What have we learned from the experience of Constructing Excellence in the UK? Don Ward Chief Executive Constructing Excellence

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?

DBF

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

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

NorwayUK Turnover (€ B) Employees (‘000) Companies (‘000) Proportion small firms % 170 2, %

What is the UK experience?

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

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)

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”

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

Construction Industry Key Performance Indicators

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

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

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

Profitability: Median profit on turnover (%) Profitability

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

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

Demonstration Performance 2006 compared to Industry Performance 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

Demonstration Performance 2006 compared to Industry Performance 2006 CE 2006 Industry 2006 = 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

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

Industry change - maintaining momentum

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?

BREAK Don Ward Chief Executive Constructing Excellence

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?

Organisation

DBF

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

Member forums

Governance Statutory BoardCouncilMember Forums

Funding

Three income streams Membership forums Commercial commissions Government programmes

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

Operation towards members and industry

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

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

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

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

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

Co-operation with the Government

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

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

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

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

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

What was critical in different phases?

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

‘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?”

What do clients want?

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

What would you have done differently?

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

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

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

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

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)

What have we learned from the experience of Constructing Excellence in the UK? Don Ward Chief Executive Constructing Excellence