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The Movement For Innovation www.m4i.org.uk Alan Crane – Chairman Industry Advisor-- Li Brandt & Co in association with HammondSuddardsEdge.

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Presentation on theme: "The Movement For Innovation www.m4i.org.uk Alan Crane – Chairman Industry Advisor-- Li Brandt & Co in association with HammondSuddardsEdge."— Presentation transcript:

1 The Movement For Innovation www.m4i.org.uk Alan Crane – Chairman Industry Advisor-- Li Brandt & Co in association with HammondSuddardsEdge

2 Why rethink construction ? £64 billion turnover - 10% of GDP   Employs 1.7 million   Low profitability   Substantial under-achievement     Low levels of investment   High client dissatisfaction

3  The Report: - Commissioned by the Government  The Scope: - For improving the quality and efficiency of UK construction  The Task Force: - Led by Sir John Egan included a number of people from other industries ‘Rethinking Construction’

4  Bases its recommendations on tried and tested methods from other industries  Sets out a model for change and improvement  Based on integrated teams- people working together!  Needs the procurement process rethinking ‘Rethinking Construction’

5 Why M 4 I was created

6 Committed leadership Focus on the customer Product team integration Quality driven agenda Commitment to people Drivers for Change Product development Production of components Project implementation Partnering the supply chain Improving the Project Process Targets for Improvement Capital cost Construction time Predictability Defects Accidents Productivity Turnover & profits -10% +20% -20% +10% ‘Rethinking Construction’ – a reminder!

7 The structure of Rethinking Construction

8 The ‘Rethinking Construction’ report recommended:  Clients committed to improvement should undertake demonstration projects to develop and illustrate the ideas set out.  This core of projects to become the basis of a movement for change & innovation Why M 4 I ?

9 Mission Statement “The Movement for Innovation aims to lead radical improvement in construction in value for money, profitability, reliability and respect for people, through demonstration and dissemination of best practice and innovation.”

10 Rethinking the Procurement Process Teamwork, not individualism     Eliminate social barriers What we need to do Satisfy the customer     Eliminate blame culture   Front end integrated thinking   Partner!

11 Progress in the first two years 270+ Demonstration Projects with value of more than £5 billion   M 4 I website and Knowledge Exchange   Established nine regional clusters within UK   Pan industry key performance indicators – proving the business case   M 4 I Membership   Annual national conferences and regional events   More than 6000 organisations engaged   74 Published Case Histories with a further 25 on the way  

12 The Demonstration Projects From all industry sectors   Participate in ‘ Clusters ’ and share knowledge   Demonstrate innovation relating to ‘ Rethinking Construction ’   Commitment to measure performance   Be open and honest about success/failure   Set high standards of safety and respect for people  

13  Innovations are therefore implemented on real projects and in real-time and tested by industry peers  The demonstrated innovations are further developed with peer feedback (ongoing improvement)  New ideas and fresh inputs are received  Prove the business case for change  Share expertise and experience across commercial and trade barriers of both successes and failures Benefits of Demonstration

14  Recognised as leading edge  Attract media and peer interest  Opportunity to raise profile  Be part of a standard setting forum  Be a member of a network for radical improvement  Share and develop ideas without commercial barriers  Utilise innovations developed by others  Improve performance  Secure commercial advantage Benefits to Demonstrators

15 Targets for next 12 months Maintain Demonstration Project Programme – with targetting of priority areas particularly design and manufacturing   Trial developing procurement processes   Continue to make the business case.   Build on developing background drivers.  

16 Background Drivers n National Audit Office Report (Modernising Construction) strongly endorsed the application of Rethinking Construction principles to Government procurement- it is unlikely that the lowest price will represent best value! n Legislation requires local Government to obtain Best Value (and achieve continuous improvement) in procurement and service delivery. n Support for Rethinking Construction from major Clients through the application of the Clients Charter.

17 Implications n Leading private and public sector clients will increasingly be looking to place business with construction companies applying Rethinking Construction principles. n Increased opportunities for strategic partnering with supply side partners. n Businesses that have a (justified) reputation for innovation and commitment to their people will be more attractive as strategic partners. n Cost of ownership will increasingly become the most critical factor for clients,and design for whole life holds the key!

18 Whole Life Cost 1 : 5 : 200 1 = Capital cost 5 = Maintenance and Operation 200 = Occupation

19 nLocal Government- Best Value nCentral Government- Achieving Excellence nPFI/PPP nDesign and Construct nPrime Contracting nPartnering Agreements - PPC 2000/ NEC/ Traditional nCommon threads- Integrated Teams, value not cost, look at the whole life, measure performance. Different Procurement Routes

20 Government - Achieving Excellence Rethinking Construction Procurement Why Change? n Central Government spends £11 billion per annum n a 10% saving equates to £1.1 billion n Which is 12 hospitals, or n 50 secondary schools n REAL VALUE INCREASES

21 Government - Best Value Rethinking Construction Procurement Why Change? n Local authorities spend £16 billion per annum n a 5% saving equates to £800 million n St. Helens spends £26 million per annum n A 5% saving equates to £1.3 million n REAL VALUE INCREASES

22 Government - Best Value Best Value in Construction Do these never happen in your Authority? n Design programme late. n Tender period cut short. n Bill of quantities period cut short. n Tender price varies widely from budget. n School not opened on time. n Extensive defects list.

