Appendix 2 - Developing and evaluating business plans

5.1. Selecting a construction manager

Per section 7.3.3.1 of the tendering policy, there are two basic forms of construction management:

• In the first form, the construction manager is procured to provide services only and acts as an advisor to the project owner. The project owner then contracts directly with the trades. The project owner may also take on the role of construction manager.
• In the second form, the construction manager is procured to provide both services and to act as a general contractor.

A construction manager provides advisory services to the project owner that typically include:

• assisting in preliminary planning and design of the project, which reflect community infrastructure needs
• identifying and incorporating socioeconomic opportunities
• advising on schedules, budget control and the cost-effectiveness of various methods and material selection
• providing site management and technical services
• coordinating trades, labour and supplies
• project planning and scheduling activities of the trades
• conducting overall project risk assessment and management
• supervising the activities of the trades

It is generally recommended to contract with a construction manager prior to entering the pre-design/design phase, as it supports the design process and helps to maintain project continuity.

If the construction manager is to be engaged after the pre-design/design phase, an acceptable proposal from the construction manager, detailing their qualifications to undertake the project in question as requested in Annex A, is required. This proposal must be evaluated and approved by the appropriate ISC regional office before the project budget is finalized and construction begins.

A construction manager may be retained until the completion of a project, or only until construction begins, with the option to extend their services through to project completion. The construction manager is typically retained on a fixed-fee or reimbursable expense based on the terms of their contract.

The construction manager can only provide advisory services such as those listed above. The construction manager must remain at arm's length from all prospective bidders and will not be permitted to submit bids on any project construction contracts or to become one of the sub-contractors or suppliers involved in the project.

6.1. When a business plan is required and evaluated

In accordance with sections 7.3.3.1 and 7.3.3.2 of the tendering policy, a business plan is required for any project that uses the first form of construction management - that is, where a construction manager is procured for services only and the project owner contracts directly with the trades, or where the project owner is the construction manager.

The business plan outlines the community's capacity to carry out the work and serves as a tool to assist the project owner in planning, managing and overseeing project completion. The final business plan must be included as part of the formal submission for project approval.

Sections 6.2 and 6.3 outline when the initial business plan may be developed and when it should be updated to produce the final plan, as well as their required information.

Business plans should be submitted to ISC for review and evaluation at the following project stages:

• design stage, as part of the project approval request
• before construction begins, or as part of a change request if required.

ISC regional offices are responsible for recommending improvements or amendments to the plan, as appropriate, to help ensure effective project delivery. Both ISC regional office and the project owner must sign off on the business plan before it can be included in the formal project submission.

6.2. Preparation and evaluation of an initial business plan

The project owner is responsible for preparing an initial business plan. The cost of preparing this plan is considered a legitimate project expenditure.

The initial business plan is typically developed after the feasibility study is completed. It should include, at a minimum, discussion of the areas outlined in Annex A below, and include information on both the competitively awarded and own forces portion of the project.

For the competitively awarded works portion, the business plan only requires the information necessary to provide context, as calls for tenders and calls for proposals will supply bidders and proponents with the detailed project information.

For own forces works, the business plan requires more specific information, particularly under the implementation plan, resourcing plan and capacity development and social and economic benefits sections.

The initial business plan will be evaluated per the checklist provided in Annex B.

6.3. Preparation and evaluation of a final business plan

Before construction begins, the initial business plan must be reviewed to determine if it needs to be updated, for example due to any changes to the previously reviewed project scope, cost, schedule, resources, technical requirements, or deliverables. If any modifications are required, the project owner must revise it and submit a final business plan as part of the formal submission.

The final business plan should include at a minimum the required information outlined in Annex C.

The final business plan will be evaluated per the checklist provided in Annex D.

7.1. Estimating cost for own forces works

In the absence of a competitive process, section 7.3.3.2 of the tendering policy requires an evaluation to determine the fair market value of the total estimated cost of the own forces works.

If the total estimated cost of the own forces works is less than $300,000, a detailed cost estimate is required, which may be prepared by the project owner. In this case, ISC and the project owner must agree to the value of the own forces work.

If the total estimated cost is greater than or equal to $300,000, the services of an independent Professional Quantity Surveyor must be retained to provide this estimate.

As stated in section 7.3.3.2 of the tendering policy, project owners cannot profit from the use of own forces works. The estimation must therefore not include any profits for the project owner.

