Welcomes Arrangements Introductions: Procurement and Integration

Procurement and Integration
Welcomes
Arrangements
Introductions
Introductions
Rethinking Construction
Principles of Collaborative Working
Understanding Customer Requirements
Supplier Relationships
Integrated Management
Managing Costs and Programme Collaboratively
Collaborative Improvement
Supplier and People Development
Bringing it all together
Construction Commitments - Endorsements

Slides you get
Make notes from
• Discussions
• Flipcharts
• Group Work
martin brown
fairsnape
email: fairsnape@gmail.com
twitter: @fairsnape
mob: 07776234702
skype: fairsnape
Identify ‘stakeholders’
Identify collaboartive working ‘expectations’

(what others expect from us)
Identify collaboartive working ‘delivery’

(what we give to others)
Your
Procurement Customers and
and Integrated Clients
working Your
Construction
Sub Contractors
Industry
Suppliers
Expectations
You
Your Your
Staff Competitors
Your
Community
And
Society
Construction Commitment
A successful procurement policy requires ethical sourcing, enables best value to be
achieved and encourages the early involvement of the supply chain. An integrated
project team works together to achieve the best possible solution in terms of design,
buildability, environmental performance and sustainable development
• Procurement decisions will be transparent, made on best value rather than lower
cost, use evaluation criteria and where appropriate, specialist advisors, whilst
encouraging the contribution of smaller organisations
• All members of the construction team will be identified and involved at an early
stage, particularly during the design process, and encouraged to work
collaboratively
• Supply chain partners will be required to demonstrate their competency, their
commitment to integrated working, innovation, sustainability and to a culture of
trust and transparency
Construction Commitment (contd)

• To ensure effective and equitable cashflow for all those involved, all contracts will
incorporate fair payment practices, such as payment periods of 30 days, no unfair
withholding of retentions, project bank accounts, where practicable and cost
effective, and will include mechanisms to encourage defects free construction
• The duties of each project team member will be identified and shared at the
outset of the project and appropriate insurance policies, such as project insurance,
put in place
• Risks will be clearly identified, financially quantified and allocated in line with
each party’s ownership and ability to manage the risk
• All contracts will have an informal and nonconfrontational mechanism to manage
out disputes
• The employment practices of all organisations, including sub-contractors and the
self-employed, will be scrutinised by the client and the supply chain to avoid abuses
Drivers
•Committed leadership
•Focus on the customer
•Product team integration
•Quality driven agenda
•Commitment to people
Project Process Improvement

•Product development
•Product implementation
•Partnering the supply chain
•Production of component
Targets for Improvement

•Capital cost
•Construction time
•Predictability
•Defects
•Accidents
•Productivity
•Turnover and profits
What are the implications of

•Rethinking Construction
•Never Waste a Good Crisis
•Collaborative Survival Guide
What are we doing?

What do we need to do?
(Overnight reading if not familiar
and revisit day 2)
Focus on Customers Values

Establish Relationships
Integrated Processes
Manage Costs / Time Collaboratively
Develop + Continuous Improvement
Leadership People Development
Developed from: Building Down Barriers

Prime Contracting Handbook
Customer Requirements
Understanding
Business not Buildings
Early Involvement
Value Management and Engineering

Understanding Your Customers

• Who are they?
• What is their business?
• What motivates/drives them?
• Who are their customers?
• What are their strengths and weaknesses?
• What are their risks and threats?
• What are there aspirations?
think business not building

Opportunity v Cost
Opportunity Cost
Brief Design Construct In Use
Project Life
What are the implications of understanding customer

requirements?
What are we doing?

