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Client procurement strategies shape the construction industry? – A discussion - Professor John Lorimer


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Client procurement strategies shape the construction industry? – A discussion - Professor John Lorimer

  1. 1. Agenda Drivers Procurement Tools &Collaboration Training
  2. 2. Manchester is the regional capital of the north west of England, the UK‟s largest economic region outside London. The Greater Manchester conurbation is by far the most densely populated part of the region, with over 2.5 million people living in an area of 1,200 km2. Manchester is the largest of the ten Greater Manchester districts,but in a relatively small area of 117 km2.
  3. 3. Population Population fell from 703,082 in 1951 to 422,915 in 2001. However following the recent growth period thecurrent Manchester population is estimated to be 498,779.
  4. 4. Economyo In 2008 the city region generated over £44bn of GVA – Circa 5% of the national economy & 40% of NW GVAo GM is a larger economic unit than Wales, Northern Ireland or the North East of Englando GM is nationally leading in balancing of civic leadership, accountability and business expertiseo Major companies such as the Bank of New York Mellon, Google, Nike and Credit Suisse have all recently been attracted from the UK and overseaso GM has particular strengths in advanced manufacturing, life sciences, creative and digital media and financial and business serviceso We have an exceptional higher education offer with the largest student population in Europe of over 100,000 students across five Universities. Economic forecasts suggest that GM has the business base to create 75,000 (net) new jobs by 2015
  5. 5. Recessiono Over £1.7bn (3.3%) and 46,000 (3.5%) GM jobs lost between 2008 and 2010o GM unemployment increased by 44,300 (64%) between 2007 and 2010o Youth unemployment increased by 13,800 (40%)o The number of companies winding up was (on average) a third higher between 2008 and 2010 compared to 2007o Personal insolvencies peaked at 5,700 in 2009, representing 28.2 per 10,000 adultso House prices have fallen by 18% from their April 2008 peak and the number of sales fell to a third of peak volume
  6. 6. A Prospectus for Citieso Cabinet Office leading work with Cities to make the case for Cities in driving economic growth across the UK and set out a radical platform for devolutiono Opportunity to create a framework for a tailored deal for growth according to: a robust economic narrative and strategy for growth, appropriate governance and leadership from both the business / public sector and delivery mechanisms that provide assurance that outcomes will be achievedo Core Cities amendment to the Localism Bill supports this tailored approach and the need for devolution to be linked a cities‟ ability to deliver. It provides a mechanism for enacting this approach.o In Manchester, the Prospectus will be significantly strengthened by some flagship proposals….
  7. 7. Etihad Campus£127m investment across 32 hectares of East Manchester - 250 new jobs, 80apprenticeships, a further 155 FTE construction posts and 310 existing jobs safeguarded
  8. 8. Sharp ProjectDigital and creative media hub currently used by Sky 1 and Channel 4. Alongside MediaCityUKestablishes Manchester as the 2nd most significant media centre in Europe. Broadband/digital infrastructure here is key to the success
  9. 9. Airport City EZNew hub for global businesses linking a string of key sites. Up to 10,000 new jobs over the next 10 years of which at least 7,000 would be new to GM.All business rates (circa £10m+) available for reinvestment.
  10. 10. SpinningfieldsOver 8,000 financial and professional jobs and the highest rents in the north.Next major opportunity is the ITV site and plans to strengthen Liverpool Road and the gateway into Castlefield. MOSI is another important part of this project.
  11. 11. NOMA / CoopNew Co-op HQ in a new neighbourhood of the city centre with over 1m sq ft of new offices, residential and leisure uses including a hotel which is now in planning. The development will have the capacity for over 15,000 jobs.
  12. 12. Civic Quarter Transformation of the Town Hall Estate,Elisabeth House and the series of buildings opposite the Peace Gardensand Peterloo House. Potential for another 10,000 jobs in the wider area.
  13. 13. Retail Many stores amongst the best performing in their groups.No voids in the Arndale – footfall during 2010 was over 38m up from 25m in 2004. Other Centres, have not performed to anything like this level.
  14. 14. New HousingMCC working with Redrow to construct 400 family homes across six sites in Harpurhey and Moston. This represents £30m private investment including alocal labour agreement and deals to improve affordability.
