Constructing Excellence - Clever Procurement - 26th April 2017

Constructing Excellence Spring Series #ceyh2017 Wednesday 26th April 2017 Addleshaw Goddard LLP

Tom Oulton Chair of Constructing Excellence in Yorkshire & Humber

Cliff Jones Head of the Construction Procurement Team

Our Next Event: Wednesday 24th May 2017 ‘Working with Architects’ Client Survey Excellence #ceyh2017

Cliff Jones MCIPS MRICS Head of Construction Procurement Team “Clever Procurement – What it Means for Clients and the Industry” 26th April 2017

“Achieving the Objective”

We all have a choice ?

“Project Budgets and Tenders” • Basis of Client budget; • Realistic/achievable; • Project requirements/constraints/risks/ Client Advisor/Supplier validation/challenge re. budget; • Cash flow forecasting; • Tenders – Costs for sub contract costs for works packages same as that provided to Supplier, terms and conditions for Supply Chain Members, are they “buying” the work, “commercial adjustments” to costs; • Savings achieved on works package costs post tender without any Client changes; • Challenging “target(s)” for a Projects Outturn Cost.

“Project Programme” • Basis of Client programme; • Realistic/achievable (resource availability); • Reflect all project requirements/constraints/risks; • Client Advisor/Supplier validation/challenge; • Tenders – Supply Chain Members contributing to Supplier proposals; • Resources information.

“Supplier Selection” • Trust and have confidence in the Supplier and Supply Chain selected (includes key supply chain members and resources); • Trust and confidence in the Client; • “Evidence” of what Suppliers and their Supply Chains have achieved and outcomes required; • Standards for Suppliers to achieve will increase; • Key resources – individuals “and” organisations; • Adding “value” during the relationship; • “Solution providers” not merely “designers and/or “constructors”.

“Efficiency and Productivity” • Not “cost cutting”; • All need to collaborate to achieve this; • Not just about “design and construction”; • Understand and apply ”Lean Principles” + “Adding Value & Reducing Waste”; • Move from bespoke processes and designs to see a the outcome of a project as a product procedures using the same processes and procedures/components in different locations (off site/modular) – improves reliability/ productivity/ Health and safety/operating costs etc.

• Learn from other industries.

P21+ Multi-Bed Bay - Repeatable Rooms drawings and BIM model Example

P21+ Standard Components - Example Standardised components example of effects of over specification: M&E Installations/Components (Sanitary Ware, Lighting, AHUs etc:e.g. AHU’s for hospitals – key drivers: • HTM 03-01 • Choice of components • Choice of materials • Life cycle costing • System Design

Compliant Cost = £30,680

“The choice of components can have an effect on the capital cost of the unit, the capital cost of the system and the whole life cost of the system/hospital .“ Typical Hospital Layout

P21+ Standard Components - Example Potential savings available for AHU’s: • Outcome & Benefit • Cost reduction up to 30% • Unit Size reduction 11mtr down to 7mtr • Maintain HTM compliance • Maintained Energy efficiency

“Problem Solving NOT Dispute Resolution”

• Early warning culture required; • Identify it and communicate it as soon as become aware of a potential problem; • All collaborate to resolve problems; • No-one wins if a problem is left to escalate; • Problems cannot be hidden forever.

“Defects” • “Zero defects” at completion/handover; • Quality management; • Correcting defects after completion disrupts a Clients business operations; • Prompt correction of defects that occur after completion; • Accept responsibility if you know you are responsible for the defect– Clients and Suppliers; • Mitigate effects of addressing defects that occur post completion.

“Customer Service”

• What is customer service?

• Why is it important?

• Obtaining feedback and addressing it; • Managing/handling issues/problems; • Learn from other industries.

P21+ Lilac Ward “Patient� Outcomes

sightlines

100 overall experience

80

sleep disturbed

60 40 20 privacy + dignity

0

easy access to shower

Haldane

Lilac

window view

easy access to wc

don't feel isolated

FINALLY !

Thank You Questions?

Further Information www.procure22.nhs.uk

Philip Collard

Managing Director, MarketingWorks Training and Consultancy Ltd

Intelligent Procurement Insights How can we best exploit digital transformation in Procurement?

A digital journey - Philip Collard MarketingWorks & myConsole

Who Benefits?

0330 365 0110

www.myConsole.co.uk

2

In numbers over last 25 years

• • • • •

17 of top 25 consultants 35 of top 50 contractors Over 2000 clients Over 3000 workshops, seminars, conferences For a top 3 consultant ▪ 65 workshops, training 1000 delegates ▪ Pan European roll out 2001 -2005 ▪ Still delivering work winning workshops in 2017 • 37 cultural change management programme delivered

0330 365 0110

www.myConsole.co.uk

3

Our Recommended Work Winning Process

0330 365 0110

www.myConsole.co.uk

4

Should teams be focused on client issues, and not just be focused on project delivery?

