Presentation on theme: "CASE STUDY – SUFFOLK HIGHWAYS PARTNERSHIP HEADLINE CWC assessed the potential for the implementation of Open Book Cost Management and Target Costing into."— Presentation transcript:
CASE STUDY – SUFFOLK HIGHWAYS PARTNERSHIP HEADLINE CWC assessed the potential for the implementation of Open Book Cost Management and Target Costing into the processes of The Suffolk Highways Partnership (SHP) & made recommendations for the delivery of cashable savings. THE CHALLENGE The SHP comprises Carillion and Suffolk Highways Contracting (SHC), both of which act under the auspices of Suffolk County Council (SCC). CWC were asked to provide independent advice to SCC on whether or not Carillion and its suppliers appear willing to move towards the implementation of Target Costing to replace the Schedules of Rates and to review internal processes to identify where changes could be made to deliver cashable savings. We were also asked to identify the potential level of savings that might be made through the application of Target Costing to typical jobs and to review the contract to ensure that Target Costing can be incorporated into any extension of it. THE APPROACH CWC adopted three primary strategies to assess the potential for the implementation of Target Costing: 1.Established that Carillion and its three main suppliers, Target, Breheny and Bagnall & Morris, understood the principles of Target Costing and were prepared to accept cost transparency & Open Book working as the first essential elements of it. 2.Interrogated financial accounts for all the suppliers to test the level of overheads and profit they apply to their Schedules of Rates. 3.Set up working groups to review, through process mapping, the internal SCC and SHP operational processes both generically and for two sample projects, and reviewed the existing contract between SCC and Carillion. BENEFITS The first element of Target Costing, cost transparency by all parties which will support Open Book working, was established. The sample project reviews concluded that a 10% saving of the costs of all projects was viable. However, Target Costing also requires that Client and Contractor agree on the best way to plan and execute a project so that all actual cost elements can be calculated and turned into a Target Cost which all parties accept. For this to occur the review concluded that these key areas needed addressing for improvement: programming, both long-term and operational early Contractor involvement communications regional differences operational ownership. CWC CONCLUSIONS CWC recommend that SCC implement a four-stage plan: begin negotiations with Carillion to extend the contract review processes for commissioning and delivery by SHP to ensure optimal cost and time outcomes. This will require far greater levels of integration of all parties than happens currently. The process mapping work can form the basis of such a review which will address organisational and operational barriers which hinder SCC, SHC and Carillion from working together effectively Implement the outcome of the review and set a target for SCC to save 10% of the cost of all projects at current prices as achieved and validated in the sample projects review. THE DELIVERY TEAM The work was undertaken by Ian Stuart DELIVERING OPEN BOOK WORKING
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