Outsourcing in Utility Networks Changing attitudes to break out of the aggressive/defensive cycle caused by contractual relationships.

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Presentation transcript:

Outsourcing in Utility Networks Changing attitudes to break out of the aggressive/defensive cycle caused by contractual relationships

In-house hierarchy Function SM FLM Teams FLM Teams SM FLM Teams FLM Teams SM FLM Teams FLM Teams

Client-Contractor hierarchy Function Client Contract Management Inspection Teams Contractor SM FLM Teams FLM Teams SM FLM Teams FLM Teams SM FLM Teams FLM Teams

Contract Development in the 1990’s Procurement function led Schedule of rates contracts – 100’s of prices items Many KPI’s – 20+ but lack of focus Client side costs increase – contract management Contractor side costs decrease – competitive bidding Net cost reduced but only for initial years

21 st Century Solution Partnering, Alliancing leading to Improved Relationships But where is “Appreciation for a system”? Does the client & contractor really understand contractual risk and accountability?

Water Supply Networks Q: Identify up to five examples and prioritise ContractorWorking WellCould Do Better Us55 Them55 ClientWorking WellCould Do Better Us50/1 Them1/210+

Final Outcome 1.New contract focus on asset performance key activities → 25 sub activities. Budgets & volumes agreed by activity 3.KPI’s:DG3 DG7 Repeat failures 4.£30m operation 15% reduction in 2 years 75% of savings on client side 5.Industry leader