From

Transactions
to Enterprises

A new approach
to delivering
high performing
infrastructure

Infrastructure Client Group

March 2017

Project 13
2 Why do we need to change?

Why do we need
to change?
Britain needs high performing infrastructure. Without it
we have little hope of improving the productivity of our
economy. Without an improvement in productivity we
will not be able to secure the quality of life demanded
by our growing population.

Yet the model we use to deliver and operate much

of our infrastructure is broken. Too often it produces
assets and networks that are expensive, perform
poorly and fail to exploit the advances in technology
that are transforming other industries. Too often the
supply chain that delivers our infrastructure seems
locked into a cycle of low margins, low investment
and dysfunctional relationships.

What are we going to do about it?

We are creating a community of infrastructure owners
and suppliers committed to change.

We are committed to a moving away

from transactional, cost driven procurement of
individual assets. We are embracing the creation
of value driven, collaborative teams that can deliver
investment programmes that secure the outcomes
demanded by clients and the public.

How can I get involved?

ICE is working with a group of leading infrastructure
owners under the ba nner Project 13 to:

.. Pilot new approaches to delivery on live projects

.. Offer peer review and support to other colleagues
seeking to implement the ideas in this report
.. Disseminate findings through a programme of
publications and events

If you want to join the Project 13 community

and help transform our sector please contact
policy@ice.org.uk or visit ice.org.uk/project13
Foreward A new approach to delivering 3
high performing infrastructure

Foreword
Andy Mitchell
Chair of the Infrastructure Client Group and CEO Tideway

As infrastructure owners, ICG members are committed In this report we describe the key features of this new
to a modern infrastructure that enables the UK approach to delivering infrastructure. It gives practical
economy to grow and its productivity to improve. advice on its implementation and on systems of
governance to ensure it delivers value for money.
We are delighted that government shares this view and
has placed high performing infrastructure at the heart It is however just a starting point. In the final section
of its plans. we set out a programme of work that will be driven
by leaders from all parts of the infrastructure sector
The status quo cannot be relied on to deliver this to develop and extend this new way of doing things.
outcome. Our traditional approach to procuring
infrastructure is already struggling to provide the “On time and within budget” is no longer enough.
innovative technical solutions and efficient project Government and owners will need to be more
delivery we need. demanding and focus on clearly defined outcomes
and improvements in efficiency. The supply chain will
This situation is likely to get worse as we move into need to respond and commit to collaboration
a new era of infrastructure development. Most and continuous improvement.
investment is now in existing networks, whose
owners are rightly focusing their resources on I hope that you will join us in this vital initiative.
delivery of services – and value - to their customers.
These networks are becoming more integrated and
are increasingly reliant on digital technologies for
their operation. There is ample evidence that in this
environment a procurement model that is based on
a series of isolated, highly transactional relationships
between owners and their suppliers will not offer best
value and often deliver a poor service.
“Productivity isn’t
This is why we need a new approach. If we are to give
the public the services they need at a price they can everything, but in the
afford we need to secure the best possible outcomes
with the limited resources we have.
long run it is almost
Fortunately we can draw on experience from here in
everything. A country’s
the UK. For example, in the water sector Ofwat has ability to improve
used its quinquennial negotiations with the water
companies to improve services to customers, reduce its standard of living
costs and limit carbon emissions. They have moved over time depends
towards regulation based on outcomes and the
combined efficiency of their operating and capital almost entirely on
expenditure. The companies have responded to this
challenge by developing new delivery models for their
its ability to raise its
investment programmes. They have moved away output per worker.“
from lowest price as their measure of value for money
and are working with their suppliers to access the Paul Krugman
skills and technologies they need to build the right The Age of Diminishing Expectations, 1994
infrastructure and achieve the best possible outcomes
for their customers. Similar approaches are emerging in
other sectors and we believe could be deployed even
more widely.
4 Contents

Contents

1. The report and why

we commissioned it
2. What is wrong with the
traditional approach?
3. Features of the new
approach to delivering
infrastructure
4. Understanding the
five key features
5. Next Steps

Appendix A
Leadership and support
Appendix B
Consultations
Appendix C
The project studies
 A new approach to delivering 5
high performing infrastructure

Digital transformation

Organisation Governance

Working together
to secure better
outcomes for
owners and users.

Integration

The capable owner

Organisation, Governance and Integration are essential

to securing better outcomes. Digital transformation
and Capable owners are enablers that over time set the
pace of change.
6 The report and why we commissioned it.
 A new approach to delivering 7
high performing infrastructure

1. The report and why

we commissioned it
This report has been commissioned by the (AW), the Environment Agency (EA) and London
Infrastructure Client Group (ICG) with support Underground (LU). These projects represent the
from the Institution of Civil Engineers (ICE). The ICG spectrum of the new approach from effective working
recognised the need for a new approach to delivering with traditional contractors to an alliance in its twelfth
the UK’s infrastructure that will encourage innovation, year of improving performance. The insights from these
produce better outcomes and reduce waste in the studies have informed the proposals we have set out in
delivery process. In particular we wanted to identify the rest of the report.
more intelligent ways to organise competition,
generate more value for end users and provide Finally and most importantly this paper is a call to
the right structure for our suppliers to invest in arms. Our five features will be developed further
improving their capabilities. and will be applied to more projects as more owners
commit to improve their performance. We set out a
The work has been led by Miles Ashley and Martin work programme, led by industry leaders from across
Buck and directed by a task force drawn from ICG infrastructure and construction and explain how you
members, the construction industry and leading can get involved.
academics (Appendix A). The proposals are derived
from consultations with infrastructure companies
and their suppliers and from studies of projects Terminology
in three different infrastructure programmes.
The Bartlett School of Construction and Project One of the challenges we have faced in preparing this
Management at University College London (UCL) report is to describe the roles and functions within
has led these project studies. the infrastructure programmes we have studied
and within the proposed new approach. We have
Through the consultations we have described what made a conscious decision to move away from some
success looks like for all the parties involved in terms such as client where we believe they imply a
delivering new infrastructure and the factors that transactional relationship.
would encourage them to invest in innovation and
in their capabilities. Throughout this report we therefore use the following
generic terms to describe the parties involved in the
The analysis of leading edge practice has allowed new approach:
us to identify five features that taken together
form the basis of the new approach to delivering Owner – the organisation that owns and operates
infrastructure. The report describes these key features the infrastructure, promotes the investment in the
and through case studies demonstrates how their infrastructure programme and receives the completed
deployment has delivered substantial benefits for facilities and puts them into operation.
infrastructure owners and their customers.
Integrator – the organisation that plans and delivers
The report also provides a critical analysis of more the infrastructure programme. It manages the
traditional approaches to delivering new infrastructure. supply chain, coordinates design and construction,
It provides evidence that these approaches often lead commissions the completed facilities and hands them
to costly and sub optimal solutions for infrastructure over to the Owner.
owners while at the same time damaging the
capabilities of the supply chain. Advisor – an organisation that provides advice and
professional services to the Owner or the Integrator.
In the appendices to the report we summarise our
consultations with the infrastructure and construction Supplier – an organisation that supplies materials,
sectors and the studies of six projects within the components, specialist services, construction or labour
infrastructure programmes of Anglian Water Services to enable the delivery of the programme.
8 Case study
Anglian Waters @one Alliance

