Customer experience roundtable report

UK infrastructure: Delivering a better customer experience

An infrastructure leaders’ roundtable Building our future

implementing the biggest infrastructure revolution in living memory

Introduction Infrastructure is a major priority for

with the industry to find a way to deliver the

Boris Johnson’s government, which has already

best possible experience for their customers

pledged via the Queen’s Speech to “implement

– a much broader remit than simply precisely

the biggest infrastructure revolution in

specifying a physical structure.

living memory”.

As is demonstrated by the Institution for Civil Recent years have seen rising investment, with

Engineers’ (ICE) Project 13 initiative, this trend

major projects such as the Thames Tideway,

has the potential to dramatically change the

Hinkley Point C and Crossrail simply the most

structure, operation and functioning of

high-profile examples. However, as Crossrail

infrastructure project teams, with implications

has shown, the challenges of delivering

for all the companies that feed into the system.

hugely complex programmes to time and

To get to the bottom of these issues,

budget against a shifting political backdrop

leading sustainable construction solutions

and over many years are as big as ever.

business, Tarmac convened a roundtable of senior industry figures for a special breakfast

Against this backdrop, clients are increasingly

seminar in London to discuss how – and how

opting for an “outcomes-focused” approach to

much – the industry needs to change.

developing schemes, in which they collaborate

2

The event Tarmac brought together a panel of senior figures from across the infrastructure industry to discuss the implications of a customer experience-focused approach to infrastructure.

The panel included representatives from all parts of the traditional project team – clients, consultants, contractors and the supply chain. Held at the ICE’s Great George Street headquarters in the heart of Westminster, it included clients driving some of the largest infrastructure projects in the UK.

The panel • Simon Newland Senior Project Manager, Heathrow Airport

• Will Gallagher Director of Strategy, East West Rail Consortium

• Martin Philips Head of Customer Strategy, East West Rail Consortium

• Melissa Zanocco Programme Manager, Infrastructure Client Group

• Vaibhav Tyagi Head of Innovation, Skanska

• Amanda Geyman Strategic Growth Director, WSP

• Richard Houston Associate Director, Simetrica

• Jeremy Greenwood Managing Director National Commercial & Construction Solutions, Tarmac

• Louise Smith Senior Manager – Customer Insight, Tarmac

3

The discussion All panellists welcomed the drive to focus on customer experience and outcomes, with a number heralding it as having huge potential to improve the delivery of infrastructure projects. The idea is that by asking the industry to deliver specific outcomes – be they the efficient movement of a defined number of people, the delivery of economic impact, or a certain volume of greenhouse gas emissions – clients can unlock the potential for innovation in a way that simply procuring against a specific design never could.

“You can do it if you get people together and buy in to the outcomes. That’s when it can work. Where collaboration takes place, the supply chain really responds to it.”

However, for this to work, it requires disparate players in the private sector to come together and genuinely collaborate for the good of the whole project, rather than their own shareholders. Hence the debate threw up significant questions and challenges that the industry will face in turning this welcome concept into reality.

Below are the six key practical challenges to the ideas that emerged – and the solutions suggested.

1

How do you decide on the outcomes?

2

What are the limits of outcome-based contracting?

3

Is there a tension between control of cost and focus on broader outcomes?

4

How do you get the project team to collaborate around shared outcomes?

5

What does this mean for consultants and contractors?

6

4

What is the role of big data?

1. How do you decide on the outcomes?

“Consumer marketing and focus on customer experience is 20-30 years ahead of where the infrastructure sector is now.

The industry is recognising it needs to be better in this space.”

If infrastructure clients are going to procure major projects on the basis of outcomes, panellists stressed the central importance of determining what specific outcomes they are going to focus on.

Under the ICE’s Project 13 approach, the central function of the client – or “capable owner” as described in Project 13 – is to articulate precisely the outcomes that the project needs to deliver.

And doing this, the panel largely agreed, means putting the industry’s customers at the centre of things.

Hence the very first job is to define who the infrastructure project’s customers and stakeholders are. Then the job is to talk to them, ideally through a transparent process, about their hopes and concerns

arising from the project, in order to inform the identification of the right outcomes for the project.

But this customer focus isn’t necessarily something the construction industry and infrastructure clients are used to.

Some panellists also made the point that to be effective, outcomes had to be clearly deliverable by the project itself. There is no point organising a project team around delivery of an outcome – such as local economic growth – that is largely determined by external factors.

Key takeaways “Doing this is not that complicated – you just have to ask your customers. Ask what the customer wants, what makes them happy, what kind of experiences they want to have in an airport or supermarket – and just listen.”

• Asset owners and clients must define and communicate desired project outcomes • Key stakeholders should be identified and invited to feed into the process • Agreed outcomes need to be relevant and achievable

5

2. What are the limits of outcome-based contracting?

While all agreed that a client focus on outcomes, rather than physical structures, was a good thing, a key point of issue in the discussion was the extent to which this focus could realistically be passed down the supply chain.

Most agreed that at a high level, the whole supply chain should be aware of the key ambitions of the client in terms of outcomes – but there was disagreement over the extent to which the procurement of suppliers by the client should be based on achievement of these outcomes, rather than delivery of the specified infrastructure.

6

Some strongly advocated the Project 13 approach, in which the client, or “capable owner”, procures an “integrator” team entirely based on outcomes and capabilities to develop the project. They maintained that unless the focus on outcomes flowed down the supply chain and underpinned the contractual relationship between different organisations, the organisations would start reverting to type, and the opportunity for innovation would be lost.