Who is responsible for Understanding Customer Requirements?
R Responsible (for ‘doing’)
A Accountable (for ‘approving’)
C Control (goverance, legislation, best practice)
I Inform (communicating, dialogue)



Supplier Relationship
Selection
Procurement
Fit
Procurement Basics
Finance
Technical
Ability (soft issues)
Performance Experience
Ability (soft issues)
Quality
Safety
Sustainability
People
Procurement Models
Historic Need Develop Procure Implement
Develop
Tranistional Need Procure
Implement
Develop
Asiprational Procure Need
Implement
Integrated Management Maturity Matrix
http://bit.ly/77M2EB
Customer Attractiveness
High
Strategic Critical
Strategic Development •Long term alliance
•Business certainty
Attractiveness of Account
•Sustainable profits
•Pay close attention
Strategic Strategic
•Better understanding of
•Nurture account
Development clientsCritical
needs
•Develop relationship
•Develop Win-win
•Seek further
•Value management
opportunities
•Continuous review and
improvement
Exploitable Account
•Short term gain
Nuisance Account
•Adversarial client
•Maximise variations
•Low income •Seek shortcuts
Nuisance
•No customer risk Exploitable
•Pay late
•Pay low attention •Pass risks to
•Lose without pain!!!!! contractor
•Drive lowest deal with
contractor
Low Income High

High Customers Procurement Strategies
Strategic Security Strategic Critical

•Sensitive to supply •Business/customer
•Low flexibility on spec critical
•Insensitive to cost
Strategic sensitive to supply
•Very Strategic
•Customer/Business •Develop Win-win
Security
Critical Critical
•Long term alliance
Risk
•Consider aggregating •Share risk
Nature of demand •Continuous review and
•Evergreen contracts improvement
Supply
Tactical Acquisition Tactical Profit
•Minimal supply risk
•Minimal customer risk
•No supply risk
Tactical •Prescriptive
Tacticalspec
•No customer risk
•Selection based on cost
•HighAcquisition
flexibility on spec Profit
•Short-term renewable
•Process costs more
contracts
•Eliminate the Process
•Reverse Auctioneering
•Procurement Cards
•Spot Deals
Low Expenditure High

Sustainable Relationship
High Customers
Strategic Critical
•Strategic Alliance
•Long Term
Strategic Relationships
Security •Inter-dependability
Risk
Strategic Critical
High
Tactical •Strategic Alliance
Tactical Profit
Acquisition •Long Term
Relationships
Strategic
Attractiveness
Low High •Inter-dependability
of Account
Development
Spend (£)
Suppliers
Nuisance Exploitable
Low High
Income (£)
Sustainable Relationship
Strategic Critical
High
•Strategic Alliance
•Long Term
Relationships
•Inter-dependability
Low High
What are the implications of supplier relationships?
What are we doing?

Who is responsible for Supplier Procurement?



Integrated Management
Common Processes
Integrated Project Team
Clustering
Communication and Information

Understanding Your Suppliers

• Who are they?
• What is their business?
• What motivates/drives them?
• Who are their other customers?
• What are their strengths and weaknesses?
• What are their risks and threats?
• What are there aspirations?
Draw or map out your understanding of

an
Integrated Project
Horizontal Clusters:
Clusters formed across suppliers and subcontractors, often to increase
range and scope of services, across a number of contracts for a number of
clients
Vertical Clusters:
formed down through supply chain, often led by a main contractor or
client based on a particular building type, eg housing
Specialist Clusters:
formed around a specialist, either technical or building specialism, eg
AMEC airport pavement team
Ready to Go:
Clusters can emerge and be formed from existing relationships where
proven working togtehr success has been demonstrated and put on hold
pending the correct contract or opportunity to activate.
What are the implications of integrated working?
What are we doing?
Do we have a strategy?
Who is responsible for Integrated Working?

• “Construction is information-intensive”
– “information overload”
– paper-intensive
Communication and Information
‘Technologies’ evolving to support collaboration
• Video- and tele-conferencing

• Face-to-face
• Extranets
• Written word
• Web-conferencing applications
• Hand drawings
• Telephone • File-sharing (P2P)
• Telegram • Instant messaging
• Telex • Discussion forums
• Fax • VOIP Skype
• CAD … BIM • Home pages (iGoogle)
• Email • Wikis
• Groupware (eg: Lotus Notes) • Blogs
• File transfer protocol (FTP) • RSS
• Websites • Social networking
• Intranets, enterprise portals
• Social search, tagging, sharing
• Mashups: Mapping, time-lines, etc
• Virtual worlds
Live Demo Examples of collabortive ICT / Web, eg