Case study

Anglian water’s
@one alliance
Transforming the delivery of
investment  in the UK water industry

In 2005 Anglian Water (AW) recognised that their The @one Alliance has evolved from a simple
traditional approach to procuring projects in the collaboration into an integrated, high performing
market was unlikely to achieve the improvements in enterprise staffed with people from AW and their six
performance required by their shareholders and their partner companies and with long term relationships
regulator Ofwat. They decided to form an alliance with with key suppliers. Over the current regulatory period
their consultants and contractors through which they the @one Alliance will design and build some 800
could collaborate with their key suppliers to develop projects at a cost of £1.2bn. AW’s Alliance Director
better solutions to their infrastructure needs and leads the organisation and it works closely with AW’s
improve performance in delivering their projects. operational and asset management teams. Since 2005,
through this integrated and collaborative approach, the
Alliance has consistently out-performed the targets set
in the AW business plan.

Figure 1.
Safety – the Alliance has reduced its accident frequency
rate from 0.4 to zero.
 A new approach to delivering 9
high performing infrastructure

Figure 2.
Efficiency– the Alliance has reduced the cost of investment
projects by almost 30%.

Figure 3.
Carbon Reduction – the Alliance has halved the carbon
embodied in new infrastructure.
10 What is wrong with the traditional approach?
 A new approach to delivering 11
high performing infrastructure

2. What is wrong
with the traditional
approach?

How did we get here? Why do consultants struggle

In the 1980’s much of the UK’s economic infrastructure
to design the right project?
was transferred to the private sector. In the years Identifying the right project is the single most
that followed privatisation, the new infrastructure important step in maximising the value we obtain
companies that owned and operated these networks from investments in infrastructure.
transformed their organisations. There was no single
model but as a general rule they outsourced their It is difficult for consultants to acquire the knowledge
technical skills and relied on the market to deliver any and expertise needed to design the right project
new facilities. Consultants were used to design projects without owning and operating infrastructure. They
that were then delivered by contractors chosen by also struggle to identify the emerging technologies
competitive tender. that shape new infrastructure solutions as these are
usually being developed by infrastructure owners or in
The relationships created by this model are often the supply chain. The traditional model often prevents
highly transactional and the parties use contracts owners and their consultants from engaging key
as the principal means of securing their objectives. suppliers in the design process on the basis that this
In many cases owners use lowest initial price and will limit competition.
maximum transfer of risk as their measure of value
for money. Contractors typically break the projects The consultants’ business model is based on selling
down into packages and invite tenders from suppliers their services by the hour. This provides few incentives
for the work they cannot deliver themselves. It is not to develop alternative solutions that deliver the
unusual for 80% of the total value of a project to be  required outcomes with less investment in design and
sub-contracted in this way. construction. Furthermore, the margins they earn are
not sufficient for consultants to maintain the large
networks of relationships within the infrastructure
What is wrong with this approach? sector and the supply chain that are critical in keeping
abreast of the latest ideas and innovations. Put simply,
At first sight this approach seems to offer owners
the tendency for consultants to consolidate into ever
a simple way of obtaining the infrastructure they
larger firms reliant on selling ever more man-hours is
need at the lowest cost whilst satisfying regulatory
not providing infrastructure owners in the UK with the
requirements for open competition. However it often
services they need.
fails because the parties to the project encounter a
recurring problem:
Why lowest cost does not always
.. Consultants struggle to acquire the knowledge represent best value
needed to design the right project to solve the
owner’s infrastructure problem. The processes of designing infrastructure, obtaining

.. Clients discover that the lowest price does not

tenders, administering contracts and dealing with
claims all incur transaction costs, management costs
represent best value. and overheads down the supply chain. These costs are
.. Contractors are unable manage the delivery embedded in every price submitted by tenderers and
in the final price paid by the owner. The construction
process efficiently and cannot bear the risks in
delivering the project. industry shows little interest in measuring these costs
in a consistent manner and this lack of transparency
12 What is wrong with the traditional approach?

means there is no pressure to reduce them. In practice Ten years later a study by waste management experts
the myth that lowest cost equals best value only WRAP (Ref. 2) suggested that up to 15% of all
survives because of the lack of best value options to materials delivered to construction sites ends up in
compare it with. skips. And a recent study by the Get It Right initiative
www.getitright.uk.com showed that defects and
Unpublished studies of two large building projects errors in delivering projects can add 20% to their costs.
in London suggest that the overall cost of project
management, design, commercial management, Against this backdrop, construction is the only major
overheads and profit within the supply chain are as industry in the UK that has failed to improve its
much as 50% of the price paid by the owner. We productivity over the last twenty years.
are not suggesting that all of these costs could be
eliminated, but we could reduce them significantly
by streamlining design and project management and
through long-term relationships with suppliers that “Construction
enable them to reduce their overheads. More efficient
management of programmes could reduce overall costs productivity has
by as much as 20%.
been flat for
Why contractors struggle to manage
decades, according to
the delivery process effectively McKinsey research.
The growth in sub-contracting over the last thirty years
In manufacturing by
has changed the principal function of contractors contrast productivity
from planning and managing work to procuring and
administering sub-contracts. The contractor provides has nearly doubled
the overall planning for the project and coordinates
the many interfaces between the sub-contractors.
over the same period
Sub-contractors in turn manage their own detailed and continuous
engineering, logistics and production on site. Most
projects lack an overall production system that improvement has
coordinates design, manufacturing of components and
assembly on site. As a result, inefficiencies and waste
been the norm.”
have become embedded in the delivery process and in McKinsey & Company
the unit rates and other assumptions that suppliers use The construction productivity imperative, July 2015
when preparing their tenders.

This situation has evolved over the last thirty years.