Overview

This section includes a brief narrative outlining the overall goal of the project, the implementation method, and the anticipated benefits to the community.

Project owner profile

The project owner's profile should include an overview of the project owner, with particular emphasis on the community's financial capacity and well-being. It should also outline the project owner's management structure and the capacity of its administrators, along with information on previous experience with similar or other major capital projects.

Project team profile

The project team is responsible for the implementation of the project.

This profile should identify all project team members, outlining each member's primary roles and responsibilities, as well as their respective professional, technical, administrative, financial and other qualifications, with appropriate supporting documentation.

If an ISC representative(s) is included as a team member, their role should generally be limited to providing technical advice on an as-needed basis. The anticipated level of ISC involvement on the project team should be described in this section.

Although each project has unique requirements, the following subsections provide a general guide for selecting project team members.

Project team organization

This section describes the composition and organization of the project team. The following items should be included:

• project team organizational plan and reporting relationships
• responsibility for monitoring project budget
• responsibility for monitoring project schedule
• responsibility for addressing budget and schedule variances and making adjustments
• responsibility for regular reporting on project status
• responsibility for analyzing and assessing preliminary project risks
• responsibility for delivering the project within established scope of work, on time and within budget

Construction manager

This section outlines the qualifications of the proposed construction manager or construction management firm for the project.

Project owners must provide information on the proposed construction manager or a copy of the proposal received from the proposed construction manager if the construction manager is retained after the pre-design/design phase. The information or proposal should provide the following:

• detailed resumes outlining the qualifications and experience of the proposed construction manager and associated on-site and off-site support personnel for the project
• organizational structure supporting the construction manager, including key personnel and replacements, and availability of multi-disciplinary staff
• roles and responsibilities of the construction manager
• established systems and procedures for planning, scheduling, cost estimating, analysis and control, tendering, purchasing and construction administration
• demonstrated knowledge of the current market for material costs and availability, labour conditions and union agreements, construction equipment costs and availability of qualified trade contractors
• involvement in previous First Nations projects
• involvement in projects of similar discipline, magnitude and within similar geographical area
• present workload and immediate past history of project performance

First Nations assistant construction manager

For major capital projects, the business plan may include a section outlining the qualifications and experience of a proposed First Nations assistant construction manager as well as the roles and responsibilities associated with this position.

This section should detail the amount of time that the individual will dedicate to the project, the tasks that they will be responsible for completion, their reporting relationships, and how they will collaborate with the construction manager.

Implementation plan

The implementation plan should provide a general description of both the work that will be competitively awarded and the work that will be carried out by own forces. The total value of each component and their percentage in the total project cost will be included, along with an anticipated schedule for project activities.

The project owner must provide a resource pool for the own forces works portion of the project. This resource pool contains details on the human resources, equipment and materials that may be available for use in this project, such as:

• community skilled trades trainees to be utilized
• community direct employment of labour force to be utilized
• community equipment to be utilized
• materials to be purchased locally

Resourcing plan

The resourcing plan for the own forces works should be developed using class "C" cost estimates, plus agreed-to contingencies. Costs for applicable construction management services should be clearly identified and itemized by type of work and included in their respective work packages.

If applicable, the resourcing plan should provide construction management and project management design fees, as well as estimated fees during construction.

An allowance for the cost of retaining the independent Professional Quantity Surveyor should be identified and included in the business plan.

The resourcing plan should also include documents that demonstrate the qualifications of the Professional Quantity Surveyor. These documents may include credentials, résumés, or other appropriate supporting materials.

Contingencies are to be calculated according to the appropriate regional practices and the complexity of the project. Project owners should consult with their ISC regional office for guidance on this calculation.

An anticipated schedule of resourcing requirements should also be included.

Capacity development and socioeconomic benefits

This section should describe, in general terms, how the project will strengthen community capacity and generate socioeconomic benefits.

It should outline the proposed working relationship between the construction manager and the First Nations who will be involved in the project. It should also provide objectives for skills development, local participation and/or future economic development opportunities, and the specific activities that will support their achievement. These activities should be necessary for the project and directly contribute to its successful delivery.