RSS feeds to igoogle / google reader
Collaborative project blogs
Linkedin
Twitter
Facebook
Woobius
Supply Chain / Project Mashup (visualisation on googlemaps)
Earth Exchange
Project timelines - Dipity
Doodle
Googlewave collaboration with supply chain
Second Life
Networks and forums (be2camp and AEC Network)
Building Information Modelling
What are the construction implications of

Collaboartive ICT
Social media
Building Information Modelling?
What are we doing?

Who is responsible for Collaboartive ICT?



Collaborative Programme
Time Certainty
Lean Construction
Last Planner
projectfootprint
100%
1200
90%
1000
80%
800
70%
600
400 60%
200 50%
0 40%
-200 30%
-400 20%
-600 10%
-800 0%
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 31 32 33 34 35 36 37 38 39 40 41 42
Summary
Non-Productive Productive Productive Support Statutory
lean…
Lean Management
Lean construction can

Lean Construction reduce programmes by
30% !
Last Planner
CICLOPS –
Construction Industry Collaborative Planning System
managing the gaps
Interstitial Spaces

collaborative time management?
What are we doing?

Collaborative Costs
Price v Cost
Open Book
Cost Certainty
Understanding ‘price’
Old New
Price Thinking Thinking
Claims
Profit = extra cost +
profit
Overheads
Labour
Profit
Plant
Overheads
Material
Tender price Labour
Plant
Waste
Material

collaborative cost management?
What are we doing?

Who is responsible for Collaborative Time and Cost Management?



Improving
Plan Do Check Act
KPI’s
Process Improvement
Improvement Plans
Constructing
Excellence
KPI’s

Integrated Improvement?
What are we doing?

Who is responsible for Improvement ?



Development
Supplier Development
People Development
Fit Organisations
Values
Competitive strengths
People
Suppliers and
Customers
Organisational
structure
Processes
Products and
Services
Hardness to
Copy

collaborative people development?
What are we doing?

Who is responsible for People and Supplier Development?

