Supplier Engagement Working Group - Digital Railwaydigitalrailway.co.uk/wp-content/...Working-Group-7th-January-2016.pdf · What do you want to gain from membership of the working

Supplier Engagement Working Group

7th January 2016

Agenda Introductions and Objectives of the Day

Supplier Engagement Survey Results

Identification of Working Group Activities, Participants and Timescales

2

Introductions

Who you are Your organisation Knowledge of Digital Railway How you can support the working group going forward

3

Objectives of the Day

To mutually agree the agenda for the working group Provide group with supply chain feedback from conference and survey results Develop the draft delivery strategy Agree future commitments and ongoing activities

4

Setting Expectations

Digital Railway Ensure industry that the Supply Chain’s views have been considered and support the supplier engagement strategy

Supply Chain What do you want to gain from membership of the working group? What are you prepared to contribute / commit? Is there anything else that we should be considering?

5

Provisional View of Procurement Strategy

November 2015 .

PROGRAMME DELIVERY APPROACH

Overview – DR Delivery Model

Digital Railway Overview | PROTECT

DIGITAL RAILWAY DEFINITION

GBS

SYSTEMS INTEGRATION

PROGRAMME MANAGEMENT

NRT

BUSINESS CHANGE

IP

TOC

FOC

Delivery Owner: Development & Deployment

ROSCO

Programme Approach - the DR System


DEFINITION STAGE DEVELOPMENT STAGE DEPLOYMENT STAGE

AGREED DR OUTCOMES

DEFINITION OF DR SYSTEM

CHECKED FOR ROBUSTNESS

NATIONAL DR REQUIREMENTS SET

AREA/ ROUTE DEFINITION ASSESS AREA/ ROUTE DEPLOYMENT

DEVELOP DR SYSTEM

DR DEPLOYMENT ASSESSMENT

DEPLOY DR SYSTEM CONFIGURE/ INSTALL/ TEST

AREA/ ROUTE DEPLOYMENT CONFIGURE/ INSTALL/ TEST

DIGITAL RAILWAY PROGRAMME TEAM - SYSTEMS INTEGRATION AND PROGRAMME MANAGEMENT

DIGITAL RAILWAY PROGRAMME DELIVERY OWNER

Presenter

Presentation Notes

Definition Stage Sourced & managed by DR programme team Utilising existing NR consultancy & professional framework arrangements and mechanisms wherever possible and appropriate Where requirements are not covered by existing arrangements then competitive exercises undertaken under the RISQS system Key emphasis on appropriate skills and capabilities to deliver the requirements as well as value for money Development & Deployment Stages Sourced and managed by delivery owner in alignment with over-arching DR procurement framework (internal & external to NR) Over-arching systems integration and programme management provided by DR programme team To maximise industry opportunity and innovation requirements are sourced via full OJEU notice and selection process Balanced scorecard approach to supplier selection at each stage Specific contract mechanisms drive ECI, collaboration and incentivisation to achieve value for money outcomes Supplier reward linked to successful category/system wide outcomes Tender bid evaluations will be against “Most Economically Advantageous Tender”, but the DR programme will need to define the way economic benefits are calculated and ‘total life costing’ approach to be used

Tier 1 – The Overall DR Procurement Principles

• Industry-level strategy

Tier 2 – Toolkit to determine Category Specific Approach

• Guidance on ‘delivery route’ selection • Balanced scorecard • Guidance for Category Analysis (matrices, supply market analysis, technology

readiness, level of skilled/ available resource in supply chain etc.) • Guidance for common procurement and supplier selection process • Guidance on appropriate contractual approach with templates

Two Tier DR Procurement Model


Example Tier 1 Industry Level Strategy (under development)

The DR programme will rely on suppliers to deliver the required new technology, from design to installation, operation, maintenance and through to disposal. These core principles will underpin all supply chain arrangements:

1. Safety and Security 2. Value for Money 3. Social Responsibility 4. Meeting performance, productivity and capacity targets

Made possible by:

• Open architectures and common standards for inter-operability, and inter-systems integration • Industry level systems integration and programme management activity • An Industry ‘data warehouse’ that allows DR systems to operate from secure common data sets • Appropriate risk allocation and incentivisation in contracts • Risk management to include resilience and business continuity • Common planning information and sharing of roll out volumes by Area/ Region and route • National and local requirements known prior to tender and roll out • Industry level change management and people development plan in place • Common industry adopted toolkit to provide consistency and allow governance • The DR approach will follow the general principles outlined in the ‘IUK Procurement Routemap’

model • Robust cost estimation and benchmarking will be used to develop business case and benchmarks

for value for money • “Industry-independent” standard contracts will be used

Example Category Toolkit Suite (under development)

