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Jason Jones
making the difference
What needs to happen to unlock further efficiencies in AMP6? (edited for upload)
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Contents
Introduction
C6 – Efficiency Tool
DNA Study & Efficiency Levers
Efficiency Programme Case
Studies
Summary
3
Introduction: Our water sector client base
Sole AMP 5 commercial consultant
AMP5 commercial, technical and management services consultant
AMP 4 Cost Consultancy Lot extended in to AMP5
Secondment of staff to support Thames Tideway
Brighton & Hove WwTW, Tunnels &
Sludge Centre AMP 5 Commercial Consultant AMP 5 CDM Framework CapE AMP5 Efficiency programme
UU Contract Assurance model Short Cycle Cost Audit & Verification
for short cycle Infrastructure Framework
AMP5 Cost and PM Framework Consultant
Framework Cost consultant for Q&SIIIb (2010 to 2015)
Frontier Capital Programme Efficiency Commission
Other Environment Agency National Cost
Management Framework Affinity Water AMP5 National
Environment Programme Framework NIW – Clay Lane WTW
AMP5 Design and construct alliances audit
AMP5 Major projects support
4
C6: A structured approach to assessing efficiency
■ Based on research from over £1 trillion of capital programmes across the globe.
■ Informed by OGC (PRINCE2 and Managing Successful Programmes), I(UK) and
by the APM Body of Knowledge. Also consistent with PAS 55:2008.
■ 6 themes and 35 success factors to assess maturity, identify improvement
opportunities and drive improvement delivery.
■ Supported by efficiency levers - proven ways to improve performance.
■ Used successfully on over 25 efficiency programmes,>£600m efficiency to date.
C1 Clarity
C2 Composition
C3 Capability
C4 Collaboration
C5 Control
C6 Conversion
Defining and communicating efficient asset solutions
Setting up to deliver efficiently
Mobilising an efficient team
Engaging an efficient supply-chain
Safeguarding efficient delivery
Efficient transition from construction to operation
5
Efficiency Theme overall
39% Theme Sub Element
Scores 1 2 3 4 5 6 7
C1 - Clarity - Defining & Communicating Efficient & Effective Solutions
39% Business Case
43%
Benefits Management
41%
Requirements Management
40%
Value Engineering
24%
Strategic Risk
45%
Design Management
37%
Stakeholder Management
38%
C2 - Composition - Setting up to Deliver Efficiently & Effectively 42%
MS & IM
36%
Commercial Strategy
35%
Funding & Due Dil’gence
39%
PC & OM
44%
Governance & Assurance
50%
C3 - Capability - Mobilising an Efficient & Effective Team 39%
Organisational Design
36%
Organisational Development
42%
Culture
41%
C4 - Collaboration - Engaging an Efficient & Effective Supply-chain 34%
Procurement Management
33%
Supply-chain Management
35%
Contract Strategy
32%
Dispute Management
44%
Cost Verification
29%
C5 - Control - Safeguarding Efficient & Effective Delivery 42%
Cost Control
52%
Cost Estimating
35%
Contract Admin
44%
Schedule Management
47%
EVM & Perform
Management
42%
Qual Assure & Control
35%
Doc & Data Management
29%
Interface Management
35%
Risk & Opport Management
35%
Change Control
48%
Logistics
31%
Health, Safety &
Environment
67%
C6 - Conversion - Managing the transition from construction to operation 39%
Commissioning
41%
Operations & Readiness
Test
37%
Close out
42%
C6 : Example water company assessment (indicative only)
6
C6: Comparative Performance Example
Efficiency Theme Org A Org B Org C Org D Org E Org F Org G Org H Org I
(Lower Quartile)
Org J (Frontier)
Subject
C1 - Clarity - Defining & Communicating Efficient & Effective Solutions
82% 63% 38% 43% 62% 28% 53% 28% 40% 67% 39%
C2 - Composition - Setting up to Deliver Efficiently & Effectively
67% 53% 40% 60% 87% 43% 57% 33% 52% 67% 42%
C3 - Capability - Mobilising an Efficient & Effective Team
50% 33% 33% 33% 50% 33% 53% 33% 44% 67% 39%
C4 - Collaboration - Engaging an Efficient & Effective Supply-chain
60% 33% 33% 43% 77% 33% 50% 30% 42% 73% 34%
C5 - Control - Safeguarding Efficient & Effective Delivery
50% 45% 35% 44% 63% 30% 56% 16% 46% 56% 42%
C6 - Conversion - Managing the transition from construction to operation
63% 57% 30% 40% 53% 35% 43% 30% 48% 53% 39%
TOTAL SCORE 64% 47% 36% 45% 68% 34% 54% 29% 45% 66% 39%
Org I is a lower quartile capital efficiency water company and Org J is a frontier company.
7
Decoding the DNA: Study of UK infrastructure capability
■ Used C6 framework and a web based questionnaire targeted at major
infrastructure capital programmes –over 140 responses. Moderated by our
view of capability. Draft results provided in advance of formal publication.
