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

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

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

Industry change has been slow 1998 1994 2002

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Looking ahead

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

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”

Questions?