the project’s.

    The contractor who wins on lowest price has, by definition, left the least contingency in the estimate. When risks materialize, there is no buffer. The rational response — from the contractor’s perspective — is to recover through change orders and claims. The contract structure created that incentive. Blaming the contractor for using it is like blaming water for flowing downhill.

    The designer, whose fee was set at appointment and who bears no financial consequence for an uncoordinated or unbuildable design, has no financial incentive to invest additional effort in coordination or constructability. Their incentive is to produce drawings that meet the technical standard of care with the resources their fee supports. What happens in the field after the drawings are issued is legally someone else’s problem.

    Failure Mode 2: Late Knowledge Transfer

    The contractor — the party with the most detailed construction knowledge — has zero input during design. By the time they see the drawings, the design is fully developed. Any construction knowledge they could contribute has been locked out by the procurement timeline. Every improvement to buildability after tender requires a change order, which requires approval, which burns time and degrades the owner-contractor relationship.

    This is not just an inefficiency. It is a fundamental misallocation of expertise. The contractor knows how to sequence work safely and efficiently. They know what local labour can actually achieve, which materials are reliably available, where the coordination problems between trades typically emerge. None of that knowledge informs the design, which is developed entirely by a design team whose expertise is technical design — not construction execution.

    Failure Mode 3: Adversarial Risk Allocation

    The traditional contract pushes nearly all risk to the contractor through fixed-price lump sum structures. When risks materialize — site conditions differ from geotechnical assumptions, regulatory changes affect scope, supply chain disruptions delay materials — the only path available to the contractor within the contract framework is to file claims.

    The adversarial dynamic that results is not a failure of professional character. It is the predictable output of a contract structure that gives parties no collaborative mechanism for resolving problems. Every risk event that falls within a grey zone of the contract language becomes a commercial dispute, because that is what the contract designed it to be.

    Failure Mode 4: No Shared Ownership of Outcomes

    When the project fails — and overruns are the norm rather than the exception on large traditional contracts — everyone points in a different direction. The designer blames execution quality. The contractor blames drawing quality. The owner blames both. Nobody owns the outcome because the contract never gave anyone shared ownership of it.

    I have sat on both sides of this table — as a contractor managing rail corridors and highway programs, and as an owner’s representative overseeing billion-dollar transit programs. The adversarial dynamic is not a personality problem. It is a contract design problem. And it has a solution.

    Progressive models do not eliminate disagreements. They create structures where the default response to a problem is to solve it together — not to call a lawyer. That shift matters more than most people in infrastructure delivery yet appreciate.

  • BIM in Progressive Contracts: How Digital Modelling Transforms Collaborative Project Delivery

    The Core Argument: BIM and Progressive Contracting Are Made for Each Other

    Progressive contract models exist because the construction industry realized that collaboration produces better results than adversarial competition. When owners and contractors work together during design — sharing cost data, construction knowledge, and risk — the project that emerges is more buildable, more accurately priced, and more likely to deliver on schedule.

    BIM — Building Information Modelling — exists because the construction industry realized that information sharing produces better decisions than information silos. When all parties work from a shared, intelligent model rather than isolated 2D drawings, coordination improves, errors are identified earlier, and the cost of change drops dramatically.

    These two ideas are not coincidental. They are the same idea applied to different dimensions of the construction problem. Progressive contracting fixes the relationship structure. BIM fixes the information structure. Together, they address the two most persistent sources of large-scale construction failure.

    3D Coordination: Clash Detection During Preconstruction

    In a traditional Design-Bid-Build project, the first time the structural engineer, mechanical engineer, electrical engineer, and contractor’s field team genuinely compare their work is often after construction has started. The result — discovered clashes that require field modifications, rework, and change orders — is one of the most predictable and preventable sources of construction cost overrun.

    3D BIM coordination changes this entirely. When all design disciplines model in BIM from the beginning, clash detection software (Navisworks, Revit) identifies the conflicts before they become physical. A pipe running through a structural beam is caught in the model, not in the field. The resolution costs a design revision, not a concrete saw and a change order.

    In a CMAR or Alliance arrangement, where the contractor is engaged during design, 3D coordination becomes a collaborative activity rather than a design review exercise. The CM’s construction team reviews the coordinated model for constructability — not just clash detection, but sequencing, access, and buildability — and the input improves the model before it is committed to construction drawings.

    4D Scheduling: Time-Linked Models for Sequence Validation

    4D BIM links the 3D model to the project schedule, creating an animated visualization of the construction sequence. At any point in the project timeline, the 4D model shows what has been built, what is being built, and what is planned next — in three dimensions, at the scale of the actual site.

    The value of 4D for progressive delivery is primarily in the preconstruction phase. The Construction Manager’s field team uses the 4D model to validate the proposed construction sequence before it is committed to the schedule baseline. Conflicts that would not be visible in a Gantt chart — two work fronts competing for the same crane radius, a staging area that gets consumed before materials have been offloaded — become visible in the 4D simulation.

    I saw an owner’s project director spot a sequencing risk in a 4D simulation that the construction team had missed — because the visualization made it visible and the progressive contract made it safe to raise. In a traditional contract, raising a sequencing concern that wasn’t in the tender documents would have been a commercial negotiation. In the CMAR environment, it was a collaborative problem solved before construction started.

    5D Cost Modelling: Real-Time Cost Visibility

    5D BIM connects the 3D model to cost data, enabling automatic quantity takeoff and cost updating as design evolves. When a wall changes from concrete block to precast — a design decision that has cost implications — the 5D model updates the quantity and cost estimate automatically, rather than requiring a manual takeoff and estimating exercise.

    In CMAR delivery, 5D BIM is particularly powerful during the GMP development process. The CM’s open-book cost estimate should reflect the actual design, not a schedule of rates applied to approximate quantities. 5D BIM provides the quantity certainty that makes the GMP genuinely reflect reality rather than the CM’s best guess from limited information.

    A 6-8 week cost reporting lag is enough to burn through contingency without anyone noticing. 5D BIM eliminates that lag — design changes trigger immediate cost impact updates, keeping the project’s financial picture current.

    Digital Twins: From Asset Delivery to Asset Management

    A digital twin is a real-time, connected replica of the physical asset — updated continuously with operational data from sensors, IoT devices, and maintenance systems. In infrastructure delivery, the digital twin represents the handover of the construction BIM model to the operations team, enriched with as-built data, commissioning records, and asset management information.

    For progressive delivery models, the digital twin creates a direct line between the collaborative effort invested in design and construction, and the long-term operational performance of the asset. Assets designed and built with BIM can be handed over with complete, accurate as-built information. Assets managed with digital twins provide the operational data that informs future projects and programs.

    The Saudi Arabia infrastructure boom — with its scale, its pace, and its emphasis on smart and sustainable assets — is one of the most significant digital twin deployment opportunities in the world. Concept Dash’s digital twin practice is directly focused on this opportunity.

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