06 Apr 2017
Collaboration, progressive procurement, and early contractor engagement can save the taxpayer millions of pounds across the lifecycle of an infrastructure project, and the commercial manager is perfectly placed to help make it happen, writes Stephen Blakey FRICS, Commercial Projects Director, Network Rail.
Improving efficiency and value for money
Six years ago Network Rail set out on a journey to radically change the way it works with the supply chain. This came in response to the McNulty report, which, among other things, pointed to the importance of better supply chain relationships for improving efficiency and value for money.
So Network Rail committed to making collaboration the platform from which it would deliver a £25 billion portfolio of work. It created the role of Head of Collaboration, went to market with progressive forms of contract founded on collaboration and developed processes and systems to support the cultural change necessary to make collaboration the norm across the business.
Stafford Area Improvement Programme
Network Rail also committed to lead the rail sector’s supply chain in developing its collaborative capability, and in March this year, it became the first UK client to achieve ISO 44001, the international standard for collaborative working.
Sounds great, but are there tangible examples of the benefits of this approach with regards value for money? Yes – and the Stafford Area Improvement Programme is one such example, where effective collaboration has succeeded and changed perceptions of the costs and programme associated with significant and complex schemes.
Reducing the cost from £1 billion to £250 million
The programme involved upgrading the West Coast Main Line around Stafford. Initial assumptions based on traditional approaches led to a preliminary view that the project could cost as much as £1 billion. In terms of value for money, this was untenable.
But through progressive procurement, early contractor engagement and the establishment of a collaborative alliance, the programme was delivered to a much shorter programme and an out-turn cost of approximately £250m.
Some of the features behind this success included establishing an atmosphere of trust and instigating processes based on mutual and aligned objectives. Risks were shared and everyone worked collaboratively in pursuit of what was right for the programme as a whole.
A relentless focus on value and efficiency from all practitioners, not just the commercial team, resulted in costs being stripped out through better integrated planning, the avoidance of ‘man-marking’; and the use of a single, shared set of project data.
The scope and design of the work were also constantly challenged, with more efficient ways of delivering the desired functionality being realised throughout the programme. The result is a high-value-for-money programme, delivered at a quarter of original (all-be-it preliminary) budget expectations through the collective endeavours of various disciplines, not least of which was commercial management.
In essence, commercial managers serve as commercial stewards of infrastructure investment; informing procurement strategies, assessing market capability and risks, managing entitlements and influencing costs.
Crucial to this commercial stewardship is the ability to address four key questions: what should it cost; what will it cost; what did it cost; and why? Rarely can one person provide answers to all four, but project teams working collaboratively can – and are – coming up with better answers.
Learning from experience
Experience from the Stafford Area Improvement Programme and other projects is informing opinion as to what projects do and should cost. The modern commercial manager needs to be equipped to address these questions and hold the right balance of technical and behavioural skills, with the latter being seen as ever more relevant.
Programmes such as Stafford demonstrate that collaboration and all that it entails is no longer an experiment; it’s a recognised approach that when properly employed can deliver real success.
For the commercial manager, collaboration is an increasingly important dimension of their professional capability and for RICS, it’s an increasingly important dimension of the capability of the profession.
RICS have recently launched their new infrastructure distance learning course - find out more and book before 15 May.
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