Has a client ever said, “I didn’t know you did that”?

0330 0110 0330365 365 0110

www.myConsole.co.uk www.myConsole.co.uk

5

Gathering feedback is the start of the process not the end.

Is customer feedback for QA purposes or because you really want to improve?

0330 0110 0330365 365 0110

www.myConsole.co.uk www.myConsole.co.uk

6

Could your teams show detailed client plans of agreed objectives and shared tactics to improve relationships?

If you asked how your five most important clients are to be developed ‌ 0330 0110 0330365 365 0110

www.myConsole.co.uk www.myConsole.co.uk

7

Do they understand their role and have their own activities to contribute?

Does everyone in the client team know the plan for developing the client?

0330 0110 0330365 365 0110

www.myConsole.co.uk www.myConsole.co.uk

8

Why is this guy important?

• We all face Change • Change is the only constant…..

“Those that survive and thrive will be … the most responsive to change” Darwin

0330 365 0110

• Methods of winning work need to change in parallel • Understanding this at the leadership level is vital

www.myConsole.co.uk

9

Business Transformation

Business transformation Culture change

Values Skills Behaviours

Knowledge flows and information architecture Delivery capability Innovation capability Organisation structures

Process improvement

Effectiveness Efficiency Alignment

Aligning an organisation to achieve its objectives

Enabling an organisation to constantly change to meet market changes 0330 365 0110

www.myConsole.co.uk

1

Intelligent Procurement Insights can assist

The new power source is not steam or electric, but access to immense quantities data that can be instantly processed and analysed

Key to success will be to learn how to harness this new source of power for our industry

0330 0110 0330365 365 0110

www.myConsole.co.uk www.myConsole.co.uk

12

1

The technology to process and analysis data is immense and instantly transforms data into knowledge

Where is the data?

• How are we capturing data?

• Where are we capturing it, if we are?

• Do we have the right tools to capture data and draw analysis from it instantly?

0330 365 0110

www.myConsole.co.uk

14

1

0330 365 0110

www.myConsole.co.uk

1

Note importance of concurrent data analysis, monitoring & aversion to failure Concurrent data analysis and monitoring

• because you must have the right data at the right time to deliver the right optimisation loop

Success is a complex interplay

• between creativity and measurement operating together

This allows you to know where you are going wrong

• so you can get things right

Needs an “allergic” attitude to failure • F1 teams see every failure as a marginal gain in disguise to confront underperformance Standing still is tantamount to extinction in some sports

• increasingly relevant in business

Aversion to failure is the single largest obstacle

• to creative change in sport and in business

27 April, 2017

16

Bid Cost Research With University of Reading we recently conducted extensive bid cost research across over £8 billion of bid data.

37% of Bids are won not due to price, but due to a combination of client-centric behaviours…

Average cost for contractors’ winning bids: £60k Average cost for consultants' winning bids: £24K Research conducted in collaboration the University of Reading 0330 365 0110

www.myConsole.co.uk

1

It also informed me about behaviours and activities

0330 365 0110

www.myConsole.co.uk

1

Are we lagging behind?

0330 365 0110 27 April, 2017

www.myConsole.co.uk

19

1

Data capture essential to drive efficiencies new smart structures to capture and then process such data before any measurement or monitoring can uncover opportunities for improvement..

Excel sheets don’t do it any more!

If this change is not embraced it will result in firms denying themselves of valuable insights which overtime will result in losing their current competitive advantages.

27 April, 2017

20

Can we use these tools to their fullest potential?

0330 365 0110 27 April, 2017

www.myConsole.co.uk

21

2

Where to start?

0330 365 0110 27 April, 2017

www.myConsole.co.uk

22

2

Mapping Cognitive Workflows

0330 365 0110 27 April, 2017

www.myConsole.co.uk

23

2

This ensures you will move beyond paper and document distribution?

Poor Productivity Delayed and siloed information sharing Working from different versions of reality No data capture, analysis and application of findings Old ways simply takes more time 0330 365 0110 27 April, 2017

www.myConsole.co.uk

24

2

To exploit cognitive thinking we need to build in tools which automatically Capture data and processing across • Business planning • Capture planning • Pipeline management • Key client management • Framework management • Bid management • Project delivery As well as built in reviews & approval stages to provide full governance and feedback 0330 365 0110 27 April, 2017

www.myConsole.co.uk

25

2

Our industry needs to be provided with a cognitive behaviours environment for automatic data capture, processing to achieve profound insight sharing across bid / project teams - seamlessly and collaboratively!