However, others made the case that the client’s job was to translate its rightful focus on high-level outcomes into a defined project, and then specify either solid “inputs” that it required from its different suppliers, or at least specific outcomes appropriate to the role of any particular supplier. Without this co-ordination and control, it was argued, a project team could never be brought together to effectively deliver.

“For me, the question is how deep does your focus on outcomes go, and when do you pivot from being outcome focused, to being more input-or output-focused? Yes, we want to work in a highly collaborative Project 13 type way, but at some point I need to put someone on the hook for delivering a thing, and unless that thing is delivered in that way, then we won’t get the outcome we want. Because actually, what we need is suppliers who will help us deliver the outcomes we’re focused on, and that might mean we need to be quite specific about the inputs we want, to achieve the outcome we’re driving for.”

Key takeaways • Clients require flexibility over suppliers’ involvement in meeting outcomes • An integrated approach can boost collaboration and support innovation • Successful project delivery may sometimes require greater client control

3. I s there a tension between control of cost and focus on broader outcomes?

Supporters of an outcome-focused approach suggested that true collaboration around achieving key goals delivers innovation that should actually reduce cost – with the example given of when Anglian Water set an outcome of reducing carbon emissions by 50%, and then found that the solutions prompted by that target also saved it money.

However, others were concerned that some models of outcome-based delivery reduced the competitive tension which keeps prices low. For example, where the client is early on very involved with one very fixed supply chain team to work on delivering outcomes, concerns were raised this took away any incentive to deliver savings. Meanwhile in other models, where the client simply tenders on the basis of outcomes, the concern was raised that it meant a loss of project control.

Key takeaways • Cost savings can often be achieved through a greater focus on delivering outcomes • Clients must continue to balance greater supply chain collaboration with securing value for money and retaining overall project control

“Both of those ways leave clients feeling a little uneasy. In one they don’t have the competition, and in the other they don’t have the control. The question is how you reconcile that in a way that leaves you delivering good value.”

7

4. What are the limits of outcome-based contracting?

For outcomes-based infrastructure delivery to work, panellists agreed, it was vital that members of the project team engage in genuine collaboration, rather than retreating back into prioritising their own individual organisation’s commercial interests.

One client spoke about setting up a collaborative team as a separate enterprise in its own right, in which members were “de-badged” and acted for the betterment of the project above all else.

However, there was a recognition that there were both cultural and legal/contractual aspects to this. The first step is to create a team ethos where members are encouraged to work together to deliver the identified

8

outcomes, but equally important is finding a contractual underpinning that ensures genuine collaboration makes commercial sense. Some suggested this required making the supply chain co-responsible for the delivery of outcomes, upon which rewards are based.

“What we sometimes see at the moment is some clients saying they want an outcome focused organisation, but it’s actually too late, because procurement have set the contract in such a way that when things are questioned down the line, it’s all about the contract and cost and schedule.”

A number of panellists spoke of their experience of situations where the client’s high-level aspiration for collaboration was undercut by a more traditional approach by its procurement team, transferring risk on to one party.

“Trying to establish human relationships where we have a common understanding and we’re a common part of it – that we’re all one team going after one thing – is where we’re trying to get to. We need to design contracts that work for creating the right team for delivering the right outcomes.”

Key takeaways • Achieving success relies upon all project partners pulling in the same direction • Establishing a joined-up philosophy can be key to delivering desired outcomes • Procurement practices must adapt to new collaborative working models

5. What does this mean for consultants and contractors?

Questions were raised about what this approach will mean for the traditional roles of consultants and, particularly, contractors. Under the Project 13 approach the client procures an “integrator” team made up of many different organisations including, potentially, designers, specialist consultants, contractors, specialist contractors and product suppliers. It is this team that together is given responsibility for designing and delivering a project to meet the specified outcomes, in stark contrast to a traditional approach where a consultant designs a project in isolation, before handing over to a contractor to manage construction.

This means Tier 1 contractors may not continue to occupy the same position of power in the supply chain as currently, with the client potentially talking directly with specialist contractors and others that would usually reside down the supply chain.

In addition, this could remove the existing need for the Tier 1 to hold and manage the commercial and contractual risk.

“The industry’s still figuring out the integrator model. But clinging on to a model that is tired and frankly not that productive is not an option. The industry will have to adapt and learn from it.”

Key takeaways • Adopting a Project 13 approach could see a major evolution in consultants’ and contractors’ responsibilities • An ‘integrator’ model can involve specialist supply chain partners from the early stages of a project’s design

9

6. What is the role of big data?

Panellists broadly agreed that the outcome-based contracting agenda had big implications for the use, collection and analysis of data. This is because a project team can only deliver against an outcome which can be measured.

In doing this, panellists said the industry can benefit from the wealth of socio-economic, health, economic and education data

held by the government, which is possible to manipulate to a high degree of granularity to understand the challenges facing specific localities affected by infrastructure projects.

However, panellists again made the point that the industry had to get better at collecting and analysing additional customer data on top of this, and could

“If you can demonstrate clearly the value provided to the customer by a well designed scheme, then it’s easier to make the case of how you do something that might be more costly up front - both to government and funding organisations.”

10

learn from the techniques employed in consumer product marketing. And the effort should not simply be a one-off during the project planning stage: panellists said ongoing measurement should be conducted during delivery, in order to respond to concerns raised during the build phase.

Key takeaways • Data collection is essential for measuring the successful delivery of outcomes • Teams should regularly gather and interrogate data throughout a project’s lifecycle

Portland House Bickenhill Lane Solihull Birmingham B37 7BQ TARMAC.COM

©2020 Tarmac Trading Limited. ‘Tarmac’ and the ‘circle logo’ are registered trademarks.