1. What have we learned from the experience of Constructing Excellence in the UK? Don Ward Chief Executive Constructing Excellence don.ward@constructingexcellence.org.uk www.constructingexcellence.org.uk

2. What have we learned from the experience of Constructing Excellence in the UK? Organisation Funding –Membership –governmental support –project financing –information etc. Operation towards members and industry Co-operation with the Government What was critical in different phases? What would you have done differently?

3. 199419982001 20032005 2006 DBF

4. Our purpose is to Improve industry performance The outcome will be A demonstrably better built environment

5. UK construction 2007: €170 billion 8-9% GDP 2.3 million people employed –9% women 192,000 construction firms + 30,000 professional services firms 93% small firms, <1% large firms –SMEs and Large firms both do c.50% of work

6. NorwayUK Turnover (€ B) Employees (‘000) Companies (‘000) Proportion small firms 31 320 43 97% 170 2,300 220 95%

7. What is the UK experience?

8. In the beginning… Joint Government-industry initiative 1993-94 Problems –Conflict –Litigation –Poor profitability –Poor safety –Poor productivity –Poor competitiveness Interim report “Trust and Money”

9. Two main reports: 1994 Latham 1998 Egan Client focus, partnering, award on quality and price target 30% productivity/cost improvement in 5 years legislation for fair contracts - adjudication –Construction Industry Board (now Strategic Forum for Construction) ‘Rethink’ –what if construction were like manufacturing? –lean thinking: value not waste target 10-20% improvement per year –Movement for Innovation etc (now Constructing Excellence)

10. Product development Production of components Project implementation Partnering the supply chain Committed leadership Focus on the customer Product Team Integration Quality driven agenda Commitment to people 5 Key drivers for change 4 Key project processes 7 Targets for improvement Capital cost Construction time Predictability Defects Accidents Productivity Turnover & profits -10% 10% - 10% 20% + 20% - 20% 10% + 10% The ‘Egan’ vision for change - to be a “winner”

11. Strategic Forum for Construction Over 140 trade and professional bodies under one umbrella Similar to the Federation of Norwegian Construction Industry (BNL)? Consultants Main contractors Specialist contractors Manufacturers and suppliers Clients Government

12. Construction Industry Key Performance Indicators

13. Client satisfaction –Product –Service Defects Predictability –Cost –Time Profitability Productivity Safety Construction Cost Construction Time

14. Reportable accidents per 100,000 employed (Industry AIR) Safety Better

15. Client satisfaction – product and service Scoring 8/10 or better

16. Profitability: Median profit on turnover (%) Profitability

17. Pioneering projects BAA: Pavement Team, Genesis, mid 1990s onwards –After 7 years, frameworks save 55% on time and 60% on design and management costs GlaxoWellcome: Fusion, mid-late 1990s –3 projects worth total of £50M saved £8.75M of cost and saved 13 (7+6) months worth £2.25M MOD –Building Down Barriers, late 1990s –MOD Andover North

18. Demonstration Programme Implementing the principles of Rethinking Construction –525 Projects since 1998, incl. 203 housing sector Value £13bn –430 completed, 95 live –Involvement of 1176 organisations UK-wide –176 case histories –63 associated reports and publications Innovators Early Adopters Early Majority Late Majority Laggards

19. Demonstration Performance 2006 compared to Industry Performance 2006 7700 0 50 100 150 200 250 300 350 Client Satisfaction - Product Client Satisfaction - Service Defects Environmental Impact Product Environmental Impact Process Safety * Safety - All Companies * Safety - Companies T/O > £10m * Predictability Cost - Design Predictability Cost - Construction Predictability Time - Design Predictability Time - Construction Profitability ** Productivity Construction Cost Construction Time Employee Satisfaction Staff Turnover Qualifications & Skills 2006 pan-industry performance = 100 CE 2006 Industry 2006 = 100

20. Demonstration Performance 2006 compared to Industry Performance 2006 CE 2006 Industry 2006 = 100 770 0 0 50 100 150 200 250 300 350 Client Satisfaction - Product Client Satisfaction - Service Defects Environmental Impact Product Environmental Impact Process Safety * Safety - All Companies * Safety - Companies T/O > £10m * Predictability Cost - Design Predictability Cost - Construction Predictability Time - Design Predictability Time - Construction Profitability ** Productivity Construction Cost Construction Time Employee Satisfaction Staff Turnover Qualifications & Skills 2006 pan-industry performance = 100

21. Some successes (up to 2007) Collaborative working Safety Design quality Profitability and certainty of profit Benchmarking and performance measurement Adjudication Public-private partnership and Private Finance Initiative

22. Industry change - maintaining momentum 1994.........................................................2008

23. What have we learned from the experience of Constructing Excellence in the UK?

24. Organisation Funding –Membership –governmental support –project financing –information etc. Operation towards members and industry Co-operation with the Government What was critical in different phases? What would you have done different?

