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

What have we learned from the experience of Constructing Excellence in the UK?

Don WardChief Executive

Constructing Excellence

don.ward@constructingexcellence.org.uk www.constructingexcellence.org.uk

What have we learned from the experienceof 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?

1994 1998 2001 2003 2005 2006

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

Norway UK

Turnover (€ B)

Employees (‘000)

Companies (‘000)

Proportion small firms

31

320

43

97%

170

2,300

220

95%

What is the UK experience?

In the beginning…

• Joint Government-industry initiative 1993-94

• 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%10%

+20%20%

-20%

-20%

+10%10%

+10%10%

The ‘Egan’ vision for change- to be a “winner”

Strategic Forum for ConstructionOver 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 IndustryKey Performance Indicators

Construction Industry Key Performance Indicators

• Client satisfaction– Product – Service

• Defects

• Predictability– Cost – Time

• Profitability

• Productivity

• Safety

• Construction Cost

• Construction Time

13541271

1318

1217

10971172

1023

901946

865

0

500

1000

1500

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008

Reportable accidents per 100,000 employed (Industry AIR)

Safety

Better

72% 73% 72% 73%78%

80%83% 84%

82% 83%

50%

60%

70%

80%

90%

100%

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008

Client satisfaction – product and service

Scoring 8/10 or better

58%63% 63% 65%

71%74%

77% 79%75% 77%

50%

60%

70%

80%

90%

100%

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008

4.4%5.1% 5.2% 5.4%

7.0%8.1% 7.9% 8.2%

9.6%

0%

5%

10%

15%

2000 2001 2002 2003 2004 2005 2006 2007 2008

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 2006compared to Industry Performance 2006

7700

0

50

100

150

200

250

300

350

Client S

atis

fact

ion -

Product

Client S

atis

fact

ion -

Servi

ce

Defec

ts

Enviro

nmen

tal I

mpac

t Pro

duct

Enviro

nmen

tal I

mpac

t Pro

cess

Safet

y *

Safet

y - A

ll Com

panie

s *

Safet

y - C

ompan

ies

T/O >

£10

m *

Predic

tabili

ty C

ost -

Desig

n

Predic

tabili

ty C

ost -

Constru

ctio

n

Predic

tabili

ty T

ime

- Des

ign

Predic

tabili

ty T

ime

- Const

ruct

ion

Profit

abili

ty **

Product

ivity

Constru

ctio

n Cost

Constru

ctio

n Tim

e

Emplo

yee

Satis

fact

ion

Staff

Turnove

r

Qualifi

catio

ns & S

kills

2006 pan-industry performance = 100

CE 2006 Industry 2006 = 100

Demonstration Performance 2006compared to Industry Performance 2006

CE 2006 Industry 2006 = 100

7700

0

50

100

150

200

250

300

350

Client S

atis

fact

ion -

Product

Client S

atis

fact

ion -

Servi

ce

Defec

ts

Enviro

nmen

tal I

mpac

t Pro

duct

Enviro

nmen

tal I

mpac

t Pro

cess

Safet

y *

Safet

y - A

ll Com

panie

s *

Safet

y - C

ompan

ies

T/O >

£10

m *

Predic

tabili

ty C

ost -

Desig

n

Predic

tabili

ty C

ost -

Constru

ctio

n

Predic

tabili

ty T

ime

- Des

ign

Predic

tabili

ty T

ime

- Const

ruct

ion

Profit

abili

ty **

Product

ivity

Constru

ctio

n Cost

Constru

ctio

n Tim

e

Emplo

yee

Satis

fact

ion

Staff

Turnove

r

Qualifi

catio

ns & S

kills

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 Industry change - maintaining momentum- maintaining momentum

1994.........................................................2008

What have we learned from the experienceof Constructing Excellence in the UK?

What have we learned from the experienceof 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?

BREAKDon Ward

Chief ExecutiveConstructing Excellence

don.ward@constructingexcellence.org.uk www.constructingexcellence.org.uk

What have we learned from the experienceof 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

1994 1998 2001 2003 2005 2006

DBF

Strategic Forum - over 140 trade and professional bodies under one umbrellaSimilar to the Federation of Norwegian Construction Industry (BNL)?

Consultants

Main contractors

Specialist contractors

Manufacturers and suppliers

Clients

Government

Member forums 2007-8 2009-10

Governance

Funding

Three income streams

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 forour customers

Core improvement themes

Collaborative working key principlesLeadership

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

Peopleresults

Customerresults

Societyresults

ProcessesKey

performanceresults

Enablers Results

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

DEVELOPMANAGE 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 customerreally 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 practi

ce in

formatio

n

Customer le

verage

Legislatio

n

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

What have we learned from the experience of Constructing Excellence in the UK?

Don WardChief Executive

Constructing Excellence

don.ward@constructingexcellence.org.uk www.constructingexcellence.org.uk