  15. 15. New Ways of Workingo Public Sector Reformo City Region Pilots – Better Life Chances and Early Yearso Community Budgetso Better Life Chanceso Health and Well Beingo Work And Skillso Low Carbono Flexible lettings
  16. 16. Work & skillso Future Jobs Fund - 1,511 Future Job Fund opportunities filled in Manchester with 55.1% of people engaged moving on to employment (the majority), apprenticeships, training or learning or volunteeringo Apprenticeships - Higher number and the greatest % increase of apprenticeship starts for 16-18 year olds in Manchester as compared with the other GM local authorities.o Manchester Employer Suite - Set up to link more Manchester residents who are out of work with vacancies in the City Centre. Since it opened in November 2010, over 2,100 Manchester residents have been referred to the Suite for training or interview with 458 residents moving into employment.o Get Hired Event - Wythenshawe - over 800 residents attended with 101 JSA claimants securing work within 3 weeks of the event and a further 84 signing off.
  17. 17. Strategic fit/Overview of commitmentso Greater Manchester Climate Change Strategy 2011-20 A City which has adapted to a changing climate, is powered by a low carbon economy and has embedded carbon literacy into its organisations, lifestyles and behaviours, while reducing its carbon emissions by 48% by 2020o Manchester – A Certain Future (Manchester Citywide) Manchester will be a world class low carbon city which has reduced its carbon emissions by 41% by 2020 and has embedded low-carbon thinking into the lifestyles and operations of the city
  18. 18. Environmental Strategy Work Programmes Green Infrastructure Education Third Sector Energy Infrastructure Domestic Buildings Public & Commercial Buildings Environmental Strategy Communities/Carbon Literacy Sustainable Consumption Sustainable Transport & Production Carbon Metrics Sustainable Events Green Jobs Business
  19. 19. Sustainable TransportAim: To reduce carbon emissions and promote sustainable travel acrossManchester and in particular within the City Council.Examples:o Workwise project - helping unemployed overcome transport barriers of getting back to work in Wythenshaweo Travel Planning – offering advice to local workplaces and organisations to improve their use of sustainable transporto City Car Club – car hire scheme in City Centre, Chorlton, Didsburyo Adult cycle training – offering free cycle training to adultso Metrolink expansion
  20. 20. “Government will require fully collaborative 3D BIM….as a minimum by 2016” “A staged plan will be published with mandated milestones..”. “a phased process working closely with industry groups….. “allow time for industry toprepare for the development of new standards and for training”
  21. 21. What is BIM? BIM is an acronym which represents three separate but linked functions: Building Information Modelling: Is a BUSINESS PROCESS for generating and leveraging building data to design, construct and operate the building during its lifecycle. BIM allows all stakeholders to have access to the same information at the same time through interoperability between technology platforms.Building Information Model: Is the output of the business process resulting in a DIGITAL PROTOTYPE, a virtual computer model of a project which holdsselected structured data about the asset (design, quantity, time, cost, as built etc). Building Information Management: Is the ORGANIZATION & CONTROL of the business process by utilizing the information in the digital prototype to effect the sharing of information over the entire lifecycle of an asset. The benefits include centralised and visual communication, early exploration of options, sustainability, efficient design, integration of disciplines, sitecontrol, as built documentation, etc. – effectively developing an asset lifecycle process and model from conception to final retirement
  22. 22. Recommendation Level 0 Level 1 Level 2 Level 3 Building Lifecycle Management iBIM BIMs BSIM SIM BRIM AIM FIM 2D 3D IDM IFD IFC CPIC AVANTI CAD BS 1192 2007 : ISO BIM User Guides CPIC, Avanti, BSI © 2008 Bew - RichardsDrawings, lines arcs text etc . Models, objects , collaboration Integrated , Interoperable Data
  23. 23. Programme Active Management Building Management Strategic Management Budgets Carbon Enable IGT Delivery Live Operations Green Economy Roadmap Resilience Carbon Early Adopters Cost Planning O& M Handover etc Consistency Cultural Change Packaging PUSH - PULL COBIE Web Web Enriched Data “Data” Driven “Process” Driven COBIE Database File Based RepositoryMobilisation Phase 1 Phase 2 Phase 3 Phase 4 Five Years More Years Red Team Projects Blue Team Projects Live Operations
  24. 24. Tools &Training
  25. 25. Structural M&EArchitectural BIM BIM BIMConstruction Shared BIM data BIM Integrated BIM
  26. 26. Laser Scanningo Point Cloud output of laser scanningo Use of high definition scanning equipmento Captures millions of survey points (3D)o Provides accurate as-built informationo Interoperable with BIM toolso Used as basis for design developmento Validates accuracy of existing model
