Family Housing Association (Wales) Ltd Collaboratively Working with Local SMEs Slide 2 Phil Dennis Director of Operations Slide 3 Family Housing Association (Wales) Ltd Partnering and Supply Chains Opportunity to legitimise Internal collaboration capital and revenue Incremental or wholesale change Leadership Pain and gain Moving forward Slide 4 Darrin Davies Head of Property Services Slide 5 Historically We knew what we were doing. Delivering construction projects competitively. Partnering with Local SMEs. Numerous procurement methods from Design & Build to Schedules of Rates. Long term relationships with Local SMEs. Slide 6 The Motivation to Collaborate Need to Capture the Best Limited number of excellent contractors. The shortfall in skilled and good quality trades operatives. The increased work resulting from the investment in achieving the WHQSs, the related stock transfer potential and the added pressure that would place on the Associations ability to secure the services of Excellent Contractors. Slide 7 Challenges and what FHA have done. Challenges Open Book Accounting. The cultural change required by all parties. Data analysis, and so on. What we Have done. The Re-organisation of our Property Services and Development teams. Developed our ICT systems to cater for the open book accounting and data requirements. Added to the roles of Officers within other Departments e.g. Finance, to assist with the Open Book Accounting processes. Slide 8 Some Pros and Cons CONS A huge and disproportionate amount of staff time involved in the change process. The financial cost of the works, consultancy, training and development etc. The financial costs as listed will be incurred to a greater or lesser degree into the future. PROS Secured the services of 10 good quality LOCAL SMEs. The development of a Steering Group. The improved knowledge we have gained on the actual costs of construction activities. The improvements gained with the assistance of both the Construct Wales and Evolution-IP teams. Slide 9 Time Line Pre July 2004 - FHA demonstrated a thorough approach to partnering its construction processes in both Maintenance and Development schemes. July 2004 - WAG Consultation paper on the distribution and delivery of Social Housing Grant. October 2004 - First Ministers Making the Connections: Delivering Better Services for Wales. January / February 2005 - Selection of Contractors for Hazel Court through and EU Notice. Contractors selected on quality NOT price. March 2005 - WAG issue Developing Partnerships. A new Approach to the Social Housing Grant Programme Distribution and Delivery. April 2005 - FHA met with its then contractors supply chain to explain the proposed changes to its construction services procurement. July 2005 - FHA issue its EU Notice. Sept Dec 2005 - Selection process for contractors based upon quality NOT price. April 2006 - Reorganisation of the Associations Property Services and Development Departments. June 2006 - Signing of the Framework Agreements. June 2006 - Commencement of the first year Contracts. July 2007 1 Page Action Plan of Improvements Slide 10 Change? The Need to Change? The WAG guidance to RSLs (draft July 2003): Change Culture to achieve Collaborative Working. Select on Value not Price. Establish an Integrated Team. Continuous Improvement through Performance Measurement. Improved Outcomes through Long Term Relationships and Innovation. Local Based Supply Chains. Sustainable Community benefits through training & employment. Slide 11 What do FHA want? Get Better at What we do Well. Achieve Continuous Improvement in respect of Cost, Quality, Time and Customer satisfaction. Remove inefficiency and and waste. Share knowledge and expertise. Allocate Long term, work smoothed contracts - conducive to direct employment. Ensure a Non Confrontational Approach. Protected margins. Provide Business certainty. Slide 12 What did The Association Expect? To be The Best Value for Money. Excellent Quality. Excellent Health & Safety. A Responsive Service. Very Happy Customers. Year upon Year Improvements Continuous Improvement. Slide 13 How the Association Has Had to Change. A massive and difficult learning curve which has come at a price in respect of staff resources and financial commitment. Review Internal Processes including Standing Orders Review Roles and Responsibilities Reorganisation. Review Staff Skills Staff Training and Development. Review its ICT Systems. Review its Accounting Processes. Review its KPIs How we measure our services. Slide 14 Why has it Been Difficult? Contractors Had little or no method of measuring the performance of their business. Had little or no cost control within their business. Had little or no process management within their business. Had little or no continuous improvement experience or capability. Had little or no quality control over works on site. Had a variety of social & private clients they continue to work for. Had committed to collaborative working to some degree. Some see it as work for the next few years. Had changed very little internally to satisfy the needs and requirements of achieving continuous improvement. Slide 15 Why has it Been Difficult? (2) Staff There is very little experience in the delivery of works on site. There was very little experience or understanding in the philosophies of Continuous Improvement. Staff are exceptionally busy on the existing operational activities and are struggling with the workload, new objectives and training required. There is constant changes in legislation, regulation, good practice in all areas which staff have to comply with. Given the difficulties in programming the new build works, it is difficult to programme the PPM works. There are competing calls made on all Departmental staff. Slide 16 What Skills do we need to Develop? The new skills we need to develop within the supply chain (either within the RSLs or the suppliers) are: Cost management e.g. cost modelling, cost control, cost improvements. Supplier development e.g. CLIP techniques. Programme production & management e.g. Accurate, lean and integrated programmes of works. Supplier audit. Value Engineering / Continuous Improvement. Effective challenging. Process management ICT