Biddle, Paul

Greenwood, David

Mawhinney, Mark

English

Northumbria Research Link

AUTHORITY PARTNERINGLOCAL AUTHORITY PARTNERINGThe North Tyneside Partnering AgreementA Study of Strategic Partnering in the Public SectorCarried out for the DTI by Northumbria UniversityForeword by Sir Michael LathamEXECUTIVE SUMMARYForeword““Sir Michael LathamChairman, CITB-Construction SkillsIt is a particular pleasure for me to welcome this report by my good friend Dr David Greenwood of the University of Northumbria.  I was delighted to be a Visiting Professor in his department from 1995 to 2000, and very proud to have an Honorary Doctorate of Laws from the University.  I regularly visit Newcastle as part of my work with CITB-Construction Skills.The report describes the very noteworthy achievements of the North Tyneside Partnering Agreement.  When I wrote “Constructing the Team” ten years ago, I had studied the results of partnering in the USA because it was virtually unknown in Britain, but I was cautious about advocating the widespread introduction of partnering here too strongly.  I felt at the time that it would be a major achievement for the U.K. construction industry and its clients to work in any collaborative manner at all and that must be the fi rst requirement.  The culture in 1994 was so adversarial that even suggesting the need to build non hierarchical relationships was regarded with suspicion as dreamland.  Fortunately, things have moved on strongly over the decade, especially since the Egan report of 1998.  Public and private sector clients are now appreciating that they can achieve real value and much better performance throughout their project by partnering effectively with the industry.  The NTPA is a good example of what can be achieved.  I warmly commend this report to other local government clients and industry readers.  Try it.  It really works.  It can work for you.In 1994 ‘Constructing the Team’ suggested that Partnering could overcome many of the problems associated with traditionally procured construction projects.‘Specifi c advice should be given to public authorities so that they can experiment with partnering arrangements where appropriate long-term relationships can be built up.  But the partner must initially be sought through a competitive tendering process, and for a specifi c period of time. Any partnering arrangements should include mutually agreed and measurable targets for productivity improvements.’Recommendation 19 of Constructing the Team (Latham, 1994:62)In 1998 the ‘Rethinking Construction’ report championed the advantages of long-term partnering relationships.‘Alliances offer the co-operation and continuity needed to enable the team to learn and take a stake in improving the product. The concept of the alliance is therefore fundamental to our view of how effi ciency and quality in construction can be improved and made available to all clients...Partnering on a series of projects is a powerful tool increasingly being used in construction to deliver valuable performance improvements.’ Rethinking Construction ‘The Egan Report’ (Construction Task Force, 1998: 4:67)In 2000 the Local Government Act (1999) replaced mandatory Compulsory Competitive Tendering with the criteria of Best Value, thus enabling Local Authorities to go down the ‘Partnering Route’.  Part 1 of The Local Government Act 1999 states,”A best value authority must make arrangements to secure continuous improvement in the way in which its functions are exercised, having regard to a combination of economy, effi ciency and effectiveness.”1. The NTPA...The North Tyneside Partnering Agreement (NTPA) is a strategic partnering framework that brings together the council and three building contractors to carry out the council’s building capital works programme.The partners are: North Tyneside Council, Gordon Durham Ltd, The North Tyneside Construction Group and Rok Group.How it all came about...Over three years and 50 projects worth £80 million, the NTPA has achieved:better relationships - no litigation or claimshigh levels of client and user satisfactionbetter time  performance - with one project fi nishing a full year ahead of schedulebetter value - with average 25% cost savings on the trades engaged on a strategic basisbetter projects - by engaging the supply chainBuilding the NTPAThe concept of the ‘Seven Pillars’ of partnering is useful for demonstrating how such an arrangement as the NTPA was fi rst established. The fi rst four of the seven concepts will be taken in turn and elaborated upon, to demonstrate how the NTPA ‘infrastructure’ was put in place.Running the NTPA The fi nal three ‘pillars’, benchmarks, processes andfeedback, will be the framework for describing how the NTPA delivers projects - in the section entitled ‘Running the NTPA’.Maintenance and ImprovementIn addition to the elements represented by the Seven Pillars, there is a further, eighth function that emerged, namely that of Maintenance and Improvement of the model processes. The NTPA alliance has developed through different degrees of partnering maturity in which fi ve distinct stages have become apparent. The Maintenance and Improvement function describes the ways in which the partners were able to incorporate the learning acquired from project feedback as the NTPA progressed through these stages, into their future strategy for partnered projects.{{2. Getting started...The Seven Pillars of Partnering‘Second Generation Partnering is underpinned by ‘Seven Pillars’…Strategy, Membership, Equity, Integration, Benchmarks, Project Processes and Feedback. Each pillar represents a set of management actions that provide an essential element of Second Generation Partnering.’    