Delivering Successful Outcomes

1. Delivering Successful Outcomes STEVE ROWSELL ANDY ROACH-BOWLER Rowsell Wright Limited

2. Contents • Current position • Background to industry change • What Clients want – Crossrail example • What’s needed to deliver • Collaboration – Project 13 approach • Delivering wider objectives • Looking ahead

3. Current position on project procurement and delivery • Progress has been made • Funding and forward planning still difficult • Inconsistent approach to collaboration • Still too much focus on lowest price • Supply chain profits too low • Larger clients developing new approaches

4. Industry change has been slow 1998 1994 2002

5. Where we were – learn from mistakes • 40% average cost overruns, most projects delivered late • Poor buildability, little innovation • Quality defects and poor life cycle performance • Adversarial claims culture, disputes and high legal costs

6. We know how not to achieve successful outcomes • Work packaging not aligned with market structure • Supply chain not engaged until construction • Lump sum contracts which carry high risks for contractors • Complex and misaligned contract incentives • Expensive tender process with design required during tender period • Focus on lowest price tendering • Collaboration by name but not by nature

7. What outcomes do Clients want?More focus required. Technology solutions Collaborative culture No defects Better health and safety Sustainable supply chain Enhanced reputation No procurement challenges • Best whole life value • Affordability • Certainty of cost and time • Sustainable solutions • Risk-free innovation • Efficiency / improvement • Higher productivity • Support economic growth • Skills development

8. Contract strategy factors –the Client Clients need to establish: • Scope – build/maintain/operate • Design strategy - how far to develop design • Risk allocation • Affordability criteria and realistic budgets • Prioritise the wider benefits of investment

9. The Crossrail Approach • Packaging based on market engagement • OCI approach • Balanced risk allocation • Robust outturn estimate • Focus on skills development

10. Contract strategy factors –the Market Market factors: • Supply chain capability and capacity • Access to resources • Willingness to accept risk • Time to prepare and respond • Competing work programmes • Trust in the Client

11. Procurement, commercial and contracting key principles • The Client needs to understand its capabilities • Clear Client objectives / outcomes • Effective market engagement • Careful consideration of contract packaging • Achieving an integrated and incentivised team • A fair balance of risk and reward • Upholding equal treatment, transparency and proportionality

12. Project 13: From Transactions to Enterprises Evolution of the new approach: • Traditional approach • Simple collaboration • Integrated functions and relationships • High performing enterprise

13. Project 13 The five key features • Governance • Defining value; long-term relationships; performance measurement • Organisation • Coalition of suppliers; aligned commercial interests; effective organisation • Integration • Effective teamwork; Production management; Health, safety and well-being • Capable Owner • Digital Transformation

14. Examples of collaborative contracting • Use of NEC contract for simple collaboration – spirit of mutual trust and cooperation • Early Contractor Involvement – Highways Agency and HS2 • Optimised Contractor Involvement – Crossrail • Collaborative frameworks – Highways England • Alliances (NEC4) – HE SMART motorways

15. Supplier selection: Risks of lowest price tendering • Tenderers forced to submit unrealistically low prices to win the contract • Tender does not reflect the outturn price • Confrontational relationships • Quality of work or services threatened • Design solutions are not best value • Reduced competition

16. Selection:Use of MEAT as award criteria • Encourages higher quality proposals – but price still important • Supports delivery of wider government policies such as sustainability • Criteria can be developed to support successful project outcomes • Develops better understanding of requirements and risks

17. Delivery of wider Client objectives • Equality / diversity / inclusivity • Regional / community benefits • Skills and employment • Workforce welfare • Environmental sustainability • Ethical sourcing • Economic growth

18. Delivering wider objectives through procurement • Specifications / requirements • Pre-qualification procedure • Tender criteria • Contractualise tender promises • Incentivise performance • Manage performance

19. Looking ahead

20. Procurement Regulations – post-Brexit • Public sector currently need to comply with EU Directives via the 2014 Regulations(PCR & UCR) • If Brexit deal agreed and UK retains EU process, case law will be determined by EU courts • If no-Brexit deal, problems arise and we lose access to OJEU processes and the EU markets • Could move to a GPA option, but need to become WTO member in our own right – and there is opposition

21. Key steps in achieving successful outcomes • Decide on requirements and objectives • Assess client capability • Develop robust budget • Set out approach to best practice principles • Market engagement • Define/follow the procurement process • Apply assurance – “3 line of defence”

22. Questions?