Unlocking productivity and performance: five steps to setting programmes up for success
Traditional approaches to setting up and delivering major infrastructure programmes are often wasteful and inefficient. A new generation of major UK projects and programmes provide the momentum to deliver change.
Many global sectors have seen declining productivity over the past 20 years. It’s an issue that has long frustrated policymakers and industry leaders alike, particularly in developed economies. The productivity shortcomings of construction are well documented; the scale of the challenge and a US$1.6tn cost opportunity to deliver change are set out in McKinsey’s ‘Reinventing Construction’ report.
Infrastructure owners need to drive performance so that they can deliver best value for investors and customers.
Our research confirms that most major infrastructure programmes are not delivered effectively. Costs are too often at least 30 percent higher than they need to be. The causes of this underperformance are complex but if we are to enable change we need to ask: what are the traits that typically characterise these programmes?
All too often, projects fail to develop effective and adaptable operating models. People strategies are overlooked and programmes become too detached from an organisation’s ‘core’ business. Decision-making is ill-informed because of a lack of data and analysis, and supply chain engagement is only seen as an activity at a point in time and based on a single, isolated transaction.
There’s a lot at stake. Infrastructure owners need to drive performance so that they can deliver best value for investors and customers – they owe it to the people who use infrastructure every day and pay to do so. Let’s also remember that major infrastructure programmes are the foundations on which the industry and its supply chain invest and are shaped. They are also a key reason that people are attracted to join the industry – it is critical that we get things right to avert a skills crisis and at a time when economic growth is in the national interest like never before. We have no choice but to get the delivery of these programmes consistently right.
A change in mindset
The key to tackling these systemic industry issues is getting projects and programmes set up to unlock performance and subsequent productivity, this requires a complete shift in the industry’s mindset.
From our experience, there are five steps that can dramatically change programme performance.
Step one is the creation of a high performance environment and culture.
For all clients, this must start with the development of a fit-for-purpose operating model, which is often an extension of an existing set of business objectives. It should provide clear governance and decision-making, embrace lean principles and completely align with procurement activity and future execution strategies.
It’s not just an internal framework. Clients must be clear and consistent with the external market to ensure the supply chain are aware of the value they must bring to a major project or programme and how they need to invest and adapt their own business models if high performance is to be achieved.
The second step for all clients is to become technology enabled and data obsessed.
Investment in technology will yield benefits across the whole asset lifecycle. Technology can be harnessed to aggregate data, enable informed decision-making, measure performance against benchmarks and establish best value asset solutions. Data harvesting is key. But without the ability to translate this into information, it’s impossible to set a baseline on which to deliver productivity targets, or work collaboratively with a supply chain to improve performance.
That leads on to the third step; becoming informed about the supply chain and aligning the innovators.
High performing supply chains are the central part of driving project or programme performance. Clients need to lead by setting progressive procurement and management models that enable high performance. However, these are unlikely to be formed overnight and therefore, they should also look to invest in the market. Clients must be informed of the supply chain’s capability but also prepared to develop their own industrial strategies that may shape the market in a way that will provide best value for them.
In the UK, one of the best examples of a hands-on approach to designing the supply chain is the expansion of Heathrow Airport. This programme is forging close partnerships with suppliers across the UK to build the capacity and skills needed to deliver a highly efficient project. Heathrow is targeting more productive working practices and innovation through its regional hub logistics strategy, which will also offer opportunities for the supply chain, including SMEs and manufacturers across the whole country.
Client teams need to search for the supply chain innovators, invest in them and ultimately incentivise and reward them. It’s not too dissimilar from how an organisation would mine for its own talent and invest in them as part of its people strategy. Supply chains are an extension of a client’s organisation.
Innovation occurs at any level in a supply chain and all too infrequently it’s not recognised below tier one. The lower tiers are the real innovators capable of having a major positive impact on a project’s performance, but are not sufficiently empowered or incentivised to innovate as a result of contract and commercial models which stifle it and drive down risk. The aim should be to facilitate a culture of knowledge sharing, collaborative learning and continuous improvement.
Clients need to be informed and through this be able to set challenging but deliverable baselines and measure performance over a sustained period that is likely to be way beyond the lifecycle of a single project.
Step four is really crucial. We need our industry to become flawless at execution and transition to a manufacturing mentality.
Boosting productivity in the build phase through offsite manufacture and the standardisation of repeatable component-led design – more akin to the manufacturing sector – will enable productivity and innovation to be embedded into projects. Again, this is a central part of Heathrow’s strategy and infrastructure projects should look to work collectively and learn from other industries such as housing and hotels, where modular construction is beginning to take off in the UK. We need these techniques to be embedded, and to do this they require a sustained level of investment and to be rolled out industry wide, rather than simply on a single programme.
The fifth and final point requires clients and supply chains to consistently outperform programme baselines.
We need to go ‘above and beyond’ as a standard. That’s a significant cultural and behavioural shift for a construction industry that has a habit of accepting mediocre performance; often because the data hasn’t been assembled to prove it. Clients need to be informed and through this be able to set challenging but deliverable baselines and measure performance over a sustained period that is likely to be way beyond the lifecycle of a single project.
Critically, this requires clients to set out a clear vision of the expected outcomes and ensure that everyone client side and in the wider supply chain understands how this supports programme success. Crossrail’s mantra – “are we safe? are we on time? are we on budget? are we world class?” – summed up the performance vision and expectations perfectly and resonated with all who have been involved.
By embracing many of the measures above, Crossrail has pioneered great performance and is now seeking to share this with the wider sector through the Learning Legacy project. Progress made on skills, capacity building, performance assurance and many other areas is being grasped by infrastructure programmes such as Tideway and HS2.
Making it stick
With a buoyant infrastructure pipeline, we simply cannot overlook the essential elements that set up major projects for long-term success. Fit-for-purpose operating models, improved use of technology and data, embracing supply chain innovation, flawless execution and ensuring that projects outperform – these are the foundations of world-class programmes initiation.
We need to embrace the opportunity to do things differently. Following these five steps will make a difference. A new way of working is possible and in time could allow infrastructure programmes to lead the way to improved performance and productivity for the whole industry.