A study by BSRIA in 1997 of the installation of M&E
services on projects (Ref. 1) showed that more than
50% of the labour used on projects in the UK could
be saved by eliminating avoidable delays and achieving
best practice task productivity.
 A new approach to delivering 13
high performing infrastructure

… and why they struggle to bear risk The case for a new delivery model
Modern infrastructure projects are complex. The The root causes of this poor performance lie in
relationships between the owners, their customers disintegration and disaggregation. By separating
and their contractors has made it all but impossible design from construction and breaking projects down
to transfer significant risks in the delivery process to into hundreds of sub-contracts we impede the flow
contractors. Attempts to transfer these risks through of knowledge from the supply chain to the front end
the contract usually lead to them being priced into of the project where value is created, adding cost
tenders and passed on to sub-contractors. And when and uncertainty at every step along the way. The
the adverse events arise in the course of delivering the Government’s 2010 Infrastructure Cost Review was
project, it is rare for the circumstances to be exactly as right when it proposed new business models and
foreseen in the contract leading to lengthy disputes integrated supply chains.
between the parties.
So how can infrastructure companies deliver their
investment programmes to provide the best possible
infrastructure efficiently and predictably? The answer
“The client may doesn’t lie in more complex transactions and more
layers of project management – the PPP contracts
therefore pay for risk imposed on London Underground demonstrated the
folly of that approach.
twice – once to pay
the supply chain for Infrastructure companies must take ownership of the
complexity of their projects and their relationships with
holding or managing their supply chains. Owners need to use competition
more creatively. Rather than chasing lowest initial
the risk, and then to costs, they should create arrangements that enable
bear the actual costs the parties to work together to deliver the best possible
outcomes for all. Fortunately we are not starting
of the risk when its from scratch. A number of companies are moving in
this direction and the principles underpinning a new
transfer ultimately delivery model are taking shape.
proves impossible.”
Infrastructure and Projects Authority
Major capital programmes: a discussion “When we are
document based on insights from recent
experience, 2016.
confronted with
evidence that challenges
our deeply held beliefs
It is often suggested that the construction industry
benefits from all this inefficiency and uncertainty, we are more likely to
but that is not the case. A report by KPMG in 2014
(Ref. 3) of the financial performance of a group of
reframe the evidence than
UK contractors showed that since 2007 their margins we are to alter our beliefs.
from construction work ranged from 0% to 4%
and since 2010 the cash generated by construction We simply invent new
operations had reduced almost to zero. For many
years contractors have dealt with low margins from
reasons, new justifications,
construction by generating large positive cash flows and new explanations.
and investing them in other activities. With pressure
from Government to pay suppliers promptly, this Sometimes we ignore
business model is clearly unsustainable. the evidence altogether”.
Matthew Syed
Black Box Thinking; Marginal Gains and the Secrets
of High Performance.
14 Case study
The costs of doing business the traditional way

Case study

The costs of
doing business the
traditional way
Management costs, overheads
and transaction costs

At every level in the construction supply chain the An unpublished analysis of the costs of two large
prices tendered by companies include allowances building projects in London suggests that in total
for their management costs, overheads and the the management costs, overheads and transaction
costs of transacting business with each other. Some costs could be as much as 50% of the final price
of these costs are essential to deliver the project but paid by the owner to the contractor. The design and
a significant proportion are transaction costs incurred management costs are consistent at all levels in the
through tendering and administration of contracts supply chain. Overheads and profit are a significantly
at all levels in the supply chain. It is difficult to higher proportion of costs at Tier 2 and Tier 3 probably
estimate transaction costs or compare them between because these companies own plant and equipment
different projects as they are usually hidden within and employ large numbers of skilled people. Their
the prices tendered. overheads reflect the assumptions they make about
the  average utilization of these fixed costs.

Figure 4.

5.24 Overhead and profit

5.47
0.70
9.90 Project management

13.42 Commercial

3.76 Technical / Design

1.79
8.05
Prime cost

13.50

2.03
1.01
5.40

General contractor Tier 2 supplier Tier 3 supplier

Case study A new approach to delivering 15
HIgh speed 1 high performing infrastructure

Case study

High Speed 1
The importance of achieving
planned outcomes

In 1996 the UK Government awarded a concession By 1998 it was evident that the financing plan was not
to London & Continental Railways (LCR) to build viable and the Government stepped in to restructure
and operate a high-speed railway between London the project. Government guaranteed the debt needed
and the Channel Tunnel. The railway would provide to fund the project and Railtrack agreed to acquire and
international and domestic train services and stimulate operate the infrastructure once it had been completed.
development around the new international stations at In 2007 the railway was opened for international
St Pancras, Stratford and Ebbsfleet. The route through services and in 2009 the high-speed domestic services
North Kent and into St Pancras Station was chosen to began to serve stations in Kent. The Government
facilitate the extension of the high-speed railway to nationalised LCR and in 2010 the concession to
the  large conurbations in the Midlands and the north operate the railway was sold to a consortium of
of England. Borealis Infrastructure and the Ontario Teachers’
Pension Plan.
The PFI contract provided LCR with three sources of
revenue. To finance construction, the Government The infrastructure for HS1 was delivered within 20%
transferred to LCR the revenues from Eurostar UK, of the original budget and only eleven months late,
the company that operated international services comparing well with other similar railways. (1) Since it
between London and the Continent. Once the railway opened, the railway has performed reliably with only
was operating, LCR would benefit from the sale of 0.43% of services being delayed by infrastructure
the twenty high-speed train paths in each direction incidents in 2010/11. The problem has been the failure
and from development of the lands around the of the project to deliver the forecast revenues. Between
international stations. 2007 and 2011 the number of international passenger
journeys on Eurostar services averaged one third of the
level forecast by LCR in 1995. Whilst the land around
St Pancras Station is now being developed, Ebbsfleet is
still a large carpark.

(1) The completion and sale of High Speed 1

National Audit Office, March 2012.
16 Features of the new approach to delivering infrastructure

3. Features of the new

approach to delivering
infrastructure

From transactions to 1. Governance

a shared enterprise Owner’s definition of value
At the core of the new approach is a shift away from Long-term relationships with suppliers
the procurement of new infrastructure as a series of Performance measurement
individual projects each procured independently in
the market. In its place it creates organisations that 2. Organisation
integrate the core functions of infrastructure owners Coalition of suppliers
with the capabilities of their advisors and suppliers.
These organisations seek to deliver the owners’
Aligned commercial interests
outcomes through the management of a shared Effective organisation
enterprise that can evolve over time from a simple
collaboration into a high performing enterprise. 3. Integration
Effective teamwork
There is no single recipe that will create high
performing enterprises for all owners, in all Production management
circumstances. And there might be good reasons Health, safety and wellbeing
why owners with programmes of straightforward
infrastructure projects might want to stop at a simple 4. Capable Owner
collaboration with their suppliers. The proposed new
approach should therefore be viewed as a family of 5. Digital Transformation
delivery models based on the same five key features
but at different stages in their evolution. Whilst the new approach is about moving from a
reliance on transactions to the development of effective
delivery organisations, it is not an abandonment of
Five key features of the competition between suppliers to provide services to
new approach infrastructure owners. These features are designed to
enable different, more effective competitions based
Though our consultations with infrastructure owners on the contributions companies make to these shared
and their suppliers and the studies of six current enterprises and on their performance demonstrated
projects we have identified a number of factors that over time.
enable teams to work together effectively. These
factors can be grouped into five features that are Three stages of maturity
critical in enabling infrastructure owners and their
suppliers to deliver the right infrastructure solutions It takes time for organisations to move away from the
efficiently and reliably. There are clearly overlaps traditional approach and evolve into high performing
between the five features but they are a practical basis shared enterprises. Our studies of projects show that
on which owners can plan and implement the new as collaborations mature, the partners become less
approach to delivering their infrastructure. reliant on the contracts between them and more skilled
at managing their combined resources to produce
the required outcomes. Case studies show that in the
early stages of this evolution the improvements in
performance are quite modest but as the evolution
progresses the improvements accelerate.
 A new approach to delivering 17
high performing infrastructure

Unlike the traditional approach, these improvements in the development of the five key features is related
performance are carried over from project to project. to the evolution of the organisation. Whilst different
owners will progress at different paces and in different
Figure 5 highlights three stages in this evolution from ways, they can use this table to assess their progress in
a simple collaboration to a high performing shared making the transition to a high performing enterprise.
enterprise. The data in the table is based on evidence
from the project studies and shows in outline how

Figure 5.
Evolution of the new approach to delivering infrastructure

Integrated
Simple Collaboration High performing enterprise
functions and relationships

Governance Definition of value agreed by Value shapes investment programme. Value at the centre of
the owner. Regular reports on asset management.
Long-term relationships with supplier performance. Suppliers influencing
suppliers accepted. Performance reporting integrated investment decisions.
Performance targets and with production. Performance reporting integrated
reporting agreed. with asset management.

