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A presentation given by Don Ward, Chief Executive of Constructing Excellence at the AEC Network Meeting in London on the 23rd July 2009 http://aecnetwork.ning.com
Citation preview
“The effect of the recession on partnering in the construction sector”
Don WardChief Executive
www.constructingexcellence.org.uk
Our purpose is to
Improve industry performance
The outcome will be
A demonstrably better built environment
Core business activities
UK Construction Key Performance Indicators“A Measured Approach”
Economic
• Client satisfaction– Product and service
• Defects
• Predictability– Cost and Time
• Profitability
• Productivity
• Safety
• Construction Cost
• Construction Time
Safety
Reportable accidents per 100,000 employed (Industry AIR)
Better
13541271
13181217
10971172
1023
901946
865 906
0
500
1000
1500
19992000200120022003200420052006200720082009
Client satisfaction – product
Scoring 8/10 or better
72% 73% 72% 73%
78%80%
83% 84%82% 83%
86%
50%
60%
70%
80%
90%
100%
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
Client satisfaction – service
Scoring 8/10 or better
58%63% 63%
65%
71%74%
77%79%
75%77%
84%
50%
60%
70%
80%
90%
100%
19992000200120022003200420052006200720082009
Client satisfaction – value for money
Scoring 8/10 or better
67% 69%73% 74%
79% 80%
75% 75%
82%
50%
60%
70%
80%
90%
100%
2001 2002 2003 2004 2005 2006 2007 2008 2009
Profitability
Profitability: Median profit on turnover (%)
4.4%5.1%5.2%5.4%7.0%
8.1%7.9%8.2%9.6%9.9%
0%
5%
10%
15%
2000200120022003200420052006200720082009
Cost predictability - project
% On or under cost
50% 46% 48% 52% 50% 48% 45% 46% 49% 48%
0%
20%
40%
60%
80%
100%
2000200120022003200420052006200720082009
Time predictability - project
% On time or early
28%36%
42% 44% 44% 46% 44%
58%
45% 45%
0%
20%
40%
60%
80%
100%
2000200120022003200420052006200720082009
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
0
50
100
150
200
250C
lientS
at-
Pro
duct
Cle
ntS
at-
Serv
ice
Defe
cts
Pre
dC
ost-
Pro
ject
1
Pre
dT
ime-
Pro
ject
1
Pro
fita
bility 2
Pro
d(C
urr
ent)
Pro
d(C
onsta
nt)
3
Economic KPIs
Demonstration v Industry 2009CE 2009 Industry 2009 = 100
Clien
tS
ati
sfa
cti
on
-P
rod
uct
Clien
tS
ati
sfa
cti
on
-S
erv
ice
Defe
cts
-Im
pact
at
Han
dover
Pre
dic
tab
ilit
yC
ost
Pre
dic
tab
ilit
yTim
e
Pro
fita
bilit
y
Pro
du
cti
vit
y(C
urr
en
tV
alu
es)
Pro
du
cti
vit
y(C
on
sta
nt
20
00
Valu
es)
0
50
100
150
200
250
300
350
400
450
Safety-Overall 4
Safety-Allprojects 4
EmpSat StaffT/O Q&S EnvImp-Product
EnvImp-Process
Demonstration v Industry 2009(2)CE 2009 Industry 2009 = 100
People and Environment KPIs
2009 Demonstrations outperform the industry by an average of 80%
Safety – Overall
Safety - AllProjects Employee
Satisfaction
Staff Turnover -All Projects
Qualifications &Skills Environmental
Impact -Product
EnvironmentalImpact -
ConstructionProcess
Core improvement themes
Construction Commitments
• Procurement and integration• Client leadership• Design quality• Commitment to people• Sustainability• Health and safety
26% reduction in new orders (last qtr, £B)
- 28% - 57% + 20% + 36% - 36% - 41%
危機 危機 “Crisis = danger + opportunity”
‘Economic climate change’
U-turn back to the old ways
Go for full collaborative working
Collaborative working key principles
LeadershipVision
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
MONTHACTIVITY 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31
Appoint Architect
Appoint Consultants
Concept Design
Tender Documentation
Evaluation/Negotiation
Redesign/Design Dev.
