From our Alliance Partner, JCP
Consultancy, Ltd.
Alliances for major water, rail and power infrastructure projects in the U.K. are amongst the most advanced in the implementation of collaborative partnering. There are also some good examples in Australia such as Sydney Water’s project alliance for the Northside Storage Tunnel; however, the alliances initiated by Welsh Water and facilitated by JCP Consultancy, Ltd., provide an important case for illustration here.
Welsh Water is a water and wastewater utility company regulated by the Welsh Government. In the five-year capital expenditure program 1990-1995, they followed a traditional route for procurement with competitive tendering based on detail designs, much the same way as public works are currently procured in many parts of the world. The relationship with suppliers was claims-orientated, the budget over ran by 100 million pounds and they missed the deadlines set by the regulator. This was typical of capital expenditure programs prior to 1990. In the next five-year capital expenditure program 1995-2000, Welsh Water was required to a make 15% efficiency savings by the regulator OFWAT (Office of Water Services) and the budget was reduced to 850 million pounds. They adopted project partnering with a focus on relationship building and target cost contracts with pain share/gain share arrangements and outperformed the budget by 10% (760 million pounds) and the regulatory requirements. OFWAT requested a further 16% improvement for the 2000-2005 capital expenditure budget and Welsh Water took partnering to the next step and formed four strategic alliances to achieve this. So far, they are 10% ahead of target.
The
Welsh Water Capital Alliance is a strategic partnering team – compromised of
Dwr Cymru Welsh Water, United Utilities (contracted to operate Welsh Water's
assets), six strategic design/construction partners, two cost managers, a
partnering facilitator and a supply chain advisor - to deliver around 60% of
Welsh Water's capital investment program during the period 2000-2005. The partners are grouped together to form
delivery teams, delivering particular functional areas of the program. All teams are committed to work together in
a collaborative manner to meet the principal aims of the Welsh Water Alliance.
The Principal Aims of the Alliance are:
·
To provide best value to Welsh Water with lowest overall
costs for its investments in new and refurbished assets
·
To provide each Partner with a program of work and an
appropriate level of profit
·
To do so in a manner which will allow the aims and benefits
of the Alliances to be demonstrated objectively
There are three cornerstones to
the Capital Alliance Approach:
The total elimination of “man-marking” has been achieved by the removal of any project management capability or design capability within Welsh Water. Client Capital Managers are an integral part of the Delivery Teams, comprising client, designers, constructors, sub-contractors, operators and independent cost consultants, who manage the complete conception-to-handover process. Open book target cost contracts with pain share/gain share arrangements and the EFQM Business Excellence model are used as a basis for performance measurement, benchmarking against other water utilities, incentives and team development. To ensure the effectiveness of the program, the Alliance Board has committed itself to a very high level of investment to partnering workshops and improving the ability of all alliance personnel in cooperative skills and behaviors. Each Delivery Team has incentive in a pain share/gain share arrangement of which 20% is allocated to alliance-wide performance in order to stimulate the sharing of best practices and organization amongst the Teams.
Additional Benefits of
Partnering at Welsh Water:
The approach throughout AMP (Asset Management Plan) 2 & 3 was based
on an integrated mix of consultancy, facilitation, coaching and education. For example, a combination of one-to-one
coaching and consulting was used supported by facilitation of key meetings and
developmental workshops ranging from the introductory “Partnering and
Alliancing Awareness” through “Behavioral Skills” to Continuous
Improvement/Review sessions designing alliance wide processes. This developmental path was integrated with
the Business Excellence Model development and deployment.
The first principle applied was to ensure that the Alliance members
never felt alone on this journey and had support available whenever they needed
to talk. The second principle followed
was to ensure that everyone in the Alliance developed the same understanding of
what a cooperative relationship should be.
With that understanding in place, a common vision, a common set of goals
and a common set of values and behaviors that supported the new culture and new
way of working were ensured. The
emphasis was to move from the adversarial to a truly cooperative culture based
on openness, honesty and trust; one where the focus moved to understanding each
other’s needs and committing to helping achieve them. It meant destroying the blame culture and replacing it with one
where people not only were not frightened to speak up, but demanded to do so in
a new supportive environment devoid of fear.
That process helped to develop the right relationship, which in turn
helped the Partners to focus on getting the job right. The next steps simply flowed along two
parallel paths, building and sustaining the relationships and developing the
people, processes and structure.
Welsh Water is number one in the OFWAT OPA (Overall Performance
Assessment) league. It has taken 60% out
of its cost base and is on target to achieve further savings that will be
shared with its Partners. It is on
target to achieve the whole program and quality has shown consistent
improvement as has the Health and Safety record.
For more information visit the Welsh Water Alliance web site at: http://www.welshwateralliance.co.uk