Organisation Supply chain strategy in place. Key suppliers procured Suppliers working together in clusters.
Traditional contracts with through frameworks. Suppliers’ rewards depend
financial incentives. Cost reimbursable contracts on performance.
Core team co-located with with incentives. Best candidates for key roles in
common systems. Single integrated project organisation. the integrated organisation..

Integration Integration defined and Integrated business processes and Fully integrated programme team
integrator in place. systems. with key suppliers contributing.
Integrated planning Production system in place. Real-time digitally enabled
and management. HSW defines good practice for production systems.
Good practice in health, safety the construction industry. HSW defines good practice for
and wellbeing (HSW). UK industry.

Capable owner Owner’s champion appointed. Owner functions integrated Owner and suppliers working
Owner’s functions aligned with with delivery team. together to develop investment
delivery team. Key capabilities in place. strategy and next generation
improvement plans.
Plan in place to develop Development and succession
Owner capabilities plans in place.

Digital Digital Strategy in place Suppliers of digital services/ Suppliers of digital services/
transformation Level 2 BIM in use across technologies appointed. technologies at the core of the
the programme. Consultants’ and contractors’ programme team.

Plan for digital delivery in place. business models adapted to the Digital production platform in place.
digital environment. Asset management integrated
Plan for smart infrastructure
in place. Plan for adoption of Level 3 BIM. with delivery.

Value of information recognised Information being managed as a Integrated through-life approach

resource across the whole ‘data estate’ to information in place
18 Understanding the five key features
 A new approach to delivering 19
high performing infrastructure

4. Understanding the
five key features
Governance
Infrastructure owners establish rules, processes and An effective system of governance would provide a
practices to guide their interactions with their suppliers consistent approach to delivering value throughout the
and their decision-making. Companies usually have a life of an infrastructure asset, ensuring that intended
system to govern their commitments to investments outcomes are delivered for minimum whole life cost.
and a parallel system to govern the procurement and But this requires owners to have the capabilities to
delivery of their projects. Companies tend to get the define value in the initial planning of an investment
results their governance systems demand. The new and then track its delivery through the life of the asset.
delivery model needs owners to put in place a system
that will support the new model and focus everybody,
Long-term relationships
from the Board and senior management down on
maximising the value obtained from every investment Governance of procurement and delivery is often based
in their infrastructure. on obtaining the lowest price through a competitive
tender and then delivering the construction on time,
within budget and to quality. The flaw in this approach
Owner’s definition of value
is that it assumes that lowest price represents best
The cornerstones of the new governance system are value and that completion on time, within budget
a definition of value in terms of the outcomes to be and to quality defines the desired outcome.
achieved from investments in infrastructure. This is set
against the long-run costs and an effective process for As an example, the high-speed rail link between the
prioritising, assessing, approving, procuring, monitoring Channel Tunnel and London’s St Pancras Station was
and measuring investments against that definition. delivered within the original budget and schedule
but has failed to achieve the revenues forecast from
Most public and private sector infrastructure owners international passengers and property development.
use a form of cost-benefit analysis to make such
decisions, expressing the result as a benefit to cost ratio The new approach tackles this problem by
(BCR) or internal rate of return (IRR). When this number establishing long-term relationships between the
exceeds a pre-determined hurdle rate the investment is owner, the integrator and their key advisors and
regarded as sound and, subject to affordability, is able suppliers. The relationships are based on a shared
to proceed to design and construction. commitment to deliver continuous improvements in
performance over periods of several years. For this
In practice the analysis is often undertaken with to work effectively, systems of governance must
insufficient rigour on the basis of limited and be established to ensure that these relationships
sometimes questionable data. Furthermore, initial deliver the required outcomes and improvements
commitments to buying best whole-life value rarely in performance at every step along the way.
carry through into the actual procurement processes
that in most cases focus on the costs of construction. This requires much greater transparency between
Long-term value is unwittingly sacrificed in the the parties and commercial relationships that lead
pursuit of short-term costs savings. The result is to significant consequences for poor performance
repeated instances of projects failing to deliver their and misbehaviour.
intended outcomes.
20 Understanding the five key features

“There needs to be Organisation

far greater visibility Coalition of suppliers
to government, Our project studies showed that engaging the right
parliament and the suppliers at the right time and integrating them
into the team is critical to developing the right
public about suppliers’ infrastructure solutions and to delivering value over
performance, costs, the  long term. This is more important than extracting
the lowest price from suppliers through competition.
revenues and profits”. A few percentage points saved in the price of a
supplier’s services pale into insignificance when they
Public Accounts Committee, 2014 have a technology that can transform the solution.

Successful owners understand their suppliers’

capabilities and know when to integrate them into
their delivery teams to obtain the best results. They
Performance measurement invest time in visiting their suppliers’ offices and
factories and in exploring the products and services
The new approach relies on accurate and objective they offer. They also commit management time to
measurements of performance to support the integrating people from different organisations,
commercial agreements between the parties and to professions and backgrounds into a single high-
direct the efforts of the team towards continuously performing team with shared culture, processes
improving their performance. The scope of these and practices.
measures and the systems used to measure them
will evolve as the parties progress from a simple Effective teams are networks of collaborative
collaboration into a high performing enterprise. relationships that encourage an exchange of
knowledge and capabilities to drive improvement
The new approach uses two groups of performance and innovation. Owners should take the lead in
measures. The first consists of the outputs and designing coalitions of suppliers to deliver their
outcomes required by the owner. Alongside this it programmes and should not allow their supply
is important to establish process measures that can chains to be the consequence of a series of
be used to track the day-to-day effectiveness of the traditional procurement decisions.
collaboration. Without these process measures teams
risk getting bad news about their performance when
it is too late to do anything about it.