  27. 27. Building Performance Analysis
  28. 28. Building Performance Analysis4000350030002500 0094 Run 1 IAQ2000 0094 Run 2 IAQ1500 0094 Run 3 IAQ1000 0094 Run 4 IAQ 500 0094 Run 5 IAQ 0 00:30 07:30 14:30 21:30 04:30 11:30 18:30 01:30 08:30 15:30 22:30 05:30 12:30 19:30 02:30 09:30 16:30 23:30 06:30 13:30 20:30 03:30 10:30 17:30
  29. 29. 3D Parametric Modelling
  30. 30. Model-based programming (4D)
  31. 31. Model-based cost management (5D) 3D Model Time Costo Measurement, estimating and schedulingo Feasibility studies, cost planning, estimates, schedules of worko Quantities, materials, labour, resourceso Comparative analysis and reviewo Interoperability with 3D modelling technologieso Reporting and data extraction
  32. 32. MCC FM view of BIMo 2D difficult to understando Hard to visualiseo Functionality issues can be overlooked / missedo Limited engagemento Typical 2D drawing of THC Link
  33. 33. MCC FM view of BIMo 3D Model fantastic visual aido Building comes to lifeo Clarity of operational issueso Positive engagement BIM model showing section between CL and THX
  34. 34. BIM Aspirations and Expectationso Must haveso Link to Concerto – MCC Building Management Software systemo Detailed Mechanical and electrical asset registero Life Cycle replacement programmeo Room Data linked to: • Specifications (all assets) • Supplier / contact details • Linked to service schedules / requirements (M&E)
  35. 35. BIM Aspirations and ExpectationsLike to haveso Link to Energy Management Systems (zoning, out of hours use event management, etc)o 3D routes / mechanical and electrical distributiono Known asbestos locations - link to Asbestos Management Plano Drainage infrastructure, distribution and connectionso 3D all service duct routeso Ability to adapt and update the model to reflect future changeso Staff induction tool. Customer communication toolo Marketing tool, events and community schemes
  36. 36. BIM Aspirations and ExpectationsWant to haveso Have access to fully integrated 3D fly througho Full access to fully integrated 3D External modelso Link to fire risk assessmentso Link to operational zoning (e.g.; cleaning, events, etc)o Run logistical tests / modelso Ability to link to thermal modelso Etc….
  37. 37. The Holy Grail Energy Management Known system asbestos Specs Fabric & locations and finishes supplier Asset Ability to details register Reactive rerun contact maintenance thermal links Link to model Concerto Statutory Ability to MCC Service link to BMS schedules Cleaning thermal PPM schedules model Evidenceof and works zones completed (CERTS) Zoning of Room M&E Fabric building, Data BIM Model O&M and Run managing sheets (asset finisheslogistical events register) PPMtests and models 3D Duct routes, drai Life cycle Condition nage replacement Ability to survey distribution programme link to information Fire Risk Assessment Comms tool Inductions Ability to Churn Materials Customer. update Management and Marketing Planning components the model 3D Service selection and data routes M&E
  38. 38. Maturity Level Data Richness 10 Interoperability/ 9 Life Cycle Views IFC Support 8 7 6 5Information Accuracy 4 Roles or Disciplines 3 2 1 0 Spatial Capability Business Process Graphical Information Delivery Method Change Management Timeliness/Response
  39. 39. Manchester People into Construction (MPiC) Securing Local Economic Benefit for Manchester Residents
  40. 40. Why?o £350 million Capital Expenditureo Corporate Objectiveso Maximise Partners Added Valueo Provide Real opportunities
  41. 41. What is it?o 269 Training Opportunitieso Apprenticeships = 197o Internships/Work Experience = 60o Future Jobs Fund = 12
  42. 42. MCC Procurement Delivery Partners Regeneration Aspire Corporate Personnel Connexions Capital Programme Skills SolutionsEconomic Development Unit Manchester College Placement Providers GB Building, Laing Other O‟Rourke, Reviva, Balfour Partners/Providers Beatty, Crudens, Bramalls AGMA, NIEP, RSL‟s , National Apprentice Willmott Service Dixon, ISG, Faircloughs, Construction Skills Parkinsons, Mitie, Ground works Manchester Working
  43. 43. Challengeso Stakeholder Complexity Management Functiono Creating Sustainable Opportunities Long-term relationships with partnerso Minimising Risk to Partners/Trainee Aspire Model
  44. 44. 2010 researcho MCC spent £357,382,215.03 upon its top 300 suppliers (08/09)o MCC spent £183,967,557.15 upon Manchester based suppliers (51.5%)o £43,164,744.32 is spent in Ardwicko £87,541,509.18 is spent in Manchester neighbourhoods in 10% most deprived nationallyo £309,055,609.74 (86.5%) is spent in Greater Manchestero All suppliers re-spent £89,345,553.76 in the Manchester economy • This equates to 25p in every £1 received • Manchester procurement contributes towards the support of 5225 jobs in the Manchester economyo Range of wider local economic, social and environmental benefits