Planning
Appoint Contractor
Mobilise/Procurement
Construct
Competition Appointment
Tender
Historic procurement17 months to “start on site”
MONTHACTIVITY 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31
Appoint Architect
Appoint Consultants
Appoint Contractors
Concept Design
Design Development
Procurement
Agree Cost Plan
Planning
Mobilise
Construct
Over 6 months early
Aspirational procurement10 months to “start on site”
Frameworking clients
• Retail: Asda, Marks and Spencer, Sainsbury, Sommerfield, Tesco, Boots
• Developers: Stanhope, Slough Estates, Land Securities• Corporates: BT, BBC, Abbey National• Utilities, eg all water companies under AMP4• Central government: defence, health, work and pensions• Local government: “Best Value”• Housing: RSLs
The potential for further value for money savings in the public sector” NAO, 2005
UK public sector construction 2004: £33.5 billion
Central govt Local govt
Improved productivity based on more effective programmes and streamlined procurement
£220M £500M
Collaborative working approaches £325M £760M
Savings in whole life costs of built assets
£770M
Total savings £2.6 billion
GLAMALCO
Early involvement - lead times
• System 6-12 weeks• Glass 8-20 weeks• Pressings 4-14 weeks• Auxiliary products 4-14 weeks
Piping cost = £155,000
Equivalent length = 700m Piping cost = £116,000
Equivalent length = 494m
Early involvement - design expertise
Tender priceValue added/benefit for client- people, supplies
Profit
Other cost/waste
Claims = extra cost + profit
Old understanding of “price”Tender price, outturn price, claims
‘Right’price
Overheads
Tenderprice
Manage
Agreed
‘Targetprice’
Agreed
Reduce
Increase
Claims = extra cost + profit
Value added/ benefit for client
Profit
Other cost – waste
New understanding of “cost” Value, budget, target price, cost, risk, profit
Overheads
Risk
What is “Value”?
Value =
Benefit___________
Cost
Be ValuableHow facilities add value for users
DEVELOPMANAGE LIFE
CYCLE
CONSULT
CONSTRUCT
DESIGN
Whole life value
Construction
What the customer really needs
Business Costs
Operation and Maintenance
Process Push
User Pull
Business outcomes
Design
Source: Royal Academy of Engineering
Construction
What the HEALTHCARE customer really needs
42
Business Costs
4.31
Operation and Maintenance
Process Push
User Pull
Healthcare outcomesClinical outcomesHospital-acquired
infection ratesSafety outcomesMedication error ratesMedication ratesRe-hospitalisation ratesLength of staysCosts per unit of servicePatient & visitor satisfactionStaff morale & turnover
CABE: Patients discharged in 6.4 days rather than 8.1 due to better environment
Design 0.1
(ANNUAL COSTS)
Construction
What the EDUCATION customerreally needs
“200”
Business Costs
“5”1
Operation and Maintenance
Process Push
User Pull
Education outcomesBuilding Schools
for the Future: • “enhance teaching
+ learning• helps to raise standards• address workforce issue”
Design 0.1
Source: Royal Academy of Engineering
St Francis of Assisi Academy, Liverpool
“A school which offers its pupils a green-focused education has won plaudits for having the best teaching standards in the country.
..John Drane, the school's assistant principal, believes the ..teaching environment has been one of the key factors in motivating the pupils to do better”
Green values help academy top new league tableThe Independent, 11 Jan 2007
Whitecross High School“The best... secondary school in the country (educational efficiency)” [BRE]
• “[Taking] the number of students who have achieved 5 or more grades at A* - C including English and Maths, this year we achieved 51% compared to last [year’s] 35%.... This... is a massive increase and obviously this is the year.. that .. received all of its .. teaching in the new building.”
• This compares to a national increase of 2.5%
‘Economic climate change’- value through collaborative working
U-turn back to the old ways
Go for full collaborative working
Value through collaborative working
Don WardChief ExecutiveConstructing Excellence
www.constructingexcellence.org.uk