The ICG has been working with the construction

industry to standardise performance measures
and encourage more transparent reporting of
“Your value will
performance across the large infrastructure projects not be what you
and programmes. This initiative will be developed to
support the new delivery model. know; it will be
what you share”.
Ginni Rometty
President and CEO, IBM
 A new approach to delivering 21
high performing infrastructure

Aligned commercial interests Integration

The new approach relies on aligning the activities,
The new approach to delivering infrastructure relies on
behaviours and interests of owners and suppliers as
getting the most out of all the parties involved through
they work together to achieve the required outcomes.
collaboration and integration. Collaboration works by
All parties must commit to these relationships and
softening the boundaries between the parties to an
work hard to maintain them. And the commercial
infrastructure programme and then integrating their
arrangements between the parties must reflect this
capabilities, functions and activities to produce a better
aspiration.
outcome for all. Integration does not occur naturally.
This requires owners to define the outcomes to be Owners must take the lead in developing organisations
delivered by their suppliers. They must be able to with the culture, practices and systems appropriate to
describe what good infrastructure is, how it must the programme being delivered.
perform and what it should cost. And they must be
The traditional delivery model has reduced most
able to set realistic performance targets in terms of
general contractors’ abilities to integrate all of the
speed of delivery, efficiency and carbon reduction.
activities needed to deliver modern infrastructure
Suppliers must be confident in their assessments of
projects. Companies that once employed people with
how they will achieve these objectives and what they
these diverse skills now rely almost exclusively on their
want to get out of the collaboration.
commercial managers to coordinate delivery through
Commercial agreements based on clear definitions of their sub-contractors.
value and desired outcomes are necessary for aligned
In the projects we have studied, the owners have
relationships but not sufficient to create successful
stepped in and taken responsibility for integration
teams. Enduring alignments of interests are developed
either directly or in collaboration with their
through the long-term relationships between the
contractors. AW and LU have created alliances with
businesses. They invest time in these relationships
their contractors, consultants and suppliers to provide
understanding each other’s capabilities and working
a comprehensive integration service. The EA has
together to innovate and improve performance. They
focused on integrating its own functions and relies
understand what each party wants to get out of their
on its general contractors to integrate the production
involvement in the programme and work together to
of its projects.
achieve this.
As with other features of the new approach, there is
Effective organisation no single way of providing integration, but we can all
learn from examples of where is has been done well.
One of the most surprising conclusions to emerge
from the consultations with suppliers was how
often collaborative teams are hampered by poor
organisation. Owners can go to great lengths to
procure collaborative contracts and bring the parties
together in an integrated team and then fail to
provide the basics of reliable IT systems, a common
email system and competent office administration.
The things we normally do when setting up an office
for our own businesses can get lost when we are
establishing a collaborative team.

To ensure this does not happen, the owner’s Property,

HR and IT departments need to be engaged as early
as possible in setting up the team. Collaborative teams
have to establish themselves and deliver quickly and
they need an organisation they can rely on.
22 Understanding the five key features

Effective teamwork
The role of the integrator is fundamental to the success manufacture of components and production on site
of the new delivery approach. It is a leadership role and ensure they aligned with achieving the required
focused on creating an effective team to achieve outcomes. The integrator has to be expert in these
common goals. It requires deep knowledge of the functions from owning the integrated engineering
companies involved in the programme and their model to managing logistics and providing production
capabilities, methods, business models and objectives. systems to assemble the project on site.
And it needs expertise in managing the processes and
information that links design and engineering with Figure 2 sets out twenty-five core integration functions
manufacture and construction. identified by the ICG in consultation with its suppliers.
Not all of these functions will be needed on every
The integrator owns the key planning and project and on most projects they will be shared
management processes that coordinate design, between the owner and the integrator

Figure 6.
Core functions of the owner and the integrator

Corporate functions

.. ..
..
Governance Finance
Investment planning

Programme development functions

.. ..
.. ..
Solution development Technology strategy

.. ..
Stakeholder management Supply chain development

.. ..
External communication Procurement strategy

..
Approvals and consents Risks and opportunities
Organisation development

Programme delivery functions

.. ..
.. ..
Programme management Technical integration

.. ..
Programme controls Planning and production

.. ..
Project management Expediting and logistics

.. ..
Access management Performance management

..
Technical assurance Commercial management
Health, safety and environment

Programme completion functions

.. Commissioning .. Operational readiness

 A new approach to delivering 23
high performing infrastructure

Effective management of production Capable owner

Construction is behind other industries in its use
Our work has established that the role of a capable
of modern systems to manage engineering, logistics
owner goes well beyond the traditional role of the
and production. Consequently it has not yet created
client and requires an capabilities that are not always
global value chains. On most construction sites in
present in infrastructure companies. Consultations with
the UK, sub-contractors are left to manage their own
the supply chains revealed a demand for an owner
logistics and production. Materials are often delivered
with the capabilities and willingness to:
long before they are needed and stored in the open
and work is frequently held up whilst teams wait for
missing components to be delivered or damaged ..Define the outcomes needed from the programme.
components to be replaced.
..Articulate technical requirements.
Integrators must develop production systems that are ..Manage stakeholders.
fit for the digital age. Digital technologies have created
the opportunity for the infrastructure and construction ..Put infrastructure into operation.
sectors to adopt open-source production systems that
could be integrated with current BIM protocols and
..Work collaboratively with the whole delivery team.
used by any project team. These systems would disrupt
In July 2015 the ICG completed a study of the role of
the current approaches to designing, procuring and
the infrastructure owner led by Heathrow Airport with
delivering infrastructure. They would enable design
support from the Alliance Manchester Business School.
decisions to be made at the right time, manufacture
The study concluded that the inputs required from the
and delivery of components to be tracked in real time
owner are as critical and complex as those provided
and construction teams to work with confidence that
by the companies that deliver their programmes.
all of the pieces will fit together when they are brought
It highlighted six capabilities that all owners should
to site.
aspire to have:

Health, safety and wellbeing

..Articulating the voice of the customer.
The new approach to delivering infrastructure is all
about creating high performing shared enterprises.
..Value driven mindset.
High performing enterprises have high standards for ..Articulating the voice of operations.
health, safety and wellbeing. The performance of the
construction industry has improved but it still lags ..Relating to the supply chain.
well behind that of comparable manufacturers and ..Creating complex systems.
industrial companies. We believe that this is explained
at least in part by the high levels of sub-contracting ..Recruiting, building and retaining talent.
in construction.
Our ambition is to develop executive education and
If we are serious in our ambitions to improve health, training programmes that will enable owners’ senior
safety and wellbeing on our infrastructure projects, staff to acquire these capabilities.
we have to establish modern standards in the way
we employ and manage people across the sector.
This will include consistent terms of employment,
proper medical checks before people are employed,
training before and during employment and modern
medical and welfare facilities on construction sites. Our
ambition is to establish standards that all ICG members
will sign up to and enforce across all of their projects.
24 Understanding the five key features
 A new approach to delivering 25
high performing infrastructure

Digital transformation
“We need to focus Digital transformation is in its infancy in the UK
infrastructure sector. There are however examples
on continuity of of new practices. Transport for London has used
contactless payment technologies to improve
ownership of the passenger flows and transform its relationships with
investment that Londoners. Highways England is using its smart
motorway technologies to monitor and control
enables you to get traffic flows in real time. The UK Government is
the thing through using its Digital Built Britain initiative to pave the
way for the adoption of Level 3 BIM on publicly
into effective funded projects. And it is encouraging the use of
advanced manufacturing techniques in construction.
operation. Presently
Much of the current debate is however focused on
you get a bunch of the technologies rather than on the new business
people whose job models that will actually change the way we do
things. To accelerate the process of change, we
it is to get the bill have to address four key issues:
through Parliament
who have no interest ..The value proposition – understanding how
digital technologies can deliver value to the
in construction, infrastructure sector and its customers.

and a bunch of ..Industry readiness – understanding the skills and

business relationships needed to implement digital
people whose job technologies and the time it will take to acquire
them.
it is to build it who
have no interest in
..The disruption process – understanding how
general purpose technologies like the internet,
operations”. supporting technologies and new business models
work together to deliver transformation.

