Time for change – a new delivery model for infrastructure.
An influential group of leading figures representing infrastructure client organisations and government is launching its latest work and a subsequent concerted drive for greater efficiency in project delivery. Infrastructure Client Group member Miles Ashley sets the scene.
Productivity in UK construction has been flat for the past 20 years. The industry is inefficient and wasteful, producing 400m tonnes of waste every year – three times the nation’s domestic waste. At least 60m tonnes of material goes straight into skips due to over-ordering or incorrect storage. Research suggests that up to 50% of the cost of a typical project is spent on management, technical coordination and other transaction costs and half of the hours worked on construction sites are wasted.
It has been too easy to blame these problems on external factors like European procurement legislation. The real concern is that despite the many talented people that work in construction, this is an industry that seems unable to embrace the new technologies and business models that ultimately will enable it to meet its customers’ needs and assure its own future. The current business model simply does not enable innovation to flourish and new entrants to challenge the established order.
For the last three years the Infrastructure Client Group (ICG), chaired by Andy Mitchell of Tideway, has been working on the problem. In the bowels of the Institution of Civil Engineers a quiet revolution has been underway: Infrastructure client organisations and companies have been exchanging information and sharing sensible ideas about what a new delivery model for infrastructure might look like.
With Network Rail, Thames Tideway, Transport for London, the Environment Agency, Heathrow Airport, Anglian Water, HS2, National Grid, UK Power Networks, Highways England, the Infrastructure Projects Authority, Cabinet Office and others around the table, this is an influential group.
Since its inception in 2010 the ICG has been finding ways in which infrastructure companies can work together to effect change. The group has already published work on alliancing, skills, production management, carbon reduction and risk management. Its work led to the Treasury’s Routemap that is being widely used to test the maturity of projects as they develop through early stages.
Much of this work is available to all through the ICE’s website, but its real value has been in how it has informed the mind-set of ICG participants and influenced the evolution of their delivery approach.
A good example of this is both HS2 and Anglian Water acting to put the management of carbon at the heart of their development and decision making processes, clear in the knowledge that carbon reduction is a proxy for customer value.
Now, after two years hard work, the ICG is about to launch its next piece of work – a proposal for a new delivery model for infrastructure that promises to be the catalyst for a transformation in the way that infrastructure client organisations work with the construction industry.
In early March the ICE will release a short document summarising the proposals that have already become known as Project 13 – a mysterious title perhaps, but one that arose simply because the last project the ICG undertook was Project 12. Why change a recognised brand?
The Project 13 proposals will present an evidence-based economic case for change, identify the key factors in creating an enterprise culture and initiate a platform for building maturity. If the ICE’s recent National Needs Assessment represented the ‘what’ of infrastructure, then Project 13 will begin to set out ‘how’.
The associated academic research has identified five fundamental features of project success: outcome-driven governance; clear integration; definitive alignment; effective organisation; and owner-operator leadership capability. These are the key platforms for allowing a supply chain to move from doing what it’s told, to contributing to its client’s outcomes and enabling the value they crave and we all need.
Proposals contained in the Project 13 report are consistent with those made in previous landmark reports like Rethinking Construction and Constructing the Team. The difference this time is that publication of Project 13 is not a conclusion, but a launch platform for five cross-industry working groups, focusing on the five key factors mentioned above, that will now engage leaders of the infrastructure and construction industries in promoting real change.
These groups are led by established practitioners and leaders from infrastructure and construction and will be co-ordinated by the ICE. They will not only seek to understand and develop maturity in these areas, but in aggregate constitute a broad-based coalition with the Construction Leadership Council to drive change.
We are confident that the proposals the ICG is launching can deliver the change we need because they are already being used in whole or in part by companies from Anglian Water and the Environment Agency to GSK (GlaxoSmithKline) and BMW. We know that when companies work with their suppliers in enterprise cultures, driven by a clear understanding of value, they consistently attain better outcomes. The 30% to 50% benefits being typically achieved must now seem attractive, if not necessary.
And yet infrastructure’s traditional approaches to assessing investments, procuring contracts, developing supply chains and managing work consistently bring us back to an inefficient transactional delivery system.
We can change that, and we must – before it changes us.
Miles Ashley is a member of the Infrastructure Client Group, formerly programme manager for construction at London Underground, now director of Wessex Advisory Ltd.