Bennett and Jayes. The Seven Pillars of Partnering. A Guide to Second Generation Partnering. Reading Construction Forum (1998)There were a number of stages comparable to those described in the Reading Construction Forum’s Seven Pillars of Partnering.  We have added an eighth, ‘Maintenance and Improvement’ to describe the alliance’s progress through increasing degrees of ‘partnering maturity’.3. Building the NTPA...Building the NTPA involved the Strategy, Membership, Equity and Integration stages.The 1999 Local Government Act opened the way for a partnering approach.  A council offi cer took on the mantle of Partnering Champion and after advice from their Internal Audit and Legal departments, proposals were put to the Executive Directorate.  Briefi ngs were given to Members, Committee Chairs and to Council Leaders.  With their support a signifi cant step was taken with the waiving of the Council’s Standing Orders on Procurement. A Partnering Manager was appointed. The Council’s Medium Term Financial Plan, and its Strategic Review of Schools provided the ‘critical mass’ of projects upon which the NTPA could operate.Selection of partners was rigorous and took time.  Expressions of interest were invited at local, national and European levels.  More than 30 fi rms passed through two qualifying stages.  Three contractors were fi nally selected by panels made up of the major stakeholders in the client organisations. A fourth contractor was placed ‘on reserve’.The following principles were considered essential for success:projects would be allocated by the partners themselvessustainable levels of overheads and profi t were agreed and ring fencedproject savings or losses would be shared between client and contractorthere would be no retention or delay damagesA partnering workshop brought together 30 senior members of the partnering organisations over two days.  A Partnering Charter was drawn up, signed, and endorsed by the leader of the Council.  Two further general workshops were held to defi ne NTPA objectives.  The partnering Core Group was formed.  As projects commenced, half-day Project Partnering workshops were held.  All workshops were facilitated by external consultants. Later in the life of the NTPA, major gains were achieved by reaching deeper into the supply chains.  The council’s Building Design Agency (BDA) played a crucial role here by developing its skill in harnessing supply chain potential.1. STRATEGY: Making the case2. MEMBERSHIP: Selecting the Partners3. EQUITY: Concluding the Deal4. INTEGRATION: Forming the Team“One of the things that has really reaped the fi nancial rewards for our clients has been the painstaking work of the BDA Design Team.  Without them the valuable but diffi cult integration of the extended supply chain could not have been achieved.”Paul Conlin, Partnering Manager, NTPARunning the NTPA was the order of the day once projects became ‘live’.  To date, the NTPA has undertaken over 50 projects to a value of approximately £80 million.  Delivering these, from inception to completion, involved...From its inception, the NTPA has been committed to rigorous performance measurement.  It has adopted the Construction Industry KPIs proposed by government.  The maintenance and analysis of KPIs has been a fundamental tool for NTPA improvement.From day one, the NTPA worked closely with North Tyneside’s own multi-disciplinary Building Design Agency (BDA) to develop a standard project process map, which covers the key project stages and includes ‘gateways’ and ‘freezepoints’ to limit risk. This and other partnering guidance documents, developed jointly by NTPA and BDA are available to each project team.Communication and feedback are the great drivers of the NTPA, with the Partnering Manager, Core Group, Supply Chain Forum, and Contract Managers Forum all supporting the Project Teams.  These were created to capture best practice and were essential for this learning to be exploited in future projects.Improvements were immediate and dramatic.  But there were greater things to come as the partners learned how to engage more and more of the supply chain.  Overall performance can be illustrated by the following chart which compares, over seven selected KPIs,  the current average performance of the NTPA with pre-partnering performance and with Industry average performance. 4. Running the NTPA...5. BENCHMARKS: Setting Standards6. PROJECT PROCESSES: Running Projects7. FEEDBACK AND COMMUNICATION8. MAINTENANCE AND IMPROVEMENTNTPAIndustry AveragePre PartneringKPI Resultscompiled on 23/07/0360%10%20%30%40%50%0%70%80%90%100%Key Performance IndicatorClient Satisfaction ServiceClient Satisfaction ProductEnd User Satisfaction ServiceEnd User Satisfaction ProductDefects Predictability Construction costPredictability Construction TimeKPI Benchmark ScoreUpper Quartile Boundary5. A focus on...Cost and ValueThe most signifi cant NTPA results were in this area. The following data relate to primary schools.Supply Chains           All fi gures in £/m2Tender [mean] Dfee adjusted Final AccountPre-NTPA 813 715 896Post-NTPA 596 715 558% difference -27 -17 -37Cost certainty indicator [difference between Tender and Final Account]Pre-NTPA +10%Post-NTPA -6%To summarise, the cases indicate that:§  NTPA-built primary schools achieve target costs of 27% less than those previously tendered by the authority;§  This represents an average 17% saving over nationally published costs;§  Final accounts for tendered projects were 10% higher.  