Delivering Real time reporting

This is what we developed.

0330 0110 0330365 365 0110

www.myConsole.co.uk www.myConsole.co.uk

26

2

myConsole – designed to provide Intelligent Procurement Insights

Communication • Real–time communication systems

Task and Workflow Management • Streamlines activity into a standardized form

All-in-One Collaboration • Real-time chat, forums, calendars, organization templates 0330 0110 0330365 365 0110

www.myConsole.co.uk www.myConsole.co.uk

27

2

What myConsole delivers: myConsole drives consistent winning behaviours and predictable results through a combination of industry leading sales management approaches, personalised productivity tools, and state of the art analytics Individual Performance

Industry Leading Analytics

• Descriptive, Predictive and Prescriptive Analytics

• Personalised dashboards with insight on BUs, clients, frameworks, opportunities

• Transparency, Metrics, &

Industry Leading Analytics

Individual Performance

informed decisions

•

A personalised window into every opportunity

•

Checklist of each individual’s Responsibilities for every stage of every opportunity

•

Best Practice prompts to drive winning disciplines, behaviours, and productivity

myConsole

WinWork Process Excellence • Based on best practice work winning processes

•

Embedded Bid Reviews and Governance checkpoints

WinWork Process Excellence

Integrated BD Management Integrated BD Management

• Proprietary selectivity engine

management of Frameworks, Clients, Opportunities, Win Plans, Bids, Project Handover, Closedown and Case Studies

• End-to-end closed loop for

informed by proven algorithms and historical performance data

0330 365 0110

• One stop shop for integrated

lessons learnt, delivery collateral and metrics

www.myConsole.co.uk

2

Industry 4.0 is happening Leverage the competitive advantage

Contact us today 0330 365 0110 enquiries@myConsole.co.uk

In 2014, as the industry began to emerge from recession, MarketingWorks, in association with Professor Will Hughes of the University of Reading, updated their 2003 research to assess bid cost investment in the construction industry.

The MarketingWorks Bid Cost Survey 2014 Summary Findings

Philip Collard & Jan Hayter

Bid Cost Survey 2014

Summary Findings In 2014, as the industry began to emerge from recession, MarketingWorks, in association with Professor Will Hughes of the University of Reading, updated their 2003 research to assess bid cost investment in the construction industry.

The data was collected by reference to actual projects and was analysed to discover what can be learnt, not only in the cost of bidding for work, but also how differing behaviours and approaches have influenced whether a company wins or loses the bid.

In addition to providing some interesting indications on how and why a bid is successful, the survey also highlights that bidding for work is a complex situation with many variables, often particular to individual companies. Many companies fail to capture bid data and to fully evaluate their own specific market and processes and this has a real and clear impact on profitability. This is an issue that the industry needs to address.

The survey results indicate that when consultants and contractors invest more in work-winning, they are more likely to win. The cost of a contractor’s average winning bid is £60k and £44k for a losing bid. As these average bid costs cover a broad range of project values from <£2m projects to >£250m, looking at bid costs as a percentage of the project value gives an alternative perspective.

The bid cost worked out, across winning and losing bids, to be 0.57% of the total project value.

Overall results Value of bids with cost data Overall cost of bidding Cost as % of value

Bid result Lost £3,767m £2.57m 0.48%

Won £4,288m £4.60m 0.65%

Total £8,055m £7.17m 0.57%

Whilst the figures may not seem substantial at first glance, they can make a considerable impact on operating turnover or actual fee income and represent a significant area of opportunity for gaining profitable efficiencies.

These results also challenge the industry as to whether it is still a relevant strategy to have so many bidders.

The more bidders, the greater the cost to the industry, as both winning and losing bids represent a significant investment by the industry.

For the bids submitted to this survey, the median number of bidders is five, which aligns with the typical length of a tender list (between 4 and 6). There are slightly fewer competitors in the private sector and more bidders (and therefore more losing bids) in the public sector.

This may well be challenged by procurement advisors, but if the industry genuinely wants to lower costs, then exploring viable alternatives to current approaches would be advisable as there would be a significant saving for the whole industry and its customers in having only three bidders. In our opinion, it is a concern that so many respondents were unable to identify how many competitors they faced as this would be expected to be part of a bid selection decision.

For smaller projects (less than £5m) the proportion of bid cost to project value is highest. Here the win rate will have a considerable influence on the pipeline/ cost to win/ processing systems, especially if there are many, smaller bids.