EVALUATION TO DETERMINE CATEGORY DETAIL

3. Elements of IUK method to determine ‘Procurement Route’?

2. Supply market analysis for Category Source: adapted from Porter, 1980

Threat of Substitutes

Threat of New

Entrants

Bargaining Power of

CustomersMarket Rivalry

Bargaining Power of Suppliers

Supplier Preferencing Matrix

DEVELOP/NURTURE CORE/PROTECT

NUISANCE EXPLOIT

Relative Value of Account

HIGH

Att

ract

iven

ess

of A

ccou

nt

LOWLOW HIGH

Source: adapted from Steele & Court, 1996

4. Variety of Procurement Analysis Tools

1. DR System Plans – All future volumes Categories (Systems)

Pathfinder Area 1

Area 2 Area 3 Area 4

Category A Category B Category C

Category D Category E Category F

5. Balanced Scorecard to Evaluate & Manage Performance

S a fe ty1 5 %

E q u a l i ty a n d In c l u s i o n

5 %

C o l l a b o r a ti v e B e h a v i o u r s

a n d R e s o u r c e2 5 %

C o s t1 5 %

P r o g r a m m e / P r o j e c t

M a n a g e m e n t1 5 %

E n v i r o n m e n ta l A n d

S u s ta i n a b i l i ty5 %

Q u a l i ty A s s u r a n c e

1 5 %L e g a c y

5 %

P ro g ra m m e a n d P ro je c t C o s t M a n a g e m e n t

E a r ly In v o lv e m e n t in D e v e lo p m e n t o f

P la n n in gS a f e t y b y D e s ig n

H a n d O v e r a n d H a n d B a c k

A s s e s s m e n t o f K e y S u p p ly C h a in

P a r t n e rs

R ig h t D e s ig n a t t h e R ig h t T im e

E f f ic ie n c ie s a g a in s t U n i t C o s t a n d

T a rg e t C o s t

P ric in g R e g im e

C o s t o f P e rs o n n e l / O v e rh e a d s

L o n g T e rm P la n n in g

C o m p e t e n c ie s

Q u a l i t y P la n n in g –t o a v o id la t e

c h a n g e s

A c c e s s O p t im is a t io n a n d

U t i l is a t io n

P la n t a n d P ro c e s s e s

P e o p le C o m p e t e n c ie s

P e o p le a n d B e h a v io u rs C u l t u re

C o m m u n i t y E n g a g e m e n t

S u p p ly C h a in R e la t io n s h ip M a n a g e m e n t

B e s t P e rs o n f o r t h e J o b

C l ie n t / S t a k e h o ld e r C o l la b o ra t io n

S u s t a in a b i l i t y

E n v iro n m e n t a l

In n o v a t io n a n d C o n t in u o u s

Im p ro v e m e n t

C o n s t ru c t io n a n d O n S i t e P ro d u c t io n

Q u a l i t y


C o s t In U s e / W h o le L if e R e l ia b i l i t y

P o s t D e l iv e ry S u p p o r t / A f t e rc a re


C o m m e r c i a l E v a lu a ti o n 1 5 %

S a fe ty E v a l u a ti o n 1 5 % T e c h n i c a l E v a l u a ti o n 7 0 %

B E H A V IO U R S A N D C U L T U R E

A S S U R A N C E

V a lu e f o r M o n e y

F i t f o r P u r p o s e

S u s t a in a b l e D e v e l o p m e n t

E q u a li t y a n d S o u rc in g

Collaboration is Key to Success…

Categories (Systems)

Early Deployment

Area 1

Area 2 Area 3 Area 4

Category A Category B Category C Category D Category E Category F

SYSTEMS INTEGRATION PROVIDER

PROGRAMME MANAGEMENT PROVIDER

COLLABORATE ACROSS AREAS

INC

ENTIVE TO

CO

LLABO

RATE W

ITHIN

AREA

PHASE 2 PHASE 3

Presenter

Presentation Notes

European railways reviewed who are also undertaking similar programmes of Digital Railway/ERTMS activity have followed very similar approaches for the establishment of infrastructure contract packages, for example: Denmark – 2nr geographic packages for ETCS, 1nr national package for TM, national packages for telecommunications works Norway - 1nr national package for ETCS, 1nr national package for TM, national packages for telecommunications works (fixed and mobile), national package for enabling civils works All European railways reviewed have split the infrastructure works form rail vehicle fitment works in the packaging works All have put collaboration between packages at the heart of what they have done, although generally with no formal incentivisation link Away from ERTMS programmes other major UK infrastructure programmes such as HS2, Crossrail and the ODA have followed similar approaches to establishment of long term, incentivised, collaborative and ECI based relationships to support successful programme delivery and outcomes The approach proposed aligns with the principles and approach recommended by the Infrastructure UK Project Initiation Routemap (published by HM Treasury) in key areas such as packaging, alignment, risk allocation and contract model amongst others. Aligns with a number of the recommendations from the “Better Deal for Public Building” report published by the All Party Parliamentary Group in 2012 in key areas of integrated team use and selection and procurement based on balanced scorecards

