The Environment Agency is planning to procure longer-term contracts, with its supply chain taking more of a role in managing assets as the industry seeks to offer better solutions for projects.
EA deputy director for asset management Andrew Pearce said the organisation could ask its supply chain to help manage assets for around 10 years after delivery.
At present, EA rewards its contractors through its integrated delivery team, which is incentivised with up to three times the core costs, but can also lose their fee for inefficiency.
Mr Pearce was speaking on a productivity and cost-effective delivery panel at the CN Summit.
Derwent head of development Richard Baldwin said the industry’s productivity problem was affecting the timely delivery of schemes.
This was a particular challenge for offices with pre-lettings, he said, where the client was locked into delivery agreements that could result in penalties for not performing and target dates being squeezed.
Mr Baldwin said: “Our calling card is that you are coming to a very well-designed building […] that gets you ahead of the pack.
“That means you have to balance your desire for the bespoke, distinctive and unusual with how to stand it up one way or another.
“At 80 Charlotte Street [Derwent’s Fitzrovia scheme being built by Multiplex] we’re using a steel frame with precast concrete plates and will have cladding that effectively clips on.
“Now it’s never as simple as that, but [that’s the aim].”
What are companies doing to boost productivity in the supply chain and promote leaner and more cost-effective solutions?
- Isabelle Adams, head of scheme design, Crossrail 2
- Richard Baldwin, head of development, Derwent
- Nirmal Kotecha, director of capital programme and procurement, UK Power Networks
- Andrew Pearce, deputy director, asset management, Environment Agency
- Chaired by Simon Rawlinson, head of strategic research and insight, Arcadis
UK Power Networks director of capital programmes Nirmal Kotecha said: “Our revenue is capped so the onus is on us to live within our means.
“We have a 12-year framework with a procurement model around alliancing, allowing the supply chain to invest in direct labour and improve productivity.”
Crossrail 2 head of scheme design Isabelle Adams said using digital as a means to embed common components and offsite manufacturing through common data would lead to efficiencies.
She argued that the “tripling up” of project handovers from supply chain to client to asset manager was also inefficient, and that having the end-user involved during the design process helped allow for a “digital handover”.
Mr Baldwin said Derwent tried to have a linear supply chain and consistently use the same companies, but admitted it had to be “wary of putting all our eggs in one basket”.
It wanted to have two to three key relationships and circulate work among a “small group of people”, he added.
“A big thing we are pushing on is how to make the workforce on site happier,” he said.
“Invariably, if they can find an excuse not to be out [in poor weather conditions] they will look for that excuse. We want our peak workforce of 400-500 people feeling part of a project and happy.
“We are challenging directors [at tier one] to say, ‘How are you treating the trade workforce and will they share in the upside from a quality and timely completion bonus?’
“It’s a big challenge, how to engage everyone, and we’re looking at engaging them from bottom to top.”
Mr Kotecha said it could be “RIP for the conventional tier one contractor” if a new breed of digitally-based organisations can take on the role of project integrators, including through initiatives such as Project 13.
Mr Baldwin said many tier ones had “woken up and smelled the coffee already” and were embracing their role as integrators.
But he argued that it was incumbent on government to “pay the right price” for projects, warning that there continued to be a lowest-cost mentality hindering the creation of a sustainable industry.
He said Derwent was already hearing that prices would be going up next year from its supply chain and that continued increased would not be sustainable.
The supply chain must work out how to improve productivity to keep prices flat while delivering value, he said. “I wouldn’t just live with prices going up 3-4 per cent.”