It is vital that all companies manage their opportunity pipeline; the number and nature of the opportunities and the likely costs to win them.

Clearly, efficiencies and a methodical approach to selectivity are crucial to avoid unfocused activity and unnecessary spend.

It is not only the amount of time spent that results in winning bids, it is also important that this investment is focused on the activities identified as creating a winning bid.

In the survey, we asked ‘What reasons were given as to why you won or lost the bid?’ As this was an open question, we took the reasons given and grouped them under broader headings (Reasons given for winning and losing bids, Graph 1 overleaf) and where a combination of factors was given, we then analysed them further in Graph 2 (overleaf).

The survey found that for 11% of bids won and 15% of bids lost, the reasons for winning or losing are apparently unknown (Graph 1 overleaf).

Long-standing government guidance advises governmental bodies to provide feedback to both winning and losing bidders as a matter of good practice. Anecdotal examples from the industry suggest that in some cases clients do not provide clear and accurate feedback 2 © Copyright 2015.MarketingWorks Training & Consultancy Ltd. www,marketingworks.co.uk

Bid Cost Survey 2014 whilst in others the bidders fail to ask. This leads to the conclusion that the industry as a whole (both sides of the work-winning process) are not valuing the role that feedback plays in improving the efficiency of work-winning approaches and behaviours.

Half of reasons given for losing the bids in this survey were price related. In practise, the suggestion is that price is often a default position: if all bidders are aiming to win on price or are differentiating in similar ways, then clients will revert to price as the most clearly defined way of choosing the winning bid. This result could also imply that these bids were lost because the bidders’ focus was purely on price.

The picture is quite different when reviewing the reasons given for winning. Here, whereas single, overriding factors were also mentioned, with almost a third of responses being price related, in almost 40% of responses, a combination of factors were given as the reason for winning.

These results clearly indicate that contractors and consultants should not try to win on one single element. A better winning strategy would be to focus on a combination of winning factors.

However, this strategy requires an empowered and enthused team focused on understanding their clients’ needs and objectives and developing the right combination of key themes that will be successful for that client and project. This will not only significantly improve win rates, but reduce the number of abortive bids and their associated costs.

The conclusion that clients tend to consider a range of factors in their decision also raises one more consideration in the bidding process – if it is not possible for the bidder to score highly across all elements, should they be bidding at all?

Winning Behaviours in Work Winning Looking at the sample shown in the graphs below, the differences in behaviours between those that won bids and those that lost bids are evident.

3 © Copyright 2015.MarketingWorks Training & Consultancy Ltd. www,marketingworks.co.uk

Bid Cost Survey 2014

Apart from strategy and PQQ, the winning contractors spent significantly more across the board than the losers, but especially on:

For consultants, the winning bidders spent more overall on: •

Strategy

•

•

Intelligence gathering

Decision to bid (double the time)

•

•

PQQ (slightly)

Selecting/briefing bid manager; strategy setting

•

•

Meetings to understand needs

Planning and pursuit; intelligence gathering; meetings to distil client objectives; relationship building

•

Appointing bid team

•

More time but less external inputs on identifying proposal requirements

•

Understanding proposal requirements

•

editing boilerplate, and writing bespoke content and more external inputs

•

finalising CVs, case studies, graphic design and document production

•

internal reviews/governance; dissemination of lessons learnt

post

•

interview rehearsal; interview/negotiations

•

Slightly more time on requirements, final review

identifying/

bid

evaluation;

agreeing

For consultants, the winning bidders spent less spend on: •

Graphics, refining CVs and case studies

•

Interview

•

Shaping generic content, etc.

•

Internal reviews

•

Rehearsals + interviews

cost

Losing bidders spend more externally, possibly due to winning bidders investing in in-house resources, or possibly the former are more likely to put increased emphasis on “production qualities” than research and bespoke content, i.e. style over substance.

Whereas the focus of companies in the recessionary market has been on managing a diminished number of opportunities, as the number of opportunities increases, the industry is now facing more complicated choices and decisions. The activities undertaken to win bids also need to adapt accordingly.

Bid selection will become increasingly complex, with many variables, so companies need to evaluate further their own specific markets, processes and governance to manage this effectively. There is a huge opportunity to better manage this investment in the industry, but from this sample we can only make general statements across a broad range of project types and sizes, of organisation types, of sector types etc.

The survey outcomes suggest that individual organisations should delve deeper into the cost of bids and where time is being spent on various elements of a bid, especially if it can be related to, or taken together with, the information on reasons for winning/losing bids. This will help the organisations and the industry to identify areas for improvement.

Given the cost of winning work, the single most important tool organisations should deploy or revitalise is one that dynamically enables more effective selectivity.

