Does the current climate provide a key to unlocking the adoption of enterprise delivery?
Narratives from around the world related to economic recovery have tended to recognise something in common: with disruption comes the opportunity to do things differently, hopefully for the better. In the past, this call to action tended to be driven by the desire to boost productivity and make budgets go further. But while financial constraints will inevitably reassert themselves in the coming global recession, the current emphasis on infrastructure investment means that efforts to ‘build back better’ are taking place against the backdrop of accelerating spend. So how do we spend fast and spend well?
It has been acknowledged for some time that the traditional model for delivering infrastructure, with the primary focus on work and price, is not sustainable and seldom results in value for money. Enterprise delivery – an alternative model in which partners form an enterprise and work collaboratively towards aligned objectives - can offer clear benefits over such transactional arrangements: better outcomes, greater productivity, more innovation, and a greater predictability of value creation. In the face of radical uncertainty and economic downturn, these benefits are arguably needed now more than ever. However, the struggle to adopt principles wholesale remains.
The good news is that enterprise delivery need not involve a complete and sudden break from everything that has gone before. Rather, it is about progressively developing a different kind of relationship with partners and suppliers, supported by commercial arrangements that do not constrain this progress. Investment in enterprise delivery is always valuable providing ambitions are clear and agreed, and those who adopt it successfully tend to approach it as a journey, not a binary exercise or an overlay.
Wherever you are in that journey, there are opportunities to step on. Understanding your relative point of entry is key to taking the right steps to maximise the benefits. In doing this, it is helpful to consider three key enablers of enterprise working:
- Collaboration: the ability of different organisations, teams and individuals to work together towards shared goals.
- Orientation: the ability to translate customer requirements into desired outcomes and align the enterprise towards these.
- Innovation: the ability to generate, develop and exploit new thinking in pursuit of these outcomes.
With an accelerated pipeline, the chance of doing the wrong things in the wrong way is likely to increase. The primary reasons for project failure are usually poor project initiation, poor leadership, a lack of sponsorship or poor integration. Governance is threaded through all these factors, and establishing strong governance is usually the first step to setting up a successful enterprise.
However they are delivered, programmes will always encounter change and unexpected difficulties. Dealing with these challenges through risk transfer results in a delivery model that is brittle and vulnerable. If an enterprise is instead set up in such a way that it can solve problems collaboratively, and has the agility to make effective decisions in response to changed circumstances, then the delivery model will be able to withstand difficulties in a way that minimises the impact on efficiency.
For the complex £400M upgrade of London Waterloo rail station, asset owner Network Rail formed a new delivery body, the Wessex Capacity Alliance (WCA), consisting of Network Rail as client, consultants Mott MacDonald and AECOM, main contractor Skanska and specialist contractor Colas Rail. Participants signed up to an ‘alliance charter’, ensuring the team shared a common purpose to meet the required outcomes of the project, and the WCA was incentivised through its contract to achieve these outcomes within budget. Any cost savings or overruns were shared between the partners as rewards or penalties. The collaborative delivery structure allowed the alliance to draw on the expertise of all the partners at an early stage to solve key engineering challenges. The project was on time and within budget, creating a sustainable, user-friendly, expanded station for passengers.
Orientation towards outcomes
A large component of the value derived from the enterprise model is related to your ability to translate customer requirements into effective solutions. Each shift toward system optimisation (from work to output, from output to outcome) provides the opportunity to better leverage the supply chain and move away from the low margin trap – and to build back better. Carbon reduction and social benefits need to be included alongside economic outcomes, and the enterprise needs to be set up so that all members of the enterprise are pulling together towards these outcomes.
Outcome alignment results in trust and a level of collaboration which is hard to envisage within traditional delivery methods. This allows an enterprise to explore and make the most of value-boosting approaches that require the engagement of the whole supplier ecosystem, such as Design for Manufacture and Assembly (DfMA), offsite build and other modern methods of construction.
Orientation towards net-zero objectives is particularly important if the industry is to play its part in a ‘green recovery’ in which renewed economic growth is accompanied by meaningful progress towards the elimination of carbon emissions.
Anglian Water’s £350M Strategic Pipeline Alliance (SPA), which aims to connect the north of Lincolnshire with East Anglia via around 500km of water pipeline, has been set up as an enterprise using Project 13 principles. The key outcomes that the enterprise has been orientated towards include improving water supply resilience and the experience of Anglian Water customers, reducing capital carbon and operational carbon emissions, and having a positive impact on local communities and economies. KPIs have been set for each outcome. A ‘supply chain ecosystem’ approach has then been used, in which the influence a supplier can have on these outcomes (not package cost) defines the relationship between SPA and the supplier and the investment put into that relationship. Supply chain partners are involved early and integrated into the enterprise via a deliberate and structured process.
An environment for innovation
Enterprise delivery is characterised by early involvement, greater participation and predictability of revenue for the supply chain, all of which can create a fertile environment for innovation. Such innovation can pay dividends not only in the better delivery of an individual asset or project, but also in the better functioning of infrastructure and systems.
The challenges that COVID-19 presents to transport networks, for example, require an appreciation of systems thinking, and the interventions that are going to be needed in this recovery phase are less about pouring concrete than they are about sweating the existing assets and optimising operations. The right partners enable infrastructure owners to explore intelligent solutions that are data-driven and make the most of smart technology, all with the focused aim of better serving communities. Our Smart Infrastructure Index can help clients baseline their digital maturity and understand how to transform their operations through digital technology.
Mott MacDonald came together with six companies in 2016 to form an Integrated Design Team (IDT) for Heathrow Airport Expansion providing strategy, planning, design, design management and digital integration services to the expansion programme. We led the development of the digital strategy associated with expansion, and through use of our Moata platform we helped integrate one of the most complicated construction programmes in the UK. Driving the development of both digital strategy and information management strategy was key to enabling Heathrow to realise their DfMA and construction logistics hubs strategies which were in turn at the heart of helping distribute socio-economic benefits across the UK whilst delivering low carbon infrastructure solutions that minimised construction safety risks at the same time.
We developed a digital maturity roadmap for understanding client and supplier capability, recognising the need for the programme to progressively adapt as the delivery enterprises and eco-systems matured. Underpinning this was a common data environment which facilitated collaboration and communication across the programme’s evolving ecosystem and informed decision-making and risk sharing. As carbon aspect lead for the project, we helped Heathrow set industry leading carbon targets, then worked in collaboration with the Client and the rest of the IDT to develop management and mitigation strategies that would enable the scheme to be compliant with the UK’s Paris Climate commitments.
In summary, enterprise delivery can bring better outcomes for clients, society and the environment; greater productivity and predictability of value creation; increased innovation; and more constructive relationships with supply chain partners.
“An integrated delivery model is the best way for the industry to work with the supply chain to deliver a collective response to current challenges and achieve better outcomes,” says Dale Evans, executive advisor at Mott MacDonald.
How Mott MacDonald can help
Mott MacDonald is a leading contributor to Project 13, a UK industry-led initiative that articulated the enterprise delivery approach, and leads its digital transformation workstream. Having worked as part of high-performing enterprises fulfilling a number of different roles, Mott MacDonald can provide integration capability to enterprises and be a trusted partner to clients bringing together strategic, commercial, digital and delivery expertise.