Boris Lucic Keeping collaborative delivery arrangements in focus and of course... a case of LBSR Successful change - good culture and governance matter APM Governance Specific Interest Group Conference London, 06 Oct 2016

1. /06.02.12 1
Keeping collaborative delivery
arrangements in focus and on course
…a case of LBSR
Boris Lucic EMBA CEng MICE RPP
Programme Engineering Manager
London Bridge Station Redevelopment

2. /06.02.12 2
“The reality is that true collaboration
is difficult. It requires subordinating
individual goals to collective
achievement.”
Have you ever been
accused of not being
collaborative?

3. /6-Oct-16 3
This story is based on true events…
Strategy
Development
Strategy
Execution
Project
Review and
Interventions
Where we are
today

4. /06.02.12
Thameslink - achievements and challenges
4
 Transformational Change
 Scale
 Complexity
 People
 Communication
London Bridge Station

5. /06.02.12
Thameslink - achievements and challenges
5
 Super critical milestones
 Operational requirements take
precedent
 Cumulative complexity
 Constrained site
 Limited resources and supply chain
pool
Constraints

6. /06.02.12 6
Success Criteria
Safety
Schedule Performance
Cost Performance
Quality
Stakeholder Impact
Operational Performance

7. /06.02.12 7
Strategy in 2008
 Early Works Contractor
 Main Works Delivery Contractor
 Detailed Design and Build
 Early Contractor Involvement
 Early Sub-contractor Involvement
 Target Cost
 Co-located organisation
 One project identity-common brand
 Minimise man ‘man-marking’
 Collaborative, non-confrontational style
 Risk approach to quality assurance
 Multiple detailed design control points
 Co-ordination and stakeholder management
 Common IT platforms
 Common document management system
 One Schedule, one system
ORGANISATION & BEHAVIOURS SYSTEMS
PROCESSES PROCUREMENT

8. /06.02.12 8
Strategy Execution

9. /06.02.12 9
2011 2012 2013 2014 2015 2016 2017 2018
GRIP 4 ( OUTLINE DESIGN)
GRIP 5 (DETAILED DESIGN)
GRIP 6 – 8 (CONSTRUCTION - HANDBACK)
Feb 2012
Main Works
Contract Signature
Target Cost
Agreed
Mar. Stage 1 Completion
Early Works Contractor
Sept.. Stage 1a Completion
Jan. Stage 1 b Completion
May. Stage CC Completion
Jan. Stage2 Completion
July. Stage 2A (2A#) Completion
Apr.. Stage 3 Completion
Sept. Stage 4 Compl.
Strategy Execution

10. /06.02.12 10
Commercial Model
60% / 40%
£100.0M
£0.0M
Variable
Fee
Gainshare
Target
Cost
Saving
Total
Cost
TC + Fee
£100.0M
£40.0M

11. /Date 00.00.00 Create your footer by changing copy in the Header and Footer section 11

12. /
Everything with people in mind
6-Oct-16 12

13. /06.02.12 13
Project Review
Jan 2015

14. /06.02.12 14
2011 2012 2013 2014 2015 2016 2017 2018
GRIP 4 ( OUTLINE DESIGN)
GRIP 5 (DETAILED DESIGN)
GRIP 6 – 8 (CONSTRUCTION - HANDBACK)
Feb 2012
Contract Signature
Supplemental
Agreeement
Project Review
and Restructuring
Mar. Stage 1 Completion
Enabling Works Contract
Sept.. Stage 1a Completion
Jan. Stage 1 b Completion
May. Stage CC Completion
Jan. Stage2 Completion
July. Stage 2A (2A#) Completion
Apr.. Stage 3 Completion
Sept. Stage 4 Compl.
Schedule Performance

15. /06.02.12 15
Commercial Performance
60% / 40%
£100.0M
£0.0M
Variable
Fee
Gainshare
Target
Cost
Saving
Total
Cost
TC + Fee
£100.0M
£40.0M

16. /6-Oct-16 16
UNDER
ASSESSMENT OF
COMPLEXITY
POORLY DEFINED
REFERENCE
DESIGN, TOO
SHORT TIME FOR
DETAILED DESIGN
COMPLEXITY
POOR
EFFICIENCY
Pressure to
Design to
Budget
Poorly defined
Reference
Design or late
design decisions
triggers cost
growth
The complexity
of Major Projects
is often
intangible and
not estimated
Optimum bias
about
completion dates
leads to minimal
estimate of
Prolongation
CostGrowth
Time constraints impacts Procurement & Construction quality inc
Temporary Services & Finishes
ESTIMATING DETAILED DESIGN CONSTRUCTION PROLONGATION FOR COMPLETION &
QUALITY
Optimism Bias
Political Pressure
Design & Construction
Overlap
Fixed
Milestones
Hand
Back
Drivers of tension in a constrained commercial
model