Alliance Manchester Business School

..Policies and standards – identifying the changes
in policies and standards needed to support digital
Contribution to the study of the role of the transformation.
infrastructure owner, September 2015.
The new approach to delivering infrastructure has to
facilitate the adoption of digital technologies within
new infrastructure and the processes of designing
and building it. To that end, the ICG will identify
promising new technologies, encourage their use
within the new approach and sponsor discussions
about emerging  technologies through seminars and
other similar events.
26 Case study
Redevelopment of Bank station

Case study

Redevelopment
of Bank station
Competing to deliver best value

London Underground’s £625m upgrade of Bank Under the new approach LU provided the tenderers
Station in the heart of the City is one of the UK’s with details of the exiting station, their studies and
most complex infrastructure projects. It has attracted their cost-benefit model but did not show them the
attention because of LU’s innovative approach to design. Instead they asked them to develop their own
procuring the project based on best value rather than designs to achieve the highest benefit to cost ratio.
lowest cost. LU protected the tenderers’ intellectual property by
agreeing to compensate the unsuccessful companies
Normally LU would have completed their technical for innovative ideas that were used in the project.
studies of the station and future passenger demands
and then engaged a consultant to design the project Spanish contractor Dragados beat three joint ventures
and estimate its costs. The design would have to win the tender. From the outset they engaged with
been used to develop a cost-benefit model for the their Tier 2 suppliers and focussed on the cost-benefit
investment and to invite tenders from contractors to model and on features of the design that would
build the project. The assumption would have been maximise the benefit to cost ration. Their winning
that the consultant’s design and the winning tender solution increased the ratio from 2.4:1 to 3.5:1 and
represented best value for money. reduced the cost of the project by £61m to £563m.

“Tier 1 contractors
engage very little
with Tier 2 suppliers
when bidding – if at
all. So this is unique”.
Don Houston
Byrne Group.
A new approach to delivering 27
high performing infrastructure
28 Next steps

5. Next steps
We have identified five features of successful
delivery teams that set a clear direction of travel for
infrastructure owners. The evidence we have gathered
gives us confidence that infrastructure owners can
apply these features to develop high performing shared
enterprises capable of delivering infrastructure assets
that provide more value for every pound invested.

Over the next year the ICG will work with the ICE to
support the development and use of these features
through three activities:

..Peer review and support – provided by

ICG members.

..Programme of activities and events –

arranged around the key themes in the report
and led by colleagues in the infrastructure and
construction sectors.

..Dissemination of good practices – through

the ICE and related bodies.

Peer review and support

ICG members already participate in reviews of
infrastructure projects and programmes carried out
under the Procurement Route Map. We will use the
same informal approach to support companies using
the new delivery model with the ICE providing a point
of contact for the companies and ICG members. ICG
members have limited capacity and in time we plan
to establish a panel of experienced people outside the
ICG that companies could call on for support.

Programme of activities and events

Senior industry leaders have agreed to lead groups to
further develop thinking on the five features. This work
will be socialised via a series of events. We will look for
opportunities to deploy ideas on live projects and share
the results. Five groups are in place.
 A new approach to delivering 29
high performing infrastructure

Governance
Led by Richard Threlfall, KPMG.
In changing our approach to delivering infrastructure It challenges us to redefine the delivery process around
programmes, we first have to develop systems of value and efficiency and support it with an open-
governance and procurement practices that are source production system that could be used by all
focused on maximising value to customers and infrastructure programmes.
stakeholders rather than on minimising initial capital
costs. This theme will explore new ways of assessing
The capable owner
investments in infrastructure that are aligned with
Led by Phil Wilbraham, Heathrow Ltd
Government’s desired outcomes and new ways
of measuring performance in project delivery and The new delivery model relies on a capable owner able
achievement of outcomes. to define the outputs and outcomes they require from
their investments and collaborate with their suppliers.
Building on the work that Heathrow has done with
Organisation
Manchester Business School on the role of the Owner,
Led by Dale Evans, Anglian Water Services
this theme will explore the capabilities required by
with Nirmal Kotecha, UK Power Networks
an effective owner and the means of acquiring them
The new delivery model creates alliances and other through recruitment, development and training. An
shared enterprises into which the Owner and their output from this theme will be a common approach
suppliers deploy their staff and through which they to developing owners’ staff supported by executive
share in the successful outcomes. Building on the ICG’s education and training programmes.
successful work on alliancing, this theme will explore
the issues that are critical in establishing and managing
Digital transformation
shared enterprises with the capabilities and behaviours
Led by Mark Enzer, Mott MacDonald
needed to deliver success. It will recommend ways
of creating appropriate coalitions of suppliers with Digital technologies are transforming the ways in
aligned interests and effective relationships between which infrastructure companies deliver services to their
business partners. customers. And there are signs that the construction
industry is moving beyond BIM and embracing digital
The new delivery model requires an effective technologies as a means of disrupting business models
organisation that enables all of the people who are and embracing more efficient delivery. This theme
deployed into the team to perform to the best of their will explore the potential of digital technologies to
abilities. This theme will draw on the experiences of transform the way we deliver infrastructure and
the people who have set up teams for some of the encourage collaboration between infrastructure,
UK’s largest projects and programmes and set out a construction and the Tech Sector.
framework that defines the elements of an effective
organisation, appropriate ways of providing them and
some of the pitfalls that can be encountered. Dissemination of good practices
The ICE will host the ICG website and use this and
Integration its other media to disseminate good practices that
Led by Mark Reynolds, Mace arise from the work outlined in this report. In the
The new delivery model requires an Integrator to first instance we will continue to use these channels
bring together all of the participants and their activities to share information with the infrastructure and
and focus them on achieving a successful outcome construction sectors.
for the investment. This raises important questions
about the role and responsibilities of the Integrator,
the capabilities they need and the processes and
systems required to achieve effective integration in
the digital age.
30 References

References
1. Hawkins, G. 1997. Improving M&E Site Productivity.
BSRIA Technical Note TN 14/97.

2. Material Logistics Plan Good Practice Guidance.

WRAP, December 2007.

3. Margins, cash and order book. KPMG Construction

Barometer, September 2014.

