An enterprise model is one defined as an ‘integrated organisation aligned and commercially incentivised to deliver better outcomes for customers from infrastructure investment’.
The blueprint comes more than a year after the ICE’s Project 13 initiative released its call to arms to the industry in the form of the From Transactions to Enterprises report.
(Pictured above)Turning the tide together: Pictured from left to right - Phil Wilbraham (Heathrow), Lucy Howard (Turner & Townsend), Mark Enzer (Mott MacDonald), Treasury minister Robert Jenrick, Hala Audi (IPA), Dale Evans (ICG) and Nick Baveystock (ICE)
The new implementation plan for the enterprise approach includes a self-assessment maturity matrix to let companies test how far advanced they are.
Speaking at the launch this May, Treasury secretary Robert Jenrick said: ‘Right now there is an annual £15bn productivity gap in the construction sector in the UK. That needs to be plugged.
‘Project 13 is a superb example of what needs to be done because it sees a wide range of senior decision-makers come together from the public, private and regulated sectors, clients and suppliers alike, with a common interest in getting it right.
‘Setting out a blueprint that aims to achieve better outcomes with infrastructure investment to focus on improving performance and a collaborative commercial approach. The new model brings together parties so that interests and incentives are aligned at last and supports a move away from the unsustainable short-termist procurement that strangles investment in skills and innovation.’
Nick Baveystock, ICE director general said: ‘Developed between industry, clients and government over a number of years, Project 13 places customers at the heart of our national infrastructure programme, focusing on the social and economic value infrastructure can provide over the long-term.’ The system establishes new roles for those involved in a project, changing client and contractor direct relationships to an integrated team approach involving owners, integrators, advisers and suppliers.
The blueprint document states: ‘The owner has a direct relationship with the suppliers and advisers. The relationship is facilitated by the integrator, who brings in appropriate suppliers and advisers at relevant points within the enterprise as and when they can best add value. They employ a systems thinking approach, linking individual capabilities to attainment of programme or project outcomes. The suppliers and advisers are experts in their subject area they are accountable for the delivery of specific aspects.’
Dale Evans, chair of the ICG – which includes Transport for London and Highways England – stressed that the enterprise model was based on best practice already present in the sector though not replicated widely and consistently enough.
‘The enterprise model is about understanding the characteristics of high performing teams. Project 13 would not recognise the relationship between a client and a partner as an effective relationship. That sounds a bit one dimensional. A high performing team is likely to be the totality of all the parts in the enterprise delivering effectively together and I think that’s the real shift we have to make. We have to an effective enterprise is a whole supply chain model, not a single linear relationship,’ he said.
Asked by Highways about what happens when things go wrong under the enterprise model and how liability for failure would be allocated, Mr Evans said: ‘There is nothing about an enterprise model that means you throw a contract away. Transactional working doesn’t mean you have no contract; it still provides part of the framework.
‘In reality, when stuff does goes wrong it’s hardly ever one part of the value chain that is at fault. It is usually some collective result and there is some collective responsibility for it. Building a model that allows us to allocate blame simply, is in itself almost flawed. Competitive tendering is one way, a very archaic and probably ineffective way of creating commercial tension. There are other, far more effective, ways of creating commercial tension.’
Mark Enzer, chief technical officer at Mott MacDonald, added that Project 13 ‘provides a platform through the owners to do digital transformation of new and existing infrastructure in a strategic way that prepares us for what comes after BIM level 2, which is “operate and integrate”’.
Director of strategy and policy at the Infrastructure and Projects Authority (IPA), Hala Audi, said: ‘I think Project 13 is embedded in the Government’s work already. We published our change programme, Transforming Infrastructure performance at the end of last year. That has four elements. [These include] benchmarking whole-life performance, in a way that can be used for performance in the same way Project 13 has talked about. This is cross-government.
'There is also some work around aligning business cases and integrating across investments. These next two elements we can’t do without the infrastructure community and this is changing the procurement model from transaction to enterprise and then promoting innovation and new technology. So it is less labour intensive and more capital intensive. We want to see better risk management and a better allocation of risk.’
She added that the process of change would be difficult but the approaches to risk ‘are what need to change’.
‘What is really difficult is to give everyone who is entering this extremely difficult procurement confidence that you can get contracts that follow the logic, which was started in your strategic business plan and economic case. That’s the detailed work we want to do. It’s not easy but I feel we have turned a page here. It is becoming conventional wisdom that in certain types of investment it is a false economy to go after just the capital expenditure cost rather than the whole-life cost.’
The most significant changes
- Owner is central and leads the enterprise defining long-term value
- Suppliers and advisers have direct relationship with the owner
- An integrator actively engages and integrates all tiers of the market
- The key suppliers, owner, adviser and integrator work as one team to optimise value
The main differences in results
- Reward in the enterprise is based on value added to the overall outcomes, not service provided
- There is greater understanding of cost drivers and risk across all organisations in the enterprise with commercial incentives for collaboration to jointly mitigate risk, not transfer it.
- Establishing a high performing enterprise requires fundamentally different leadership governance behaviours and skills to succeed; this will be underpinned by organisations with increasingly diverse skills and backgrounds.
Four organisations have also been announced as early adopters of Project 13. These organisations will form a Project 13 implementation group to share experiences and learnings of the new principles.
Anglian Water: Capital Delivery Alliances
Anglian Water is planning further development of its alliance approach in preparation for Asset Management Period 7 (AMP7) - 2020 to 2025. This will include further integration of partners through aligned and incentivised relationships and a digital transformation strategy at the centre of the alliance change programme. The alliances collectively deliver an annual programme of circa £500m on new and refurbished infrastructure.
Environment Agency: Next Generation Supplier Arrangements
The Next Generation Supplier Arrangements (NGSA) is a change in how the Environment Agency will select suppliers in future. The NGSA will help deliver flood outcomes, as well as other parts of the business including navigation, and other water and biodiversity work. It will allow for greater collaboration with other risk management authorities, such as local councils, and delivery partners.
Heathrow Airport: Expansion, Third Runway and Associated Infrastructure Programme
The Heathrow expansion includes enabling works such as moving and lowering the M25 and diverting local roads and rivers. The works will increase terminal capacity with associated baggage systems, airfield and landside facilities.
National Grid: London Power Tunnels
The London Power Tunnels (LPT2) is the second phase of National Grid’s mega project to rewire London for the 21st century and beyond. It will replace the existing direct buried cable circuits in South London from Wimbledon to New Cross and then onto Hurst. The 32km of tunnels, crossing seven London boroughs, will be engineered to have a design life of at least 130 years, cost £750m and result in significantly less disruption during construction than direct burying cables.