ADM Congress 20169th February 2016

Challenges Beyond Service Delivery

ADM Congress 20169th February 2016

Challenges Beyond Service DeliveryIan Maxted, Chief Development Officer &

Chief Executive Defence, Social & Property

About Broadspectrum (briefly)

Delivery – What is Successful ?

Industry Study

Emerging Industry Trends Beyond the Technical

The Non-Technical Expectations

Conclusions

About Broadspectrum

Broadspectrum – An overview

Tot alRevenue

$3.7b

TransfieldGroup founded in

1956

10countries

18industries

+200clients

+25,000 employees

Broadspectrum

Select Examples of What We Do

We maintain and operate Sydney’s Harbour City Ferries for the NSW Government in partnership with Transdev

We provide shutdown maintenance and drilling services to various mining and oil & gas operatorsglobally including for Woodside

We maintain coal seam gas wells in Queensland for QGC’s CSG to LNG program utilising Easternwell’s well servicing rigs and provide services across the value chain

We install telecommunications networks for the National Broadband Network in Australia and the Ultrafast Broadband Network in NZ

We provide garrison and welfare services for the Australian Government on Nauru and Manus Island

We operate and/or maintain civil, mechanical, electrical and tolling assets for the Hills M2 Motorway andLane Cove Tunnel in Sydney, City Link and East Link in Melbourne, and Presidio Parkway in the US

We provide estatemanagement and garrison support services to the Australian Department of Defence on bases in Victoria,South Australia, Tasmania, Western Australia and the Northern Territory. We alsoprovide emergency services, stores, food services and Army sustainment nationally.

We provide operations and maintenance services to oil & gas assets in both the upstream and downstream sectors in the US for clients such as Chevron, Exxon Mobil and Valero

Defence – Top Ten Contractor

Support Services

Operations & ExercisesSustainment

Project Services

Quality, Effective and Efficiency Delivery as a New Minimum

‘In recent years a considerable number of projects have not been finished, nor will they be finished. This disorder … is caused by the depressed prices frequently obtained for your works … these cut prices are illusionary, especially as a contractor who is working at a loss is like a drowning man who clutches at a straw. In the case of the contractor this means he does not pay his suppliers, cheats everyone he can, underpays his men, getting the worst, not only using the most inferior materials, but quibbling over everything and always begging forgiveness over this and that. Abandon.

Re-establish good faith, give the estimation of the work and not refuse a reasonable payment to a contractor who will fulfil his obligations. That will always be the best transaction you will be able to find’

‘In recent years a considerable number of projects have not been finished, nor will they be finished. This disorder … is caused by the depressed prices frequently obtained for your works … these cut prices are illusionary, especially as a contractor who is working at a loss is like a drowning man who clutches at a straw. In the case of the contractor this means he does not pay his suppliers, cheats everyone he can, underpays his men, getting the worst, not only using the most inferior materials, but quibbling over everything and always begging forgiveness over this and that. Abandon.

Re-establish good faith, give the estimation of the work and not refuse a reasonable payment to a contractor who will fulfil his obligations. That will always be the best transaction you will be able to find’

In 1683, Marshal Vauban (1633-1707), Chief of Fortifications for Louise XIV

Industry Study 2001

Industry Study

Study of 100 contracts of varied nature across Australia

Multifaceted approach to what is a successful project including financial, stakeholder satisfaction, etc

Presumption by some was that it would reinforce a certain contract delivery model (ECI)

Engaged were Academics/Practitioners

First principles approach was adopted

The conclusions were not as “expected” for some

Industry Study

Primary cause of wasted effort

Impact

Significant Contributors

Turf

Protection

Poor

Briefs

Lack of

Trust

Process Poor

Client

Leadershi

p

Supply

Chain

Over-provision of functionality 14%

Change of scope 5-15%

Defect correction 5-10%

Design management 5-10%

Sacrificed material removed

from sites

5-10%

Administration

Meetings

Tendering (team selection)

Progress payments

5%

Inappropriate asset

management

10-30% Note: Wasted effort impacts overlap, and thus are not additive.