17. /Date 00.00.00 Create your footer by changing copy in the Header and Footer section 17

18. /Date 00.00.00 Create your footer by changing copy in the Header and Footer section 18
Team Behaviours
 No conflict
 Commitment to project schedule delivery
 More compromise than collaboration
 Lack of challenge
 Reporting with insufficient clarity to support
effective management decisions
 Light touch governance

19. /
What it means to collaborate?
6-Oct-16 19

20. /08.06.15 20
Project Dynamics

21. /08.06.15 21
RISKLow High
Existing Incentivised
Target Cost
Guaranteed
Maximum Price
Commercial Model
• No threat to balance
sheet
• Driving defensive
behaviours
• Upward pressure on
target cost
• Threat to balance
sheet
• Limited negotiating
leverage
• Potential increase in
cost or fee due to risk
transfer

22. /
25% / 75%
60% / 40%
50% / 50%
40% / 60%
£31.8M
Target Cost £0.0M
New Incentivisation Model
Infrastructure Projects: Thameslink Programme
22
Employers
Discretionary
Gainshare
Gainshare
Target
Cost
Saving
Total
Cost
TC + Fee
£31.8M
KRA Fee
Lump
Sum Fee
Milestone Fee
£5.0M
£15.0M
£25.0M
Limited grounds
for Target Cost
adjustment
No fee on Total
Cost above
Target Cost
£0.0M
6-Oct-16

23. /
Take Aways
Infrastructure Projects: Thameslink Programme
Commercial Model aligns NR & Costain to achieve
lowest cost delivery (business objective)
Creates the environment required to achieve lowest
cost delivery
6-Oct-16 23
Control Collaboration
Capacity Capability
• Deliver within agreed CP5 funding
• Supply chain performance
• Stable borrowing
• VfM
• Maintain a net cash balance at an appropriate level
• Supply chain performance
• Deliver shareholder value (adjusted profit before tax
and dividend per share pence)
Costain PLC Commercial Results IP Commercial Result
• Reputation
• Customer Satisfaction
• Advocacy
Joint Results
• VfM

24. /
Thameslink Staff Briefing 18th September 2015 24
 London Bridge Management Board –
Executive Level
 London Bridge Project Board
 Programme Manager – project controls
 Behavioural Specialist
 Supply Chain Integration
 Recognise strategic role of design
management
Leadership Review

25. /
Thameslink Staff Briefing 18th September 2015 25
 Construction Management team
 Stakeholder and Operational interface
manager
 GRIP 6-8 Design and Engineering Team
 Independent Project Controls Manager
 Strengthen NR Contract Administration
 Design Management Design team
Organisation Review

26. /
Thameslink Staff Briefing 18th September 2015 26
Behaviours Review
 Independent consultant behavioural review
across the project
 Senior management behaviours review
 Joint management behavioural workshop
 Project wide briefings
 Ongoing behavioural change support

27. /
Thameslink Staff Briefing 18th September 2015 27
Design Management
NR Design Programme Manager
MD level engagement within the design joint venture.
Design summit to agree plan for process
improvements and the determination of the overall
long term design strategy.
Control of amendment/revision of design has been
enhanced.

28. /
Thameslink Staff Briefing 18th September 2015 28Thameslink Staff Briefing 18th September 2015 28
Project Controls
 Independent Project Controls Manager
 Restructuring of reporting requirements
 Robust risk management
 Accountability for budget management process
 EWN process reinvigorated
 Change Impact Assessment
 Visualisation Room

29. /06.02.12
Thameslink - achievements and challenges
29
Where we are today
Areas Strengthened
 Safety - 5 million man hours
without major injuries
 Design management - 860/901 PDS
Requirements already evidenced
 Cost performance – Stable contract
value
 Schedule performance – All
milestones met
 KPI Performance embedded
 Behaviours – improved
 Stakeholders Relationships -
positive
Opportunities for improvement
 Independent project controls c
be more effective
 Change management could be
more efficient
 Commercial returns under pre

30. /06.02.12 30
 Risk profile dictates our options
 Commercial model is central to
collaboration
 Take collaboration seriously – good
intentions are not enough

31. /06.02.12 31
Risk profile changes during the
lifecycle of a project; therefore
the commercial model needs to
match this flux if effective
collaborative arrangement is to
be maintained.

32. This presentation was delivered
at an APM event
To find out more about
upcoming events please visit our
website www.apm.org.uk/events