The survey substantiates our belief that work winning efficiencies are achieved through a combination of improved effectiveness (resulting in fewer abortive bids) and increased rigour in bid selection and subsequent focusing of available resources.

We advise contractors and consultants to be analytical of their market and their work-winning behaviours as there is enormous potential for greater work winning effectiveness, avoiding waste, improving efficiencies and maximising profitability through refocusing resources on enhancing the quality of those bids with the highest chance of winning.

Doing this needn’t be onerous as MarketingWorks provides clients with tools and processes to capture and apply this learning inhouse, exploiting rigour in selectivity and understanding where to invest effort by variables such as client, sector or procurement route.

MarketingWorks offers a range of solutions to help our clients achieve these objectives including: ➢

Bespoke easy-to-use bid selection tools that help contractors and consultants to quickly evaluate their bidding opportunities, enabling consistency and transparency in decision taking. o

➢

By using MarketingWorks’ Selectivity and Reporting Tools you will be able to avoid waste by refocusing resources and effort on enhancing the quality of those bids where they have the highest chance of winning.

Creating bespoke win work flow processes and guidance that supports company-wide adoption of a work winning culture with embedded client centric behaviours and attitudes that improve win rates and work winning efficiencies. o

MarketingWorks works with you to identify desirable changes in behaviours and processes and then works with your teams to uplift their capability, achieving rapid buy-in to desired behavioural change, resulting in dramatic and immediate improvement.

4 © Copyright 2015.MarketingWorks Training & Consultancy Ltd. www,marketingworks.co.uk

Bid Cost Survey 2014 The MarketingWorks Facilitating Improvement of Work Winning Processes, Behaviours and Cultures programme is very practical and has helped many clients to achieve improvement in work winning processes, behaviours and cultures. We break down the complete process of work winning into inter-connected stages and apply inclusive diagnostic approaches to identify opportunities for improvements in each stage that beneficially impact the process as a whole. Through involving the work winning teams, buy-in to new approaches is generated and once companies have immersed themselves in the MarketingWorks programme, they achieve impressive business improvements.

Following the successful implementation of the Win Work Programme, I know we have made a significant improvement in our success rates at prequalification, written tender submissions and our performance at client interviews. It has helped us change the culture of our work winning teams so that they are more client-centric, which has enabled us to win more work.” Managing Director, Interserve For this reason, we are looking for more construction organisations to provide access to their internal metrics so we can explore their potential.

Highlights of Key Findings from the MarketingWorks Bid Cost Survey 2014 •

179 respondents; 118 with cost data. A further 61 provided bid data, but without costs.

•

The total project value of the bids submitted with data is £11.3 billion of which £8 billion has full cost data. Significantly this includes £4.3 billion of winning bids.

•

The sample represents a large proportion of the construction work carried out last year in the UK and is a good representation in the key areas of measurement.

•

The cost of a contractor’s average winning bid is £60k in 2014 and consultants average £24k.

•

In 11% of bids won and 15% of bids lost, the reasons for winning or losing are apparently unknown.

•

Price was given as the single reason on 50% of losing bids but only 30% of winning ones.

•

Almost 40% of winning bids identified a combination of factors as the reason for the win, compared with 21% of losing responses citing a combination of factors for the loss.

•

Winning bidders invest more in their bids.

•

The investment of time or money needs to be focused on the activities identified as creating a winning bid.

•

The activities identified as helping create a winning bid are importantly those that are client-focused.

•

The bid cost worked out, across winning and losing bids, to be 0.57% of the total project value.

•

The bid cost percentage has a significant impact on a contractor’s retained operating turnover.

MarketingWorks Training & Consultancy Ltd MarketingWorks is a leading business development management consultancy specialising in work winning in the construction industry. We provide an array of tools, guidance and mentoring support that helps construction organisations to embed client-centric work-winning behaviours, processes and culture which ensures they win more work. MarketingWorks has provided services for over 1000 construction firms, including 9 of the top 20 contractors and 5 of the top 10 consultants. www.marketingworks.co.uk

MarketingWorks and Professor Will Hughes of the University of Reading thank the Bid Cost Survey participants and the supporters: Construction News, Glenigan, Constructing Excellence, Barbour ABI, Building Magazine, CIOB, KMS, Construct UK, Designing Buildings WIKI, RIBA, RICS and Satellite mpr. Thanks also to Simon White, Arup Head of Business Development, who was a reviewer and contributor to the analysis and interpretation for both the 2003 and 2014 Bid Cost Surveys.

5 © Copyright 2015.MarketingWorks Training & Consultancy Ltd. www,marketingworks.co.uk