■ Includes coverage of 7 of the 8 largest water sector capital programmes
Highest scored success factors (water sector)
1. Health, safety and environment 2. Business case 3. Planning Consent & Applications
Management 4. Contract Administration 5. Procurement Management
Lowest scored success factors (water sector)
1. Logistics 2. Lessons Learned 3. Schedule Management 4. EVM & Performance Management
Reporting 5. Organisational Development
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
C1: Clarity C2: Composition C3: Capability C4: Collaboration C5: Control C6: Conversion
Air
Rail
Road
Power
Water
Average
8
• Business risk based scoped • Robust “should costs” data • Adopting Intelligent/ Lean client models • Whole life costing • Investment planning linked to corporate
KPIs • Best practice asset management (PA55)
0.0 0.5 1.0 1.5 2.0 2.5 3.0 3.5 4.0
C1: Clarity
Air
Rail
Road
Power
Water
Average
C1 Clarity: Defining and communicating efficient asset solutions
C1 Clarity
• Power sector highest score • Water sector above “average”
Example Efficiency levers
9
Case Study: Driving efficient design to ‘should-cost’ targets at Yorkshire Water
■ Asset based, business risk prioritisation.
■ Capturing cost data and using UCDs to know the “should cost”.
■ Early contractor responsibility, not just involvement.
■ Procure the business risk - incentivised innovation.
■ AMP5 Procurement – tendered efficiency factors.
■ Integrated VM/VE/RM.
10
Efficiency Levers
• Product standardisation
• Lean/ Six Sigma reviews of high
expenditure processes/ sub-assets
• Materials waste reviews - Lean Six Sigma
• Quantity of rework reviews - Lean Six
Sigma
0.0 0.5 1.0 1.5 2.0 2.5 3.0 3.5 4.0 4.5
C2: Composition
Air
Rail
Road
Power
Water
Average
C2 Composition: Setting up to deliver efficiently
C2 Composition Example efficiency levers
• Highest overall scores • Air sector highest score • Water sector score around the ccaverage
11
“We are recognised as a model of excellence in delivering business benefits
through a lean, strategic and programmatic approach.
We work as an intelligent client.”
■ An “Intelligent Client‟ has a clear
understanding of how to turn an
organisation‟s strategic needs into reality
in a way that achieves sustainable long-
term benefit
■ For Capital Programmes it means clearly
understanding Heathrow‟s long term
goals and so challenging and shaping the
Capital Investment Plan more effectively
Case Study: Deploying an intelligent client operating model at Heathrow Airport
•Intelligent Contract Compliance
•Intelligent Conscience
•Intelligent Information
•Intelligent Customer
Programme Delivery Manager
Programme Control Manager
Contracting Officer
Commercial Manager
12
C5 Control: Safeguarding efficient delivery
C5 Control Example efficiency levers
0.0 0.5 1.0 1.5 2.0 2.5 3.0 3.5 4.0 4.5
Cost
Contr
ol
Cost
Estim
ating
Contr
act …
Schedule
…
EVM
and …
Quality
…
Docum
ent …
Data
Managem
ent
Inte
rface …
Ris
k a
nd …
Change C
ontr
ol
Logis
tics
Health, Safe
ty …
Air
Rail
Road
Power
Water
Average
• Programme process & governance streamlining
(remove non-value adding)
• Improved Programme & Project Risk &
Opportunity Management
• Integrated cost estimating data structures and
workflow for more informed ooprocurement
decisions and target setting
• Improved cost and schedule integration to
enable effective EVM
• Lowest overall scores • Air sector highest score • Lowest water sector score
13
Case Studies: Efficiency Programmes
Frontier Programme
■ £2.1 billion Q&S IIIb (2010 –
2015 programme).
■ Quantitative benchmarking of unit
costs to identify improvement
areas.
■ Focus on upskilling and cultural
change legacy.
■ Efficiency levers included:
■ “Appropriate” scoping
■ Collaborative improvements
in supply chain productivity.
CEP
■ £1.75 billion AMP5 programme.
■ Health-check and C6 scope review of existing CEP identified
additional £40m of efficiencies.
■ Clear definition of accountabilities
and responsibilities with efficiency
tracking and governance.
■ Efficiency levers include:
■ Introduction of integrated
risk and value process
■ Revised procurement
strategy within established
frameworks.
£100m cashable saving delivered Forecast efficiency > £250m
14
Summary: Key AMP6 efficiency levers
The Fundamentals
■ Robust “should cost” data.
■ Business risk based problem
definition.
■ Integrated risk and value
approach.
■ Early contractor engagement /
responsibility with incentivisation
linked to “should cost” plus out
performance targets.
Sector Leading
■ Whole life cost focussed
organisation. (Intelligent client)
■ PMO acting as efficiency hub with
strong PCon approach.
■ Supply chain integrator (deserve
an excellent supply chain).
■ Out performance culture throughout
organisation and supply chain.
■ Totex and outcome based
contracting? (AMP7 < 2,600 days).
Controlled Service Delivery – Improved Performance – Satisfied Customers
5 to 15% 20 to 35%