Driven by Contract Strategy for ECI and Incentivisation


Supplier Selection OJEU PQQ ITT

Stage 1

COST PLUS ARRANGEMENT

Appoint Suppliers

Stage 2

INCENTIVISED TARGET COST CONTRACT

Set Target Costs

NEGOTIATION

INPUTS: NATIONAL DR SPECIFICATION DEFINED AND DEVELOPED

OUTPUT: DETAILED DEVELOPMENT &

DEPLOYMENT

INPUTS: AREA & ROUTE ASSESSMENT TO DETERMINE LOCAL RISK/ SCOPE

OUTPUT: INITIAL DEVELOPMENT TO ESTABLISH SCOPE, SCHEDULE & RISK

Approach to System Packages by DR Phase (Note limited example - not exhaustive list of all categories)

DIGITAL RAILWAY INDUSTRY WIDE (principles, toolkit etc.)

NATIONAL SYSTEMS INTEGRATION

NATIONAL PROGRAMME MANAGEMENT

NATIONAL TOOLKIT & CHANGE MANAGEMENT

ETCS COMPASS GSM-R

Traffic Management

New trains Train braking systems Train control system

Cab Fitment

Volume throughput Depot Design

Station Design

E-ticketing Barrierless Detection Sales system

Passenger Comms system

Phase 1 Phase 2 Phase 3

Infrastructure

Rolling Stock

Stations & Depots

Customer Experience

ROCs Rail Operations Rail Maintenance

Operations & Maintenance

NATIONAL DATA/ IT PLATFORM

NR

TOC & FOC

TOC/ FOC & NR

TOC

NR

Categories Delivery Owner

Programme Services

DR

SYSTEMS INTEGRATION

PROGRAMME MANAGEMENT

TOOLKIT & CHANGE MANAGEMENT

DATA/ IT PLATFORM

Key: Plans established In Place Required To Be Confirmed

N/A N/A

Survey Overview

6

61%

39%

1 2

Is your organisation currently “business ready” to support the Digital Railway contracting approach?

1.Yes 2.No

48%52%

1 2

Does the proposed contract strategy provide sufficient opportunity for suppliers to innovate ? and deliver improved value for money?

1.Yes 2.No

70%

30%

1 2

Is the approach to incentivise across the sub-system elements acceptable to your organisation?

1.Yes 2.No

94%

6%

1 2

Do you see the use of a collaborative contract mechanism as the best approach to deliver the Digital Railway programme?

1.Yes 2.No

Analysis of Responses to Online Survey

100% attracted to a 2 stage contract award approach

92% interested in the contracting approach 92% prepared to work in a KPI/Balance Scorecard / Pain/Gain share structure 85% understand the ECI concept

83% see use of collaborative contract mechanism as best approach – marginally down from the conference feedback 77% of respondents are familiar with BS11000 Standard for Collaboration, however, only 56% believe it is appropriate for DR 75% believe there is sufficient opportunity for the supply chain to innovate – higher than the conference feedback

11

Incentivisation

100% of respondents believe the approach to incentivisation is acceptable to their organisation

12

38.5% 46.2%

15.4%

Level of Incentivisation

10% Incentivisation25% Incentivisation50% Incentivisation

Key Challenges

100% of respondents ranked culture and behaviours as the highest ranked challenge

13

Challenge Rank Culture and Behaviours 1 Resource 2 Capacity 3 = Safety and Security 3 = Technology 5

The Supply Chain’s Perception of Risks

14

Benefits Realisation

Innovation and Funding of Innovation

Constraints to Procurement

Approach

Funding Authority

Supplier Access to NR (tier 2 / 3 )

Clarity of Goals

Senior Executive Leadership Buy In

Relationships and

Partnerships

Supplier Selection

Delivering Transformation

Recruitment and Retention

Intelligent Client

Confidence in the Programme

Wider Industry Buy

In

Working Groups

15

Working Group – Open discussion

Open discussion to review and agree which areas should be progressed DR Suggestions:-

Incentivisation Risk management

Supply Chain perception for risk management Innovation Contractual structure for KPI’s / Balanced Scorecard Contractual terms and conditions overhaul Addressing key challenges

16

Next Steps…

Working Group leads and members identified Agree timescales and outputs Next meeting 21st January 2016 – Euston House

17

Documents

Supplier Engagement Working Group - Digital Railwaydigitalrailway.co.uk/wp-content/...Working-Group-7th-January-2016.pdf · What do you want to gain from membership of the working