Project organization

• project owner's management structure, administrative capacity, and financial capacity are sufficient
• project manager demonstrates experience in successfully completing or contributing to similar projects
• proposed project team meets the project requirements
• organizational chart/staffing plan is complete and includes an overview of reporting relationships
• roles and responsibilities for budgets, schedules, project reporting and mitigating project risks are represented and have been defined for each team member
• information on or proposal from proposed construction manager or construction management firm indicating qualifications, experience, knowledge, available resources, procedures for planning, cost analysis, scheduling, estimating, cost control, tendering, etc. has been included

Implementation plan

• a general description of the proposed implementation strategy for both the competitively awarded and own forces works components has been provided with sufficient detail
• the approximate value of each component and the percentage of the total project work each will comprise has been provided
• resource pool for own forces works component has been sufficiently developed

Resourcing plan

• class "C" cost estimates of the own forces works, including agreed-to contingencies and cashflow projections, have been provided by the appropriate entity and are accurate. Per section 7.3.3.2 of the tendering policy, the project owner cannot make any profit from the own forces works. The cost estimates should also include, as applicable:
  • construction management and project management design fees, as well as estimated fees during construction, have been included as part of the estimate
  • cost of a Professional Quantity Surveyor or an estimate of retaining this service, as agreed to by the project owner and the appropriate ISC regional office
• documents proving the qualifications of the Professional Quantity Surveyor and construction manager, such as credentials, resumes or other appropriate documents, have been included
• costs for each contract, or the value of services to be obtained through own forces works, have been identified and itemized in their respective work packages
• an anticipated schedule of resourcing requirements has been included with sufficient detail

Capacity development and socioeconomic benefits

• the proposed working relationship between the own forces and the construction manager or project owner in the project has been outlined
• a description of objectives and activities that are essential for successful project delivery and that will strengthen community capacity-building and support the achievement of socioeconomic benefits has been provided

Overview

This section provides a general description of the final business plan.

Project team

The roles and responsibilities of the project team that were proposed during the initial planning stage should be confirmed for the construction stage in the final business plan.

Responsibilities for construction quality control, project inspection, and project completion certification and reporting should be clearly defined.

Additional resources and services provided by the construction manager relating to project implementation should be explicitly identified.

Finalized implementation plan

This section outlines how the project will be implemented and describes any specific arrangements planned to ensure successful completion.

The own forces work resource pool should be updated as needed and provide sufficient detail on the availability and readiness of First Nations human resources, equipment and materials that will be utilized for the project. The class "B" cost estimate of the own forces works and its percentage in the total project cost should be provided.

A general description and value and percentage of the total work that will be competitively awarded may also be provided for context.

A schedule of proposed project activities should be provided, including key milestones such as procurement and approvals, and how the schedule will be maintained.

Finalized resourcing plan

Risk assessment and mitigation plan

This section presents an analysis of potential risks associated with the project owner's responsibilities in managing the project. Potential risks, including those related to the availability and readiness of the planned own forces resources, should be identified and accompanied by appropriate mitigation measures. 

Capacity development and socioeconomic benefits

This section should provide a description of the planned capacity development activities and the direct social and economic benefits accruing to the community through the own forces works component of the project.

Details included in the description, such as participant information, work plans and anticipated outcomes, should be included to enable an assessment of community benefits.

Identified community benefits and potential risks need to be assessed to support the decision on whether to continue proceeding with the own forces works.

Project team

• project team has been confirmed
• organizational chart/staffing plan and reporting relationships have been revised and/or confirmed as applicable
• roles and responsibilities of the project team have been revised and/or confirmed as applicable
• revisions to construction management arrangement have been included, if applicable

Implementation plan

• description of project implementation strategies has been provided
• the resources available and ready to carry out the planned own forces works has been confirmed
• value of the work to be completed through own forces and its percentage of the total project cost has been confirmed
• description of the schedule of all project activities, and how this schedule will be maintained, has been provided with sufficient detail 

Resourcing plan

• class "B" cost estimates, including contingencies and cash-flow projections provided for work to be completed using own forces, have been provided by the appropriate entity and are accurate
• if applicable, construction management costs during construction, bonding and warranty details, and other project costs such as project management fees, have also been provided
• if required, class "A" cost estimates are provided

Risk assessment and mitigation plan

• description of potential risks associated with the project owner's project management responsibilities and a mitigation plan to address the risks is included
• potential risks related to the availabilities and readiness of own forces resources are identified and accompanied by appropriate mitigation measures

Capacity development and socioeconomic benefits

• description of the proposed working relationship with First Nations who are involved in the project has been updated, if applicable
• value of work to be completed by own forces has been provided
• summary of capacity development activities and direct social and economic benefits to the community has been included
• comparison of direct social and economic benefits against potential risks as required in Annex C has been provided