  45. 45. 2011 researcho MCC spent £547,382,215.03 upon its top 300 suppliers (53% increase)o MCC spent £294,836,725.96 upon Manchester based suppliers (53.9%)o £68,709,428.04 is spent in Harpurheyo £154,770,295.70 is spent in Manchester neighbourhoods in 10% most deprived nationally (77% increase)o £497,712,492.26 (90.9%) is spent in Greater Manchestero All suppliers re-spent £233,422,039.95 in the Manchester economy • This equates to 43p in every £1 received
  46. 46. What Value is MPiC Generating? Costs o Manchester City Council - £86,500 per year o Wages – (Average of £10,665 per person per year) o Supervisory and training costs to construction partners o Minimal costs to the apprentice
  47. 47. What Value is MPiC Generating? Benefits o Productivity of the Manchester economy (£11,643 per person per year) o Reduced welfare benefit costs (£8,100 per person per year) o Reduced spending of healthcare (£508 per person per year) o The value of reduced crime (£3,494 per person per year) o Other softer benefits – Not valued but still important A total of £5.46m of social, economic and environmental benefits generated For every £1 invested an additional £4.74 is generated in social, economic and environmental benefits
  48. 48. Collaboration
  49. 49. Collaboration1. act of working jointly; „they worked either in collaboration or independently.2. act of co-operating traitorously with an enemy that is occupying your country. Latin roots: from labour, toil together
  50. 50. “Collaborative working enables you andyour partners to create more value by being more efficient and effective. It does this because collaborative behaviours are allabout working together earlier and smarter for mutual benefit. Eliminating waste and inefficiency in methods and processes significantly increased predictability and suitability of outcomes”
  51. 51. Where does £100 go? Designer £7 Client £18Supplier £42 Contractor £33
  52. 52. Collaborationo There are 6 critical success factors for collaborative workingo Early involvemento Selection by valueo Common processes and toolso Measurement ) continuouso Long-term relationships ) improvemento Robust commercial arrangements
  53. 53. CollaborationKey features of project allianceso Single integrated team with the client on the insideo Collectively owned risks and rewardo Decisions taken on „best for project‟ basiso Alliance partners incentivised to achieve outstanding performanceo Full „open book‟ accountingo Culture of no fault, no blame and no dispute, with an uncompromising commitment to trust, collaboration, innovation and mutual support
  54. 54. Procurement
  55. 55. A time of radical change... “This strategy calls for a profound change in the relationship between public authorities and the construction industry to ensure the Government consistently gets a good deal and the country gets the social and economic infrastructure it needs for the long-term”
  56. 56. North West Englando Five sub regionso 47 local authoritieso Four-fifths of the region is rural, most of the population live in urban areaso 60% of people live in conurbations of Merseyside and Greater Manchester
  57. 57. Where does the North West Construction Hub operate and who can use it All North West Public Cumbria Sector Bodies have access. Over 200 organisations were listed in the OJEU notice Lancashire Gtr Manchester Merseyside Cheshire
  58. 58. Why use it?o Lead organisation on behalf of North West Contracting Authoritieso NWCH is responsible for establishing frameworks, letting procurement agreements, playing a key role in the managemento NWCH is responsible for benchmarking and performance measurement of those agreementso Opportunities to apply lessons learned and share benefits across the North West region.o The results are less waste, less duplication, local engagement and greater efficiencies which gives better value for money
  59. 59. Sub regional lots Develop skills across the region Promote sub regional engagement &Generic model for framework ownership management Encourage participation from sub regional contractors
  60. 60. NWCH FrameworksThe NWCH procured three frameworks for theNorth West regionLow Value (£0 - £500k) January 17 partners 2011Medium (£500k - August 2010 14 partnersValue £10m+)High Value (£10m+) May 2010 5 partners
  61. 61. Framework benefits Saving on project 7.5% costs10-15% Time savings Capital cost savings – 1-2% result of not tendering
  62. 62. What does it mean for local clientso Reinvesting in the local economyo Fair paymento Local supply chain participationo Support for SMEso Apprenticeships / Youth Employmento Local employmento Low Carbon
  63. 63. Conclusiono Delivering sustainable efficiency savingso Reducing consultancy and construction costso Projects closer to target cost and timeo Reduction of disputes, claims and litigationo High client satisfaction rateso High proportion of value of work undertaken by SMEs
  64. 64. Conclusiono High proportion of local labour and sub- contractorso High take-up of government initiatives such as Fair Payment, Apprenticeships, Localismo High proportion of construction, demolition and excavation waste diverted from landfillo Good Health and Safety performance against national average
  65. 65. Thank You