25. BREAK Don Ward Chief Executive Constructing Excellence don.ward@constructingexcellence.org.uk www.constructingexcellence.org.uk

26. What have we learned from the experience of Constructing Excellence in the UK? Organisation Funding –Membership –governmental support –project financing –information etc. Operation towards members and industry Co-operation with the Government What was critical in different phases? What would you have done different?

27. Organisation

28. 199419982001 20032005 2006 DBF

29. Strategic Forum - over 140 trade and professional bodies under one umbrella Similar to the Federation of Norwegian Construction Industry (BNL)? Consultants Main contractors Specialist contractors Manufacturers and suppliers Clients Government

30. Member forums 2007-8 2009-10

31. Governance Statutory BoardCouncilMember Forums

32. Funding

33. Three income streams Membership forums Commercial commissions Government programmes

34. Funding How much? UK started with €15M –divided between several organisations Today €4-5M would suffice Who? Probably Government grant to pump-prime Can you organise big clients to support? Federation of Norwegian Construction Industry (BNL)? Aim is industry-led sustainability

35. Operation towards members and industry

36. Core business activities ‘Must dos’ that add distinctive value for our customers Core themes Action research & innovation KPIs & benchmarking DemonstrationsNetworks Guidance & training Leadership & influence

37. Integration & collaborative working Leadership & people (incl. health and safety) Value Sustainability Core improvement themes

38. Collaborative working key principles Leadership Vision Processes ‘Hard’ measures People ‘Soft’ issues

39. Collaborative working Critical success factors Early involvement Selection by value Common processes and tools Measurement of performance } continuous Long-term relationships } improvement Modern commercial arrangements

40. Leadership People Policy & strategy Partnerships & resources People results Customer results Society results Processes Key performance results EnablersResults Innovation and learning The EFQM [Business] Excellence Model

41. Co-operation with the Government

42. HM Government policy interests Competitiveness –skilled/trained workforce Sustainability –environment –communities Consumer protection Public expenditure drivers –“Delivery” – health, education, defence, crime etc –Value for money –3-year financial planning –Private Finance

43. Government Some characteristics –Bureaucratic, risk averse, process-driven As a client of the industry –procure ‘as one’, allow the industry to innovate, learn from the private sector As a legislator or ‘sponsor’ of the industry –Intervene where there is market failure –Facilitate and encourage innovation, training etc –But do not prescribe

44. DEVELOP MANAGE LIFE CYCLE CONSULT CONSTRUCT DESIGN The whole life-cycle of construction

45. How the built environment adds value Workplace productivity Competitiveness of investments Effectiveness of public services Locational value Social benefits Environmental quality

46. Design £100K Construction What the customer really needs “£200M” Business Costs “£5M” “£1M” Operation and Maintenance Process Push User Pull Outcomes “£250-£2000M”?

47. What was critical in different phases?

48. Drivers for change Why should people change? –The business case –Clients –Commercial threats - survival issues? Compare with the North Sea in the 1980s? Economic recession

49. ‘Survival’ issues today Sustainability –a sustainable industry? environmental, social, economic “is our ‘license to trade’ threatened?” “[How] can we survive the recession?” Procurement practice, supply chain relations “how can we deliver better value for the customer/end-user?” People and image –safety, health, welfare –recruitment, retention, respect “how can we ensure we get our fair share of good people?”

50. What do clients want?

51. Clients driving change Retail: Asda, Marks and Spencer, Sainsbury, Sommerfield, Tesco, Boots Developers: Stanhope, Slough Estates, Land Securities Corporates: BT, BBC, Abbey National, Barclays Utilities: BAA, all water companies Central government: highways, defence, health Local government: “Best Value” Social housing: Registered Social Landlords

52. What would you have done differently?

53. Barriers and challenges include Too many people see the old way as “the way we and our customers have always done things”… … and do not have time or the inclination to change their processes….. or to invest in re-training their people…. as there has been enough work around for everyone

54. We have overcome some of these barriers by providing evidence utilising client ‘pull’ working with the willing and able

55. Targeting the market Capture ideas Best practice information Customer leverage Legislation Innovators Early Adopters Latent Followers Other

56. Lessons learned How? –People ownership, buy-in, engagement, passion, commitment Formal training –“Initiative overload” –ICT as a driver and enabler –Keep evolving – people ‘get it’ at different speeds

57. Recommendations Get the Politicians interested Organise the client focus and “pull” Engage the passionate industry champions Establish a forum for clients, industry and government to collaborate Identify and agree the “radical threat” Establish a measurement regime Set out to prove the “business case” Align government’s interests (legislation, procurement) Use existing networks for communication (and credibility)

58. What have we learned from the experience of Constructing Excellence in the UK? Don Ward Chief Executive Constructing Excellence don.ward@constructingexcellence.org.uk www.constructingexcellence.org.uk