4. Pink, Daniel H. Drive. The Surprising Truth About

What Motivates Us. Riverhead Hardcover.

5. Ariely, D. et al 2005. Large Stakes and Big Mistakes.

Federal Reserve Bank of Boston Working Paper.
 Appendix A A new approach to delivering 31
Leadership and support high performing infrastructure

Appendix A
Leadership and support

Project 13 Task Force

Miles Ashley (Chair) Wessex Advisory Ltd and formerly Transport for London
Martin Buck Formerly of Crossrail
Peter Adams Highways England
Nick Baveystock Institution of Civil Engineers
Professor Andy Davies University College London
Dale Evans Anglian Water Services
Mark Hagger Environment Agency
Dr Richard Holti Open University Business School
Nirmal Kotecha UK Power Networks
Simon Murray Acumen7 Network
Alasdair Reisner Civil Engineering Contractors Association
Phil Wilbraham Heathrow Airport
Professor Graham Winch Manchester Business School

Stakeholder Review Group

The following companies were represented in the 
Stakeholder Review Group

Arcadis Mabey
Astins Mace
Atkins McNicolas
Bachy Soletanche Morgan Sindall
BAM Nuttall Mott MacDonald
Byrne Group N G Bailey
C A Blackwell Osborne
Carillion Otis
Cleshar Skanska
Costain Speedy Services
Expedition Engineering Tarmac
Keltbray Toppesfield
Kier Turner & Townsend
KM Decorating Waterloo
Lafarge Tarmac Wilson James
Laing O’Rourke WSP
32 Appendix B
Consultations

Appendix B
Consultations
The proposals in this report are based on consultations Most suppliers have processes and systems for
with infrastructure owners and the construction managing design, delivery of materials and
industry and on studies of three pairs of projects taken manufacture but when they arrive on site their
from current infrastructure programmes. In this section experience can be very different. It is rare for
we present the findings from the consultations and contractors to provide an effective system for
in the following section we present a summary of the coordinating engineering, logistics and production
studies. The full results of the studies will be published across all of their suppliers with the result that suppliers
over the coming months in a series of academic papers are often brought to site too early and put under
and articles. pressure to begin tasks they cannot complete.

The consultations began in June 2015 with three The success of the workshops led us to bring together
facilitated workshops with owners, Tier 1 consultants the suppliers, consultants and contractors with other
and contractors and Tier 2 suppliers. The idea behind representatives of the construction industry in a
the workshops was that for the new delivery model Stakeholder Review Group (Appendix A). We have
to be sustainable, it has to enable all parties involved held one formal meeting with the group to review the
in the delivery of infrastructure to be successful. The results of the studies and the emerging conclusions
participants were asked two questions: and three further workshops to discuss subjects
proposed by the review group. We have also held
When thinking about infrastructure projects that have private meetings with smaller groups of consultants
been successful for your company, what are the criteria and contractors to discuss the likely impacts of digital
you use to judge that success? technologies on their businesses.
For the same successful infrastructure projects, The picture that emerges from these consultations
what are the features of the project teams that is of a construction industry that is keen to engage
enabled that success? with new approaches that enable them to build their
businesses and their relationships with their customers.
Facilitators led the workshop, recorded key points
This enthusiasm is conditioned, particularly amongst
from the discussions and used simple textual analysis
the suppliers, with concerns about the willingness
to identify the top five success criteria and the top five
of infrastructure companies and their contractors to
features of successful teams. It was notable that all
implement the new approach and share the rewards
three workshops came up with the same criteria and
of  more efficient working down the supply chain.
features summarised in Figure 3. The only exception
was Effective management of production that was Most of the people involved in these consultations
introduced by the Tier 2 suppliers. were aware of the threats and opportunities
presented by emerging digital technologies and
possible new entrants that could provide infrastructure
companies with a more efficient delivery service.
It is recognised that consultants’ and contractors’
existing business models, based on turnover, will
have to change to enable them to benefit from new
approaches to delivering infrastructure and emerging
digital technologies.
 A new approach to delivering 33
high performing infrastructure

Figure 7.
Industry vision of success

Success criteria Features of successful teams

.. ..
.. ..
Relationships and reputations Shared values and common purpose

.. ..
Common purpose, culture and behaviours Effective organisation and processes

.. ..
Fair financial rewards Effective teamwork

.. ..
Health, safety and well-being Aligned commercial relationships
Achievement of owner’s objectives Effective management of production
34 Appendix C
Project studies

Appendix C
Project studies
Design of the studies
The studies were designed to explore across a group
of infrastructure projects the causal relationships
between the teams, their roles, how they worked
together and the outcomes they achieved (Fig. 4). By
understanding these relationships in the context of
specific innovations and improvements we tested the
outputs from the workshops and identified the factors
that are critical in creating successful teams.

Figure 8.
Schema for studying causal relationships

What + How = Outcome

Companies Team features Success criteria
Capabilities Relationships Innovations
Roles Processes Improvement
Products Systems Lower costs
 A new approach to delivering 35
high performing infrastructure

The studies investigated three pairs of projects Questionnaires – seventy-eight leaders from across
provided  by AW, the EA and LU. The projects were the project teams and supply chains completed the
completed recently and were chosen to represent three questionnaires online. The results were analysed
versions of integration between the owners and their to determine the causal relationships between the
suppliers (Fig. 5). features of successful teams and successful outcomes.
The questionnaires also identified specific innovations
UCL collected and analysed three sets of data about and improvements to be explored in the interviews.
the projects and the teams that delivered them:
Interviews – UCL interviewed forty-three leaders from
Projects and supply chains – the owners’ project across the project teams and supply chains to explore
managers collected information about the projects the factors that enabled and inhibited innovation and
and their supply chains using standard spreadsheets improvements in performance on the projects. The
and generic terminology. The data was analysed to interviews were recorded, transcribed and analysed
understand the evolution of the supply chains and of using textual analysis.
the relationships within them.

Figure 9.
The projects in the study

Owner Project Integrator

Environment Agency Broomhill Sands Integration of planning and design by EA’s own staff.
£30m coastal defence scheme at Camber Sands. Integration of procurement and construction by EA’s
Mersey Warrington framework contractors.
£6.5m investment in flood defences to protect
homes and wetland habitat..

London Underground Embankment Station LU’s STAKE Programme.

£14.5m upgrade of the existing station. LU’s SWIP Programme.
West Hampstead Station
£3.4m investment in extensions to platforms.

Anglian Water Services Cambridge WRC @One Alliance formed by Anglian Water in 2005 with
£20.7m expansion of an existing treatment plant. a group of six consultants and contractors.
Pulloxhill
£8m investment in a new water treatment works.
36 Appendix C
Project studies

Projects and supply chains

UCL analysed the data from the projects and their The AW projects represent a mature alliance that
supply chains using generic terms for the roles of has established relationships with key suppliers and
the participants, the stages in the development of can bring them into the team before the project has
the projects and the degree of involvement of each. been defined. The two LU projects were amongst
By presenting all of the data for each project on one the first to be implemented through the STAKE and
page (Figure 4), they enabled comparisons between SWIP programmes and represent an early stage in the
the evolutions of the supply chains for the three pairs evolution of their supply chains when they still rely on
of projects. consultants to make key technical decisions. The EA’s
objective was to integrate their own core functions that
The analysis highlights the need to design impact on the projects so as to improve coordination
the evolution of the supply chain to meet the needs with their framework contractors.
of the project rather than allowing the evolution to be
the consequence of established procurement practices.
This is particularly important in the early stages of
developing collaborative teams when owners might
assume that by involving their contractors at the start
of projects they are also engaging the suppliers.