Construction Commitments
Company Responsibilities
Business
Integrated Team Activity
Risk
Performance
Company Responsibilities
PI.01
Does the company apply an integrated procurement policy?
PI.02
Do you apply evaluation criteria in a transparent way to your contribution to the framework
decision process?
PI.03
Do you involve your supply chain partners, where appropriate, in the design and planning
stages of the framework decision process?
PI.04
Where appropriate do you seek specialist advice to assist in your contribution to the
framework decision process?
PI.05
In what framework process areas do you currently seek specialist advice and what is the
source of this advice? of
PI.06
Do you identify your supply chain partners at an early stage of a framework contract?
PI.07
Does the company assess sub-contractors before they participate in its supply chain?
PI.08
Does the company monitor the performance of members of its existing supply chains?
PI.09
What are the procedures adopted by your company to assess the competency of existing and
potential supply chain partners?
PI.10
What is the average timespan of the established relationships with your key suppliers?
Integrated Team Activities
PI.11
What are the criteria does a supplier or subcontractor need to meet to to sustain a long term
relationship with your company?
PI.12
Does the company liaise/meet with its supply chain partners on a regular basis to maintain an
effective business to business relationship?
PI.13
Are ‘action plans’ communicated to all relevant supply chain members' staff?
PI.14
Does the company liaise/meet with its supply chain partners to assess specific project-related
performance?
PI.15
Does the company involve its supply chain in the design and planning stages of construction
projects?
Business Practices
PI.16
Does the company award supply chain contracts based on open book cost/ transparency of
cost basis?
PI.17
What percentage of the company's supply chain contracts in 2009 were awarded contracts
on open book cost/ transparency of cost basis?
PI.18
Does the company's supply chain members abide by the provisions of the Fair Payment
Charter e.g. 30 day payment periods?
PI.19
Do you check the financial standing of individual members of your supply chain at regular
intervals?
PI.20
Does your company allocate financially qualified risk to its framework partners?
PI.21
Do you and your integrated team partners align cash flow and year end reporting?r e
Risk Management
PI.22 Does the company clearly identify and financially quantify the risks arising from
participation in a framework process?
PI.23 On what basis do you cost financial risks?
PI.24 What procedures does your company have in place to check that your framework
partners are adequately resourced to cover their financial obligations throughout the
framework agreement?
PI.25 How is the workload exposure managed to account for the collective behaviour
of the team and the consequential risk?
PI.26 Do you have procedures in place validate the financial resources of your
downstream supply chain partners?
PI.27 What are your company's requirements in evaluating tender submissions from
your supply chain partners?
PI.28 Does the company liaise/meet with its supply chain partners regularly to assess
specific project related risks?
PI.29 Do your supply chain members measure and report your performance back to
you?
Performance Measurement
PI.30 How many innovation improvements have been developed by the company's
supply chains over the last 3 years?
PI.31 Does the company use KPIs to measure the effectiveness and efficiency of its
supply chain during/after the construction phase of construction projects?
PI.32 Does the company use supplier performance defect values to compare
performance against its peer group and/or other industry benchmarks?
PI.33 "Does the company use any financial indicators (other than ""profit"") to monitor its
business performance?”
PI.34 What actions has the company taken in the last three years to improve its business
performance indicators?
PI.35 Does the company use staff indicators to monitor this area of its business?
Performance Measurement Construction Commitments
PI.36 What actions has the company taken in the last three years to improve staff
performance?
PI.37 Does the company have development plans specifically for the staff responsible for
managing its supply chains?
PI.38 How does the company monitor the implementation of staff development plans within
its supply chains?
PI.39 Does the company have a procedure that ensures clients’ needs and requirements are
delivered before, during and after project completion? last three contacts
PI.40 How many projects did the company complete last year?
PI.41 How many of last year’s projects were completed on time?
PI.42 How many of last year’s projects were completed within budget?
PI.43 How many companies are in the company's immediate supply chain pool?
PI.44 How many companies have been in the company's immediate supply chain for more
than 5 years

Welcomes Arrangements Introductions: Procurement and Integration

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Procurement and Integration

Principles of Collaborative Working

Understanding Customer Requirements

Managing Costs and Programme Collaboratively

Supplier and People Development

Bringing it all together

Construction Commitments - Endorsements

Slides you get

Make notes from

Identify collaboartive working ‘expectations’

Identify collaboartive working ‘delivery’

Construction Commitment (contd)

Project Process Improvement

Targets for Improvement

What are the implications of

What are we doing?

Focus on Customers Values

Developed from: Building Down Barriers

Business not Buildings

Value Management and Engineering

Understanding Your Customers

think business not building

Brief Design Construct In Use

What are the implications of understanding customer

What are we doing?

What do we need to do?

Who is responsible for Understanding Customer Requirements?

R Responsible (for ‘doing’)

A Accountable (for ‘approving’)

C Control (goverance, legislation, best practice)

I Inform (communicating, dialogue)

Focus on Customers Values

Developed from: Building Down Barriers

Ability (soft issues)

Historic Need Develop Procure Implement

Low Income High

Strategic Security Strategic Critical

Low Expenditure High

What are the implications of supplier relationships?

What are we doing?

What do we need to do?

Who is responsible for Supplier Procurement?

R Responsible (for ‘doing’)

A Accountable (for ‘approving’)

C Control (goverance, legislation, best practice)

I Inform (communicating, dialogue)

Focus on Customers Values

Developed from: Building Down Barriers

Integrated Project Team

Communication and Information

Understanding Your Suppliers

Draw or map out your understanding of

What are the implications of integrated working?

What are we doing?

What do we need to do?

Who is responsible for Integrated Working?

R Responsible (for ‘doing’)

A Accountable (for ‘approving’)

C Control (goverance, legislation, best practice)

I Inform (communicating, dialogue)

• Video- and tele-conferencing

Live Demo Examples of collabortive ICT / Web, eg