It was the consequences of fragmentation in our industry which Sir Michael Lathem principally examined in his land mark report “Constructing the Team” PUBLISHED IN 1994 We are only realising the impact the impact has had on the industry and the developments rising from it, such the CIB, adjudication. The report rethinking construction, based on the firm foundations of Constructing the team suggested to the DPM the following: Demonstration projects A movement for change The knowledge centre Public sector involvement, facilitated know by m4i via GCCP/LGTF Occasional client via the Clients charter Branded products, Our prisons and Hospitals, Maces Office, Leisure. Airport products, Arups Office
Committed leadership, from the top committed to, aspiring and driving change through in their organisation and being able to communicate the required operational and cultural changes throughout the organisation A focus of the customer : the customer drives everything, providing what the customer wants, when they want it at a price which reflects the products value to the customer. Activities which do not add value to the customers view point are classified as waste. Integrate the process and the team around the product , where the is no fragmentation
In the Constructing the Team report Sir Michael Latham concluded that the industry's traditional methods of procurement and contract management and its adversarial culture caused inefficiency and ineffectiveness. He concluded that addressing these issues had the potential for saving 30% over five years.
Review requirements and constraints Availability of suitable procurement options YES Identify available standard contracts appropriate to the selected option Traditional Design & Build Management/ Construction Management Select appropriate payment mechanism Review Risk allocation and management Consider contract amendments if necessary Finalize contract documentation including risk allocation summary Consider contractor selection options and constraints (EU regulations etc.) Finalize selection procedure NO Consider special arrangement Consider special contract JCT 98/ JCT MW/ ICE 7 th / NEC etc. JCT 98/ NEC etc. JCT Management/ NEC etc.
Rethinking Construction 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 % - 10% +20% -20% -20% +10% +10%
Committed leadership Focus on the customer Integration of process and team around the project A quality driven agenda Commitment to people Five key drivers
Partnering the supply chain Components and parts Focus on end products Construction process (elimination of waste) Four key processes
Reduce capital costs by 10% Reduce construction time by 10% Reduce defects by 20% Reduce accidents by 20% Improve cost and time predictability by 10% Increase productivity by 10% Increase profitability by 10% Seven annual targets
Early involvement of suppliers in design, costing, planning - often with contractors taking the lead
Collaborative contracts - that accept at the start that contractors should make a reasonable profit
Long term relationships with contractors and key suppliers
Learning and Improvement from project to project
Functionality optimised and cost reduced through VM/VE Gain share incentive Gain pain incentive to reduce cost through Risk Man & CI Final Target Cost agreed PROJECT STAGES FINAL COST ECC: NEC Standard Form of Contract with gain pain share incentives Construction Phase Inception COST Pre Construction Pricing
Target Price agreed at 6 month intervals based on submitted ‘Project Cost Model’ - including agreed labour and materials, risk allowance, and overhead and profits. Materials specification to be agreed with client during development of target costs.
PCC ensure costs favourable in relation to Historic Reference Costs.
Risks analysed during the development of target price and ‘reasonable’ contingency allowed for real unknowns. Any provision for client or shared risks also agreed at this stage.
New Continuous Improvement targets set at 6 month intervals in key performance areas such as cost, reaction times, customer satisfaction. Long term continuation of the contracts to depend on satisfactory performance improvement.
Open books with auditable costs used by both parties to interrogate and reduce high cost areas.
Contractors integrating in design, costing and planning
Collaborative development of specification & planning
Single point responsibility given to main contractor for planning & installation