Major Projects Group Explore Delivery Models & Productivity

In February, the Major Projects group came together to review key takeaways from the Future Major Projects session at the Constructing Excellence Conference, focussing on four core areas:

• Standardisation
• Scaling down best practice from major projects to smaller projects
• Managing cost and programme
• Productivity

The two main areas for discussion during this call were around the two linked areas of delivery models and productivity.

Delivery Models

‘The way in which clients operate destroys value.’

Clients set the tone and expectations that will be mirrored throughout the supply chain. Many contractual mechanisms remain anti-productivity and focus on cheapest price. Clients need to be brave and intelligent enough to interact with the supply chain in the right way. However, the advice clients are getting is not always consistent and can lead to ‘unintelligent’ client decision making, for example advice to go to single stage lump sum tenders when that is not the appropriate model.

With politically driven decisions there is often a disconnect between those driving better outcomes at a strategic level and those making funding decisions. Often clients are battling internally with their procurement teams and with their funders who lack an understanding of the impact their decisions can have. This was highlighted in the recent National Audit Office Report.

One participant reported a lack of trust between clients and contractors. Clients believe that contractors are seeking to avoid their obligations and conversely given the level of insolvencies in the sector contractors are less willing to bid low to buy work. We need to ensure margins are adequate to allow investment in R&D, technology and people. Clients need to listen to the market and work out what is acceptable in the new market reality. Successful delivery requires a culture where supply chain and main contractors are able to be open and honest with the client.

Some clients are getting the supply chain involved in the right way and are getting great value from it. We need to enable the appropriate sub-contractors and specialists in the right way. There is tremendous value in involving the supply chain early, increasingly contractors are getting involved at RIBA Stage 2 to provide constructability support. Traditional models result in finger-pointing when things go wrong, rather than focusing on how to fix issues, this leads to time and cost over-runs.

Projects such as the Sellafield PPP demonstrate how this can be done to fairly incentivise the supply chain and provide the headroom needed to invest in people and technology.

Productivity

Very much linked to delivery models is the need to unlock productivity. There was discussion around the need to move from a model where consultants charge on a day rate to a model where organisations are paid based on the value they bring. The role of the integrator was discussed as a mechanism for unlocking this.

Standardisation and repeatability were proposed as potential solutions. Productivity is enabled by investment in the pre-construction phase in order to unlock gains in the construction and operation phases. However, given the high attrition rate on projects (Major Projects in particular) there is a huge spend on projects that don’t get delivered. Standardisation and repeatability could help overcome this as the work could be re-used elsewhere.

Beginning with the end in mind and a laser sharp focus on the bottlenecks that will lead to time and cost over-runs can improve productivity. One participant mentioned the need for daily site walk arounds with the whole team involved to ensure everyone was focussed on a common goal for that day and there was alignment around what needed to be done. This can provide focus and allow us to benefit from marginal gains.

Get Involved

If you’d like to come along to the next Major Projects event, or any of our other group meetings, take a look at our Events page to find out more about what’s coming up.