Slide 17 What Skills do we need to Develop? Work Stream Leadership, What, Why and How: Move away from traditional hierarchy of Department Individuals fully responsible for the delivery of specific work packages. To assist in the Continuous Improvement in Service Delivery. Manage spend against budget Monthly audits of costs and performance Participation in Construct Wales LEAN review activities Slide 18 The Construct Wales Programme An invaluable programme. Has greatly assisted the Association and its contractors to get as far as they have. A great opportunity for both the Association and contractors to learn from the improvements made by others both within and outside the construction industry. A great opportunity for learning and delivery of continuous improvement. A great opportunity for contractors to share experiences, improvements and therefore collectively deliver improvement to the Association. The 1-2-1s must continue whoever they are delivered by. What weve achieved so far, whilst substantial, are only the tip of the iceberg. Slide 19 Added Value Opportunities What else has the initiative made available? Central Materials Procurement. Waste management Green Dragon / Arena Network. CITB Training & Development Strategy Supplier Development CLIP Programme. Slide 20 Stephen Sutton Commercial Director Sutton Brothers Builders Ltd Slide 21 Collaborative Working FHA A new Way? NO - In-Words but principles are long founded Sense of ownership Stability Continuity of work Accountability Main contractor still the project hub Slide 22 Collaborative Working Supply Chain Knowledge & Experience Iron out Risks Challenging status quo Involved in developing the design Improving our processes Construct Wales Time & Waste Management Slide 23 Collaborative Working Financial Stability Pricing Projects using The Open Book Process Agreed % of OH&P Cost Model Labour, Plant, Materials, Management & Supervision Improving our processes Construct Wales Estimates traditionally prepared this way Complete supply chain Actual Costs & confidence of recovering sustainable returns Slide 24 Collaborative Working Improved Working Relationships Experienced a marked improvement in FHA relationship Open and constructive relationship We feel valued by FHA We value their business We discuss projects and programmes of work very early on Slide 25 Collaborative Working Greater Responsibilities To the client to deliver the project on time, within budget and to the right quality To our employees to provide continuity of work For our sub-contractors to ensure that they carried out their works in accordance with specifications But under Collaborative Working, it is with our supply chain contractors that the biggest culture change is happening as they are now having to work on their own initiative albeit with the main contractor Slide 26 Collaborative Working Current Status Ann Street/Bigyn Lane - 671,000 a multi storey development offering 4 ground floor flats and 2 bungalows, 5 first floor flats and 1 second floor flat 5% below the tender value submitted in 2005 with inflation - 13% less!!!!!!!!! Arthur Street - 678,000 a development of 5 special needs bungalows, 2 of which are specifically adapted for the needs of the impending tenants due for completion in October Cwrt Waddl - 323,000 a development of 4 general needs bungalows, adjacent to the existing Cwrt Waddl Day Centre due for completion in November Slide 27 Collaborative Working Future Year 1 of 5 Overall very pleased with outcome For benefit of our efficiencies we need continuity of work At least 12 months FHA to involve as in budgeting process on projects WAG to approve a 3 year programme We changed and adapted to the New Way of Working We need the Top of the Tree to do the same Slide 28 Collaborative Working Future-Finally Presented to the FHAs Tenant Group last month The first time that I have ever been involved with the end users of the developments we construct End Users need to join our Steering Group to discuss and provide valuable observations for future projects Slide 29 Paul Gibson Steering Group Chair & Senior Partner of George Gibson Slide 30 Previous Working Relationships Tenders 3 or 5 year cycles Lowest Price Second/third year profit Slide 31 Previous Working Relationships Partnerships Specialist Labour shortage Stability Tender costs with uplift Slide 32 Previous Working Relationships Collaborative Working Investment /Plan for the future Risk Management Proactive approach Cost Analysis / knowledge Continuous Improvement Slide 33 Collaborative Working Two Positives New Methods of working Understanding Costs One Negative Time The Steering Group Slide 34 Workstreams Slide 35 Collaborative Working Workstreams Cost Control & Monitoring Continuous Improvement New Work / Opportunities Learning & Sharing Slide 36 Nigel Hawkins Quantity Surveyor Slide 37 THE FIRST EIGHTEEN MONTHS - THE GOOD, THE BAD AND THE UGLY Slide 38 The Good Greatly improved communication Better understanding of each others businesses and working methods Improved standards Performance statistics-cost tracker -weekly stats -monthly stats Suppliers improvement targets Slide 39 The Good Training programme Realisation of true costs No blame culture Appreciation of team effort Improved workload for supply chain Predictability of costs Improved programming of works One-to-one training Slide 40 The Bad Cost models made to fit budgets Lack of training on cost tracker Cost tracker not the finished article eighteen versions in eighteen months Cash flow affected whist trying to resolve issues Double entry of data Cost models initially based on unrealistic data Slide 41 The Bad Too much time spent on Collaborative Working Greatly increased management time Large numbers of KPIs Rise in number of call backs no incentive for right first time Change brings about inefficiencies Ineffective work smoothing Slide 42 The Ugly Too many meetings Too much training FHA had to learn too! we didnt know all the answers! Natural resistance to change Ive been doing it this way for the last 30 years.. Lack of understanding of what was required on both sides Slide 43 The Ugly Payment delays queries, audits, mistakes 10% of my workload takes up 30% of my management time.