Figure 10.
Evolution of the supply chain
Cambridge Water Recycling Centre Project

Project Explore Project Contract Value (£)

Description Pre-Project Construction
Role Options Development Established Relationships (in years)
1 @one Alliance Remote (Integrator)
More than 5
2 External Design (Advisor)
More than 5
3 Environmental survey (Contractor)
3-5 years
4 Filter bed refurb study (Contractor)
More than 5 Project Role
5 Environmental survey (Contractor) (% in contract value)
More than 5
6 M&E Installation (Contractor)
More than 5
7 Pre-cast Concrete (Contractor)
3-5 years
8 FRC (Contractor)
More than 5
9 Aeration Diffusers & blowers (Contractor)
First Time
10 Motor Control Panels (Contractor)
3-5 years 35%
11 Settlement Tank Scrapers (Contractor)
More than 5
12 Civil sub-contract (Contractor)
First Time
13 Plastic Tanks (Contractor)
More than 5
14 HV electrical works (Contractor)
More than 5 65%
15 Sludge treatment (Contractor)
More than 5
16 Polymer dosing equipment (Contractor)
More than 5
17 Steel framed building (Contractor)
More than 5
18 Groundwater dewatering (Contractor)
More than 5
19 Ground survey (Contractor)
3-5 years
20 Civil sub-contract (Contractor) Integrator
First Time
21 Civil sub-contract (Contractor)
More than 5 Supplier
22 Glass Coated Steel tanks (Contractor)
1-2 years
23 Fabricated Pipework (Contractor)
3-5 years
24 Office cleaning (Contractor)
3-5 years
25 Topographical Study (Contractor)
More than 5
26 M&E Installation (Contractor)
More than 5
27 Construction materials (Supplier)
3-5 years
28 Steel re-inforcement (Supplier)
More than 5
29 Aggregate (Supplier)
First Time
30 Pumps/mixers (Supplier)
More than 5
31 Valves (Supplier)
More than 5
32 Instrumentation - Flow meter (Supplier)
More than 5
33 Ready Mixed Concrete (Supplier)
More than 5
34 Pumps (Supplier)
More than 5
35 Progressive Cavity Pumps (Supplier)
More than 5
36 Instrumentation - level control (Supplier)
More than 5
37 Auto Backflushiing Filter (Supplier)
More than 5 INVOLVED
38 Pumps (Supplier)
First Time
39 Aerial Photography (Supplier)
First Time ENGAGED
40 Pipework (Supplier)
More than 5
41 Sampling equipment (Supplier)
More than 5 CONTRACTED
 A new approach to delivering 37
high performing infrastructure

Questionnaires Interviews

The questionnaires invited the respondents to evaluate The interviewees were drawn from across the
the performance of their project teams in terms of organisations that delivered the six projects in
the degree to which the five success criteria had been the study. By encouraging them to speak openly
achieved and the relevance of the five features of about the innovations and improvements that had
successful teams. The evaluation was done on a scale contributed to the success of these projects, UCL
of 1-7 and the respondents were given the opportunity obtained a rich set of data about the participants,
to suggest other success criteria and features of the ways in which they worked together and the
successful teams. UCL analysed the results using contributions they made to the successful outcomes.
standard statistical methods. The relative maturity of the organisations that delivered
the six projects enabled UCL to relate the data to
The analysis endorsed the success criteria and features different stages in the evolution of collaborative teams
of successful teams that had been derived from the and provided important insights into the development
workshops. Although this is a small sample from of these teams.
project teams working with owners that are already
committed to collaboration, the analysis suggests that A common theme running through the interviews
suppliers and their staff are motivated to improve is that people are motivated to work collaboratively
their performance and are looking for rewards with colleagues from other companies in pursuit of a
beyond immediate financial returns. The prospect of common objective. Whilst there were many negative
long- term relationships that lead to continuity of work comments in the interviews, they tended to be
seems to be more attractive than short-term gains on associated with frustration at some of the barriers to
individual projects. collaboration that still existed within the project teams.
There were few instances in which the interviewees
The analysis confirmed that it takes time to develop preferred the traditional delivery model. And whilst
collaborative teams and their working practices. The there were many comments about the fairness of
results from LU’s STAKE and SWIP programmes that payment terms or rewards for the companies involved,
are still in development showed that whilst the teams there was no mention of personal financial incentives.
had strong common purpose and were attaining their
objectives, they had not yet achieved full maturity in It should not surprise us that people like working
ensuring that their commercial agreements aligned all in collaborative teams. In his book Drive (Ref. 4)
parties rewards with the success of the projects. Daniel Pink reported on a series of academic studies
that showed that when people are working on
The most significant result from the analysis was that creative or cognitive tasks there are three factors
the two most important features were judged to be that increase their performance and satisfaction:
Effective organisation and Aligned interests. The autonomy, improving skills and doing something
analysis showed a likelihood of 53% that these two that has a meaningful purpose. Studies done at the
features would lead to a successful outcome. This Massachusetts Institute of Technology for the Federal
result suggests that when companies and their staff Reserve Bank of Boston (Ref. 5) have shown that for
join collaborative teams their principal needs are for tasks that require even the most basic cognitive input,
an organisation that enables them to do their jobs monetary rewards can sometimes have detrimental
and that aligns their efforts with achieving the owner’s effects on performance.
overall objectives.
38 Appendix C
Project studies

“It makes a difference

to us if we have made
a difference”.
Participant in the workshops with suppliers,
June 2015.

An important insight from the interviews is that

collaborative organisations and their practices evolve
over time with new relationships, behaviours and
methods of working emerging as the teams become
more integrated and more focused on improving their
performance. Through the studies we have identified
three stages in the evolution of these organisations:

Simple collaboration – at the outset the participants

set up the collaborative team, establish a common
identity and begin to work together using traditional
project management practices and systems. At this
stage most of the improvements in performance
are delivered by challenging existing standards and
practices and by sharing ideas that the participants
bring with them

Integrated functions and relationships – once

the team is established, the participants can begin
to integrate functions within the team, remove
duplications and functions that add no value and
streamline their relationships with the owner’s
organisation. At the same time they begin to
create long-term relationships with key suppliers
and  standardise products and processes across the
value chain.

High performing enterprise – when the team is fully

integrated it can move on to improving performance
through carefully targeted incremental innovations
and improvements commonly know as “marginal
gains”. By this stage innovation and improvement
are embedded in the way the organisation works.
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