Source: Crow and Barda

Industry Study

The study concluded that only about 10% of projects in

Australia achieve excellence, and that on average these

projects create between 10% and 20% extra wealth compared with

projects developed along traditional lines. The most important

and widely recurring ‘success drivers’ for these projects were

found to be:

Client leadership (100% of projects)

Trusting relationships (96%)

Project initiation (78%)

Team selection (74%)

Value management (67%)

Stakeholder involvement (37%)

Understanding of client’s business (37%)

Open communication (29%)

Equitable sharing of risk (26%)

Client staff support (22%)

Integrated supply chain (19%)

Critical is

Competence of Client

Competence of Contractors

Ether by which they operate

How it is set up (Project Structure)

It is not

The form of contract in itself

Key Points

Early Contractor Involvement is highly

beneficial but it doesn’t necessarily mean

“contract”

You need of course to get the appropriate

agreement but the bigger question is

Who is leading on all sides and what is their

intent?

You know when you can stop

Engaging contractors early for their competence

Doesn’t mean a poor commercial outcome or probity

issues

Does mean that by maximising industry input you

maximise probability of success

Signing a contract is not the end. It’s the end

of the beginning and

Technical success is not enough. “How” is equal

to or maybe more important than “what” – The

Journey

Emerging Industry Trends

Beyond the Technical

Emerging Industry Trends

Many of the markets in which we operate are at the center of robust focus with respect to how services are delivered. Some key points;

1. Aggregation of services/departments/regions creating ‘mega-projects’

2. Inclusion of services historically delivered exclusively by the public sector further blurring the lines between government and industry and demanding a more integrated approach

3. Increased focus on the private sector providers as defacto participants in policy debates and a greater expectation to support beyond the technical

• Political - Media / Social

• Environmental - Compliance and Impact

• Stakeholders - Community

- Action groups

• Financials justification

• Cost/Benefit? Justification

• There is a greater public expectation of involvement

• Service delivery is also a vehicle for broader public policy initiatives

What is Occurring

The Non-Technical Expectations

Indigenous Participation

Our Indigenous Participation Program operates under a Global Indigenous

Framework

Broadspectrum has an “Elevated Reconciliation Action Plan” (RAP) and we

are one of only twelve companies in Australia that have an “Elevated RAP”

Currently our Indigenous

employment rate is 4.5

per cent compared to the

national Indigenous

employment rate of 1.7 per

cent

62 per cent of contracts

have either a contractual or

in kind obligation to

Indigenous participation

Broadspectrum has

launched its third RAP

with an Indigenous

employment target of 6.5

per cent

Broadspectrum’s Indigenous Advisory Board was founded in March 2006 as one the key initiatives of the Indigenous

Participation Approach. The Advisory Board is comprised of six members of Australia’s Indigenous community and six

Broadspectrum employees, including Managing Director and CEO, Graeme Hunt.

What are these other non-direct services issues

Policy initiatives e.g. Indigenous

Small medium enterprises

Support for Department for queries and justification

The strategic narratives ?

Industrial Relations

Training and development

What is needed beyond the technical skills ?

Understanding of broader policy issues and their intent

A recognition and the skills to understand the imperatives beyond the traditional approach such as the cost benefit case

A genuine approach to the implementation of “non technical” matters

Media skills including social media

Broader industry input to the framework of delivery

In Conclusion

Increased private outsourcing has changed the paradigm of what is a Government service. This combined with a more active and demanding public is shifting the level of transparency and accountable to all involved.

Quality, Efficient and Effective delivery will always be paramount. It is now the new given.

The other associated matters are increasingly important. To some more important.

The non-technical skills requires the same robust, disciplined approach that you would apply to say assets management.

This is just the beginning of change and we need to be pro-active, engaged and have a disciplined approach