Stuart Maister, Joint MD, Mutual Value
Martin Perks is highly passionate about Highways England’s £9bn Regional Delivery Partnership (RDP) framework. His energy comes from excitement at the potential to transform highways infrastructure construction – but also his frustration about where it’s taking time to work and his views on why that’s the case.
When Kevin Vaughan-Smith and I interviewed him about his experience so far in RDP we were struck by his openness about the challenges being faced, and also the support being offered to help increase integration and adoption of these new ways of working. As Commercial Programme Director, Martin is one of the chief architects of this highly ambitious attempt to put into practice the principles of Project 13 (P13).
RDP is a highways industry initiative that seeks to build a new project delivery model based on longer term, more sustainable commercial relationships which realise value for customers (for example, road users), investors and delivery partners alike.
In this interview Martin:
- Tells us why and how RDP was developed;
- Talks frankly about the support needed to help the industry overcome the challenges to work in this Target Value Delivery framework that relies on integrated teamwork and collaboration, and what is needed for rapid adoption to realise this opportunity;
- Explains the prize for everyone involved for getting it right;
- Shares his vision for how this approach can support the government’s Speed and Accelerate agendas.
RDP – Project 13 put in practice
Project 13 is the leading initiative in infrastructure construction, designed to help contractors and clients move away from a transactional process. Through collaborative behaviours the aim is to be more integrated as a team and develop enterprise partnerships. The promise is for certainty and productivity in delivery, and long-term relationships that enable innovation, early project development discussions and shared value creation.
Alongside this is NEC4, a way of contracting that seeks to capture many of the same principles. RDP has used NEC4 to develop practical focused agreements.
The challenge has long been to turn these principles into actual operational commercial agreements which ‘nudge’ transition in real-world behaviours. Martin Perks says this is exactly what RDP does.
“RDP in effect translates P13 principles into a framework that supports packages of scheme contracts. Critically, these allow us to move towards work allocation based on performance… It also translates the Delivery Partner’s role into that of an Integrator rather than simply a contractor to build somebody else’s solution. It aligns objectives, risks and rewards like never before.
“RDP brings the supplier in earlier and involves taking responsibility for the overall solution of enhancing an underperforming asset as well as building it.”
In other words, be accountable for delivering targeted value-based outcomes (e.g. traffic capacity for the future), not simply a technical delivery of a detailed specification to time and cost.
And the ambition for RDP is high, with huge rewards on offer for the taxpayer, the road user, the integration partner and – if they pass on the benefits – their supply partners. Martin says for end users and taxpayers the potential is somewhere between 15-20% in cost savings.
“But it offers in the process an enhanced margin of 100-150%…if not more in some instances. But we know the market has got to invest in a transition process to get into this space.”
And that’s where he says many of the challenges lie.
The challenges of change
Under the RDP framework there are 13 Delivery Integration Partners who will develop, design and construct highway projects across England through to 2024 and beyond. Many have already begun working on specific projects, and with Highways England colleagues form Integrated Project Teams expected to work in collaborative and aligned ways.
Martin is frank about the success of DIPs in adapting to this new mindset.
“The majority have started well, with a handful doing a really good job. But there are some who appear to still be adapting to the change and have expected their workforce to just get on with another highways project and may not be actively training people in how to integrate.”
His message is clear to those leading construction companies who say they want to see change.
“The main players in the market who contributed to Project 13 said: yes, that sounds great! We’ll follow those principles. Even with the more progressive partners I’d like to see leaders pushing the boundaries so people on the front line are empowered to make the most of opportunities those principles create.
“What we want to avoid happening is: friction, arguments, transactional behaviour, adversarial wasteful processes and relationships. Change won’t happen by itself; it needs leaders to support people into this brave new way of working. Leaders are pivotal in allowing change to happen, encouraging and empowering people to grasp this opportunity. This is the point at which real visible, felt leadership in sustainable businesses comes to the fore. I am keen that all leaders recognise their role in continuing to support as we continue to work together.”
The biggest challenge: moving from contractor to Integrator
He’s clear about what he sees as the main challenge: DIP leaders creating organisational momentum to move from being a design and build contractor to being an Integrator, which requires new thinking, skills and corporate approaches to risk.
The question he asks is: “Can they create the change focused environment they called for in the market feedback?”
Some have made real efforts to make this transition. Martin is encouraging this to happen and calls on business leaders to recognise this opportunity and step up transition activity.
“Some organisations have been really good at setting up and holding induction processes – people need opportunity to understand, absorb, learn.”
Martin says Highways England spent three years developing the RDP approach, listening to industry’s issues about the need for early involvement, a move away from price-focused procurement and highly bureaucratic assurance processes. He says the organisation has invested considerable resources in gearing up its own people.
“The corporate response has been overwhelmingly positive that this signals a change and a significant adoption of a different way of doing business…it attempts to unblock things that have dogged us for years, creates empowerment for suppliers, it does a number of things heralded as positive.
“As you then engage closer to the front line of a project it’s a completely different way of doing business.”
The first big challenge is a change in mindset about what you’re there to do. In this environment, it’s no longer simply about performing contracted tasks well. It’s about being responsible for the success of an integrated project team. The framework has the ambition to exceed investor expectations – both Government and company investors.
“Anyone taking on a role of an Integrator in what will eventually become an enterprise… you’ve also got to wake up and respond to proper outcome-based performance measurement. It’s not about: ticking all boxes. We’ve got to move away from that and align everyone to win-win.”
Central to this shift is the need for Integrators to view risk differently.
