1. BEST East – Introduction Developing the capability to deliver more with less Neil Jarrett CWC

2. UK Construction Is In Crisis & Changing Key Industry Drivers –Cost efficiency – ( 20% reduction in cost to government by 2015) –Lower carbon ( public building zero carbon 2018) Will be delivered through a new way of working –Collaboration –Lean –BIM –Cost efficient low carbon

3. Are You Ready?

4. 4 Drivers for Change in UK Construction Industry Government Construction Strategy BS11000 – Collaborative Business Relationships The Wolstenholme Report – ‘never waste a good crisis’ Smart Procurement Accelerating Change Lean Construction Building Down Barriers Egan Report –industry must change –clients must change Latham Report The Challenge: “Government to consistently get a good deal”, “…reduce costs by up to 20%” 1990 2010 2000 2011

5. The Collaborative Market Public Sector – will get better –MOD – new wave of contracts –Education – Smarte East –Health – budgets slashed –PPP approach with Local Government – new models, JVs now being developed Private Sector –Pharmaceuticals –Developers –Retail Utilities, Energy – EDF, nuclear 5

6. Collaborative Solutions Leaders are embracing the new world ….. Creating Collaborative Vehicles to respond to the new challenge and new market Encompassing Design, Build and Operate Generating new business for the founder organisations Formed from like minded organisations Adopting tried and trusted approaches that fulfil all business requirements - collaboration Delivering More… With Less…

7. The New Way Professionally led - Embrace best practice supply chain management –Adopt the all-for–one, one-for-all Virtual Company Approach –Fair Payments using Project Bank Account –Integrated Project Insurance to underpin approach –Maximise Equity Participation –Lean approach –BIM adoption by whole team –Low Carbon approach Focus on Project – driving out waste, maximising efficiency to deliver Value for Money & low carbon Whole Team involved in design, pricing, VM, VE, Estimates, Option Appraisals, Whole Life Costs and Risk Management 7

8. 8 The New Way – A Virtual Company Approach Partnering Environment – A Culture of Collaboration Ring Fenced Margins, Sharing of Risks and Rewards Fair Payments, IPI, Common Procedures Incentivisation of Whole Supply Chain Whole Team Focus on Project – A Lean Approach Improving Quality Improving Performance & Efficiency Optimising Through Life Cost Attacking Waste

9. 9 Target Cost v Traditional “Traditional Lump Sum” 1.Costs determine price 2.Performance, quality capital cost & profit are focus of cost reduction 3.Cost reduction not customer driven. 4.QS responsible for cost reductions 5.Suppliers involved late in design 6.No focus on through life cost 7.Margin-on-margin & risk-on- risk duplication “Target Costing” 1.Price determines costs 2.Design is key to cost reduction, with costs managed out before they are incurred 3.Customer inputs into preferred cost reduction areas 4.Cross functional teams manage costs 5.Suppliers involved in design from outset 6.‘Best Value’ - Minimise Client cost of ownership 7.Minimise Margin on Margin and joint Risk approach

10. 10 A completely different way of working requiring a different mind set and process “Traditional” 1.Multiple tenders for design, PM, Contractors Maintenance and FM 2.Risks due to coordinating and aligning above lie with the Client 3.Risks due to interfaces in contracts lie with the Client 4.Minimal access to supply chain 5.Adversarial contracts – focus on Claims “Collaborative” 1.Single contract only with “Collab Co“(saves procurement time and cost) 2.SLD coordinates the whole team from the outset (avoids unforseen risks) 3.Single point responsibility (price certainty) 4.Supply chain involved from the outset (best Value approach) 5.Focus on Success of the Project underpinned by IPI (No Claims Culture)

11. 11 Value Engineering Savings – Andover North Site Item £ k Combining lecture theatre 600 Maximising Building Cores 320 Optimising site levels (zero off site) 170 Optimising Catering provisions 120 Prefabrication facility 155 Electrical wholesaler 90 Optimising Tech Building450 Optimising mains servicing110 Advanced planting60 TOTAL SAVING – OVER 5% £2075k 500 1000 1500 2000 0 £ k

12. 12 Running Cost Savings – Andover North Site Item £ k PA Energy Savings 200 Intelligent Lighting 25 Heat pumps in lieu of chillers 40 Optimising landscape20 Demountable partitions 40 Low maintenance finishes 40 Annual Savings £365 k Total over 25 years (over 20% of Capital cost) £9,000 k 50 100 150 200 0 £ k PA 250 300 350

13. Summary Benefits to the Client Greater price certainty through GMP underpinned by Integrated Project Insurance Reduced Capital Costs Reduced cost of ownership Extended Warranty Better Facilities - improved project focus improves use, reliability & functionality Single Contract ‘One Stop Shop’ approach reduces internal procurement costs 13

14. The industry is broken. To survive, you need new skills. If you believe things are changing… BEST East is here to help East of England firms to win work by becoming leaner, greener and more collaborative Thus delivering improved performance and business benefits as well as contributing to Government targets for reduced costs and lower carbon. BEST East has development funding in place to help local firms create an action plan to implement improvements.

15. The industry is broken. To survive, you need new skills. If you don’t believe things are changing… Thanks for Listening and Entertaining Us