For NTPA projects, fi nal accounts were 6% less.The research also revealed that the NTPA had evolved through 4 stages and aspires to a 5th stage.STAGE ONE Pre-partneringSTAGE TWO Project-specifi c PartneringSTAGE THREE Strategic PartneringSTAGE FOUR Partnering with the Supply Chain and a future aspiration to the next stageSTAGE FIVE Actively Managing the Supply Chain§  Stage 1: the typical (pre-partnering) situation, where the Final Account exceeds the Tender;§  Stage 2: increased commitment by the constructor to the Target Cost, giving better cost certainty;§  Stage 3: reduction in the level of capital cost (the Target). Cost certainty is also maintained;§  Stage 4: improvements embedded in a ‘lean’ Target. Further dramatic reductions in the Final Account;§  Stage 5: more and more of the supply chain will be integrated into the project process.Early in the life of the NTPA it became apparent that signifi cant savings were possible by exploiting supply chains but that these gains would only come when key elements of the whole project supply chain had been properly identifi ed and engaged. These became the source of the most dramatic improvements in COST and VALUE.BeforeEvolutionSteel frame 5m spanWindow 2Window 1Example: Aluminium windows. The partnering environment enabled the NTPA to analyse the complete supply chain - specifi er, contractor, fi xer, and supplier / manufacturer.Commitment to and engagement with the complete supply chain allowed the value engineering of the design and fabrication of the product. This produced savings in capital cost of over 30% against tendered rates.AfterNorth Tyneside CouncilNorth Tyneside CouncilTown Hall, WallsendTyne & Wear, NE28 7RRtel: UK+(0)191 200 6565Research TeamDave GreenwoodThomas BampatsisPaul BiddleResearch Steering GroupMalcolm PotterDavis Langdon ConsultingNeil PattersonMansell Plc Glenn SteelSunderland University  Bill TindaleDerwentside CouncilPartnering Improvement TeamJohn HollingsworthPaul ConlinPhil StephensonGavin FraserBuilding Design AgencyMartin StokoeRichard MullenAndy ThompsonNTPA ContractorsConstruction GroupRichard HumphreyHarvey CombeKillingworthNewcastle upon TyneNE12 6WHGordon Durham LtdRay AtkinsonGordon Durham & Co LtdMoor Lane, East BoldonTyne & Wear NE36 0AGRok Property SolutionsplcMark TaylorRok Centre10-11 Allison CourtMetro Centre, GatesheadTyne & Wear NE11 9YSLOCAL AUTHORITY PARTNERING© 2004 Northumbria UniversityFor further copies of this Executive Summary please contact:Elaine RyderSustainable Cities Research InstituteNorth StreetNewcastle upon Tyne, NE1 8STTelephone UK+(0)191 227 3500Email: elaine.ryder@unn.ac.ukA full copy of the report is available on CD, price £9.99 from the above address.“The NTPA is a good example of what can be achieved.  I warmly recommend this report to other local government clients and industry readers.  Try it.  It really works.  It can work for you.”Sir  Michael Latham. Chairman CITB -  Construction Skills“For NG Bailey & Co’s business, having the opportunity to develop long-term collaborative relationships as a key supply chain partner within the NTPA has demonstrated that being integrated into the decision making processes brings real tangible benefi ts to both ourselves, and all other stakeholders.” Martin Bailey, Managing Director, NG Bailey & Co“The NTPA has demonstrated how Construction can be transformed by a partnering approach where all parties are fully engaged. I would recommend this report to local authorities, many of who would clearly benefi t from adopting such approaches.”David Bentley, Lead Adviser, Construction and Property Services,Chartered Institute of Public Finance and Accountancy“It gives me great pleasure to see how much tangible improvement can be had in forming strategic relationships between local authority clients and industry. (This)...could, if translated to the entire local authority spend...amount to savings of more than a billion pounds that could be further invested into more community activity. As community wealth is one of our goals we can only but praise this approach. ... my challenge to industry is to use the platform of Strategic Partnering to deliver further improvements ...”Dennis Lenard, Chief Executive Offi cer, Constructing Excellence“The North Tyneside Partnering Agreement has exceeded expectations in its ability to deliver improvements in quality, cost and customer satisfaction. With the government actively looking at new ways of procurement within the public sector this is a sustainable method which delivers. It fi ts extremely well with the long standing work the Northern Consortium has been involved with in achieving innovative and robust partnering arrangements with its members and product suppliers.”John Moralee, Chief Executive, Northern Housing Consortium“This excellent guide takes a ‘warts and all’ look at partnering from a local authorities’ perspective. In particular it gets down to some hands-on detail on the implementation of partnering down at the grass roots of the industry - at SME supplier and sub-contractor level. The hardest partnering nut to crack, this is an area often overlooked in partnering guides yet the one with the biggest potential for ‘hard’ savings. All in all, an excellent, practically-based introduction to partnering which should be on the required reading lists of all value-focused local authorities”Alan Kennedy Executive Secretary COMPASS; Chairman, Integrated Supply Chains Drafting Team, Strategic ForumFor further information about the research, please contact:Dr David GreenwoodSchool of the Built EnvironmentNorthumbria UniversityNewcastle upon TyneNE1 8ST,UKTelephone: UK+(0)191 227 4691Email: david.greenwood@unn.ac.uk

Local Authority Partnering. The North Tyneside Partnering Agreement: A study of Strategic Partnering in the Public Sector

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Local Authority Partnering. The North Tyneside Partnering Agreement: A study of Strategic Partnering in the Public Sector

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