Shared Benefits Unlock Greater Efficiency
What’s the best way to improve efficiency and maximise returns from major infrastructure investments? Is it by progressively tightening contract terms and margins to squeeze more out of contractors? Is it by creating a hypercompetitive market place?
Or is there a better option?
The traditional route has been to use the market and contracts. And we know where this road leads. It leads to issues with quality, claims and disputes – all of which represent more cost and reduced value for everyone.
Recently, more enlightened approaches are starting to emerge through frameworks and longer term contracts. These are based around an understanding of what value means to all stakeholders. Customers are more interested in lifetime costs than short term gains. And, above all, they have a partnership approach that shares risk and reward.
Shared Risk and Reward in Action
The programme of repairs recently carried out to the rail line around Poole Harbour illustrates the benefits of a different approach.
Traditionally, contractors would have been presented with a list of works and encouraged to give their best price.
The One Team Wessex approach is different. The priorities were to deliver as much long term value as possible from two closure periods, and to minimise travel disruption as far as possible.
As a result, the work was planned based on an agreed risk prioritisation. This followed close collaboration between designer, contractor and client. The work plan also allowed Poole station to reopen quickly during the works. A reduced possession once materials and equipment had been positioned along the line around the harbour, quickly restored services to Bournemouth and beyond.
The degree of cooperation and planning meant that all high priority and many lower priority works were completed during two intense possessions. It was a question of ‘how much can we complete’ rather than ‘what are we contracted to complete.’
The benefits for us in this approach are a clearer understanding of what value means to our client. We also have greater security and clarity in our work pipeline. This means we can invest in further innovation and efficiency and expect to share the benefits of this with our client as efficiencies are realised.
Cost effectiveness will become a greater challenge for infrastructure investment in the coming years. A shared risk and reward approach will surely offer a more effective route to unlocking the innovation and long term value creation that will be needed.