Sellafield: a model for leading change in a complex world
Sellafield Ltd is leading a 100-year project to create a clean and safe environment for future generations across the UK nuclear industry’s vast research and development site in Cumbria. Richard Lennard, Head of Client, Programme and Project Partners (PPP) at Sellafield, explains how its game-changing procurement model will transform outcomes across its portfolio of construction projects, while also revolutionising the industry.
Since the world’s first nuclear power station opened in 1956 at Calder Hall on the Sellafield site in Cumbria, the UK has been a global leader in the research and development of nuclear technology.
The main focus for Sellafield is the complex work being carried out by the Nuclear Decommissioning Authority (NDA) to contain and make safe the legacy of its past activity. About two thirds of the NDA’s annual £3.65bn budget is committed to delivering one of the most complex portfolios of construction projects in the world.
“Sellafield is at the heart of the nuclear industry in the UK,” explains Richard Lennard, pointing out that the site has been central to developing the UK’s nuclear skill base over the last 65 years.
“The Sellafield nuclear site is the highest hazard nuclear facility in Europe and with the largest inventory of untreated nuclear waste in the world. Safely decommissioning the site is of strategic and national importance to the UK.”
Driving value from a new delivery model
Sellafield Ltd, a subsidiary of the NDA, is responsible for operating and decommissioning work at the site. Its capital investment includes the careful dismantling and containment of numerous old buildings and equipment.
But there is also a major focus on designing, building and operating new facilities that enable the safe dismantling, processing and storage of radioactive waste arising from this task – essentially very large, complex and expensive stores in which to carry out the delicate work.
“The traditional approach to delivering capital projects is very transactional. We were not getting the results we wanted on cost and schedule, and we suffered from lacking an ability to learn from our mistakes and from our successes," says Lennard.
The PPP procurement model is designed to tackle this problem head on through ambitious long-term partnerships between Sellafield Ltd and four separate partners to deliver around 25 major projects over the next 20 years. A radical approach, PPP features no contractual break-clauses, zero pain share, and a guaranteed profit arrangement as the team tackles a complex programme of work across the Sellafield portfolio of assets.
Understanding the PPP client
With an annual budget of £2.2bn and a programme stretching out over the next century, Sellafield’s activities have been under the public spending spotlight.
“This is public money and the UK government expects us to deliver projects faster and provide better value for money for the taxpayer.”
Having realised that it needed a new approach to procurement, Sellafield worked with Turner & Townsend to design and implement the ‘intelligent client’ operating model. This started with scenario planning to really understand what Sellafield required from their supply chain and set out a structure capable of aligning, incentivising and rewarding teams behind this goal.
“The concept of this client model was deliberately designed to change the way governance and assurance is done. We spent 12 months visiting other clients to see how they operate. Turner & Townsend then helped us to shape the goal and create the operating model.”
A new approach to major project procurement
The new PPP model turns traditional major programme procurement on its head. The approach is one of carrots not sticks, putting early contractor engagement at the heart of the process and ensuring that true collaboration is central to delivery. By focussing on the behaviours that drive the right outcomes, it underpins faster, more effective project delivery, creates greater stability in design and construction supply chains, and promotes greater workforce flexibility, and local economic benefit.
The new approach kicked off in May 2019, with contracts awarded to Kellogg Brown and Root Ltd (KBR), Jacobs (previously Wood), Morgan Sindall Infrastructure and Doosan Babcock Ltd. With a total forecast spend of £7bn, the PPP accounts for an average of 15 percent of Sellafield’s annual site funding limit.
The model is beginning to bear fruit with the partnership achieving firsts for the industry, setting the baseline against which delivery performance will be measured and incentivised. Five major projects have transitioned to PPP with more than 1,300 people mobilised, expected to increase to 1,900 this year.
Three delivery hubs have been established in Leatherhead, Warrington and West Cumbria, 98 long-term trade packs have been awarded to supply chain and 50 graduates and apprentices have been recruited so far.
Changing behaviour is the game changer
The PPP behavioural model is central to driving change and ensuring that collaborative behaviour is built into the procurement – a factor that accounted for 30 percent of the overall contract assessment scoring based around 25 behavioural characteristics aligned to one of five themes of people, leadership, creating an environment for success, outcome focus and collaboration.
“We recognised that a robust evaluation of behavioural and cultural fit should be considered before embarking on a long-term strategic partnership. The longevity and high-risk nature of the works meant that it was critical that the capability procured embodied the behaviours essential to the success of the partnership model.”
Lennard explains that the success of PPP comes down to realising the benefits as defined in the original PPP business case, which include predictability of project costs, high hazard reduction and an enhanced recognition of Sellafield’s expertise and reputation.
The aim is also to find new business opportunities at Sellafield, increase employment opportunities across the local supply chain, reduce carbon through sustainable practices and increase the value for money provided to the UK taxpayers.
“Over the lifetime of the project we're looking at double digit savings,” he says, pointing out that the model is a true game changer for Sellafield, but also potentially for the whole major projects sector - the key to providing greater value for money for the taxpayer, for Sellafield’s supply chain and for the local community.
“The PPP is now operating as a strategic enabler to the Sellafield Ltd mission,” Lennard adds. “Landing the procurement and contract successfully means that the business can realise its ambition sooner - accelerating the high-hazard mission and realising in excess of 10 percent, or £700m worth of savings to the UK taxpayer.”
Mobilising a cultural shift
Across the supply chain all profits are now linked to the outcomes achieved for the client and by removing the threat of pain, teams can focus on finding and achieving the right outcomes. Sellafield turned to us for support throughout the mobilisation of these new partnerships and to help forge a single effective organisation capable of meeting the challenge over decades, through creation of a mobilisation framework which set out what this emerging supply chain had to look like.
Both technical and behavioural alignment between the client and the partners was considered, with the new model immediately put to the test as three live projects were transferred across to the new team and new management regime.
Working with Sellafield throughout this process, we developed the operating model to ensure programmes remained on track and help the client team meet its targets.
Sellafield Ltd has also established and embedded a behavioural ‘manifesto’ to further accelerate this cultural shift.
Building capacity, building capability
The pace and complexity of the programme means that the capabilities and capacities across the supply chain are a top risk. Working with these trusted, long-term suppliers, provides huge opportunities to build the required skills across nearby communities, invest in apprenticeships and grow the industry from its grassroots.
By having 20 years of sustainable employment in the design and construction supply chain, Sellafield can be confident that its partners will own that risk and invest to enhance that workforce.
The additional wider benefit, of course, is the ability of this long-term arrangement to help realise the economic ambitions of the local community, unlocking the local potential and so creating a new generation of nuclear expertise across the region.
"As part of PPP, the supply chain will deliver billions of pounds in spend, we want this to have a significantly positive impact on the economic, social and environmental wellbeing of our communities.”
A model of excellence
Sellafield has forged strong relationships with UK government, the Infrastructure Projects Authority and large infrastructure clients such as HS2, Anglian Water and Network Rail, to share learning throughout the development of the PPP model.
As a result, the PPP model has been held up by the Institution of Civil Engineers and Infrastructure Client Group’s Project 13 network as a successful ‘early adopter’ of collaborative and integrated delivery model principles.
Sellafield is considered an industry thought leader when it comes to innovative procurements of this kind and was asked to share its experience both nationally, with HS2 and Crossrail, and internationally with the International Thermonuclear Experimental Reactor project.
“From a personal perspective, developing a relationship with Project 13 has been one of the richest experiences of my career,” says Lennard. “I am personally invested in making Sellafield’s role as an ‘early adopter’ valuable to others.”