“Some corporate governance processes are set up for… a more traditional transactional type of risk transfer. RDP steps into a different space to that risk transfer…
“Partners are learning how to articulate development risk, not just construction risk. And that can prove to be trickier than expected.”
Changing position in the value chain requires a major shift: to a much wider view of your role as a Delivery Integration Partner.
“We’ve got to get away from this idea that the job is simply build the building or the road. We’ve got to understand the role is to integrate. To create the environment for everyone in the integrated team to perform – to outperform – as that’s where the effort turns into improved margins and allocation of more work.
“You can’t take a really great construction manager on Thursday and take them into a new project on Monday and say: ‘by the way, you are now an Integrator’. It’s imperative we invest in training to enable key people to understand the difference and be equipped to grasp the opportunity.”
There are some shining examples of Integrated Project Teams (IPTs) working. In a couple of the contracts under RDP where the IPT has brought forward effectiveness changes in the design these have been very acceptable and welcomed by the Sponsor. Adoption of the changes has yielded potential gains through efficiency which – if maintained to the end of the scheme – will enhance the margins of everyone involved by 100-150%. Therefore, Highways England says it continues to have confidence that working under integration agreements will lead to improved supplier sustainability.
The supply chain as partners
Martin says the same principle applies to the whole supplier community. Integration means a move away from transactional purchasing and towards collaborative teamwork supported by behavioural-based procurement. It requires time invested in rethinking how you engage.
The concept is that if integrators are brought in much earlier in the development process their partners and suppliers should be there too. The aim is to bring people to the table as early as possible, contributing to thinking and design based on their own specific areas of expertise. What’s more, RDP provides a clear pipeline that enables long term planning and relationships. This creates the opportunity to reduce inefficiency, improve innovation and align everyone right from the start.
But that isn’t yet happening across the board. It’s a fundamental change that is taking time to develop. Taking a leap of faith is one thing, but RDP creates the environment to support this investment and enhance returns as a reward for taking the risk.
“What we’re finding is some delivery partners haven’t yet geared up to create the environment within their own organisation and supply chain to do that. That is something that is being established rather than was ready to go…
“Some Tier 1s seem to feel safer that they establish what the picture looks like and then they engage the supply chain after they’ve agreed the deal. “
Hold the front page: let’s not focus on price
Here’s where this conversation really took a twist that many contractors will find surprising: a major government buyer insisting that procurement must move away from being simply about price. Yet Martin insists this is fundamental to the RDP concept and one for DIPs to take on board – the focus is on behaviours and achieving end user value.
“The procurement of tiers 2 and 3s has to move away from lowest price – we’ve been constantly pilloried as a client to move away from lowest price. This has to apply to all tiers of the supplier community.
“Look at the performance of the integrated team in the A14 where delivery partners changed and procured on behaviours and performance as value – it transformed the overall project’s performance and earned the team a host of industry awards.”
“And so while, as a client, we’re moving away from that…it naturally takes time to translate into the next tier and the tier below…once that’s embraced and taken on by all we’ll see the real benefit of RDP.”
This resonated strongly with us. We know from our own experience and conversations that the commercial relationships between Tiers 1 and below suffer many of the same issues as those between major clients and contractors.
RDP as a beacon for the industry
These challenges matter, not just in terms of RDP. This programme is one of the beacons in the infrastructure sector aiming to show how new ways of working collaboratively can make a real difference in value creation for everyone involved.
What’s more, Martin sees this at the centre of how public-sector projects can achieve the government’s key agenda: speed and efficiency.
“One of our company values is integrity, meaning we value people and companies doing what they promise. If you don’t do what you say you’re going to do you’ve completely compromised the whole thing.
“The level of inter-reliance in complex major enhancement projects relies on 100% integrity to take out waste, and we’re poised to work together with Integrators to hold people to account. What that means is, if you’re working with us, or want to, we want to see commitment to what you agree to deliver, with open and honest conversations where you come up against any challenges. If you are working with us, or want to, we absolutely expect you to do what you say you’re going to do.”
The key to this in his view is that major projects must have an Integrated Project Team, containing all parties. If accountability is as a team, which includes the client project managers, and linked to outcomes, not simply contractual delivery, then there will be higher levels of trust, collaboration and aligned behaviours.
This is a new way of thinking in an industry which has always behaved transactionally, and he admits the challenges are on the client side too, because the change is all about the people involved.
“We have exactly the same challenges as everybody else in the sector. We’re making huge efforts to transform our activity. We’re driving budget-led design, digital by default, innovation reapplied, moving ourselves towards P3M3 programme level 4 (a management maturity model) to make sure we don’t inadvertently constrain delivery partners.”
His message to the sector: Trust us!
“We’re directly, honestly trying to improve the entire relationship!”
“We work in a people industry, and unless we change behaviours of our people, the outcome’s going to be the same. Einstein said it best – the definition of insanity is continuing to do the same things but expecting a different outcome.”
You can develop the greatest processes, but until people learn new behaviours, connected by a shared vision, supported by their organisations, these aims remain difficult to achieve.
RDP is already having some successes and Martin, with the Highways England’s project and commercial teams, are determined that the framework will demonstrate that trust, collaboration and alignment through integration are fundamental to successful delivery of value for everyone.
Stuart Maister is Joint MD of Mutual Value, a consultancy which consults, trains and coaches organisations who want to be more ambitious about what they can achieve with their customers, suppliers and partners based on trusted relationships, higher level collaboration and aligned outcomes.