23 What about the Private Sector Are they leading or following? nFramework Agreements nSupply Chain Relationships nPartnering- whatever that means!

24 Strategic partnering through the supply chain What is Strategic Partnering ? “All partners must embrace partnering as - a rigorous management method which requires an internal policy, formal selection, training, the identification of clear objectives and the development of an agreed strategy for effective implementation at all levels.”   Partnering is not, post award team building as an anti-litigation strategy  

25 Strategic partnering through the supply chain Strategic Partnering - Key Principals Partnering Policy     Selection & assessment - (culture & level of compatibility) Compatible organisations     Continuous Improvement Programme   Commitment to performance measurement   Win : Win arrangements   Problem solving and dispute resolution   Training

26 Linking procurement and profit Profit is for everyone ! Reduce the reliance on costly competitive tendering     Develop long term relationships Replace ‘Contracts’ with performance measurement     Design for construction and use   Invest in training Secure our industry’s future   Increase profits by at least 10%- year on year - Sir John Egan, Construction Task Force  

27 Project performance Client satisfaction: (Product and Service) Defects n Predictability: (Cost and Time) Construction Cost Construction Time Company performance n Profitability n Productivity n Safety The 10 (Headline) KPIs Economic – KPI Working Group

28 Client Sat. - Product Client Sat. - Service Defects* Safety Year on Year Comparisons - 1999 v 2000 19992000 73% 63% 65% 1037 INDUSTRY 72% 63% 53% 1088 M4I 93% 76% 86% 620 81% 76% 89% 716 19992000

29 Pred. Cost - Design Pred. Cost - Constr. Pred. Time - Design Pred. Time - Constr. Year on Year Comparisons - 1999 v 2000 19992000 64% 45% 37% 62% INDUSTRY 63% 52% 41% 60% M4I 61% 66% 67% 69% 84% 59% 55% 69% 19992000

30 Profitability* Productivity* Cost Time * Year on Year Comparisons - 1999 v 2000 19992000 5% 59 -2% 3% INDUSTRY 5.5% 28 +2% 1% M4I 7.1% 36 -7.1% -12.9% 7% 164 -6% -8% 19992000

31 Client Satisfaction - Product Client Satisfaction - Service Defects Predictability Cost - Design Predictability Cost - Construction Predictability Time - Design Predictability Time - Construction Profitability Productivity Safety Cost Time M4I 2000 v Egan year-on-year targets 50 100 150 200 Egan year-on-year target M4I 2000 120 110 120 KPI Comparisons 1999 Construction Industry Average - DETR

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33 Why Change ? Construction industry under-achieving Low profitability & inefficiencies Not enough capital investment Lack of research and development Too many dissatisfied clients Labour and skills shortage

34 April 1999 - March 2002 extended to 2004 Supported by DTI, The Housing Corporation, NHBC and members: to reflect whole industry To promote Egan targets: innovation and continuous improvement in the housing sector The Housing Forum

35 Nearly three years on……. 125 approved Demonstration Projects representing £1.6bn construction costs 185 subscribing members Seven regional groups Four reports on DPs progress Eight working reports

36 Key initiatives National customer satisfaction survey Development of RR&M KPIs Impact of planning on innovation Promoting recruitment, retention and respect for people Sustainable construction

37 Key partnerships Housing repair and maintenance Demonstration Projects with the Local Government Task Force Case studies and dissemination with the Construction Best Practice Programme Benchmarking Club with Building Research Establishment

38 The Movement for Innovation M4i The Local Government Task Force Government Construction Clients ’ Panel Rethinking Construction Ministerial Steering Group The Housing Forum Board Executive Open members Demonstration Projects Panel (standing) Regional groups (standing) Working groups (time limited) KPIs Customer Satisfaction Sustainability Recruitment, retention and respect Steering Group Core Members (standing) Policy Development Groups (time limited) Industry Liaison Group (standing) Construction Best Practice Programme Structure of the Housing Forum within the Rethinking Construction initiative (at 04/00)

39 Demonstration Projects Emphasis on partneringEmphasis on partnering Strong trend towards prefabricationStrong trend towards prefabrication Projects cover all the ‘Egan’ targetsProjects cover all the ‘Egan’ targets Using Key Performance IndicatorsUsing Key Performance Indicators Additional voluntary indicatorsAdditional voluntary indicators Supported learning networksSupported learning networks

40 Repairs and maintenance Call centre operated by contractor Reducing administration costs Increasing tenant satisfaction Reducing defects Covers 8,000 properties Demonstration Projects by theme - Broomleigh HA

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47 The Movement For Innovation www.m4i.org.uk Alan Crane – Chairman Industry Advisor-- Li Brandt & Co in association with HammondSuddardsEdge

48 © 2002 Alan Crane, Movement For Innovation, U.K. All rights reserved. No part of this paper may be reproduced, distributed, published, or transmitted without the prior permission of the copyright owner.


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