Strategic alignment: key to more effective project delivery

Major transport projects are under greater scrutiny than ever for cost-effectiveness. New thinking is placing a focus on how clients and contractors work together with a shared vision

Why are the terms ‘innovative procurement’ and ‘strategic alignment’ ringing in the ears of transport scheme promoters and project managers?  Perhaps it’s because funding bodies have identified procurement processes and delivery arrangements as a significant opportunity for efficiency gains, cost savings and effective risk management based on emerging new understanding and experience of how effective relationships and working arrangements deliver the best outcomes and avoid the likelihood of delays, cost overruns and damaging disputes.  Government, public agencies and private sector investors all want to achieve better processes and deliver savings on third-party spend. 

In the UK in particular, the recent McNulty review of rail efficiency identified the need for better procurement, and the strategic move of the Office for Government Commerce (OCG) to the Cabinet Office’s Efficiency and Reform Group illustrates how closely the Government is steering this agenda. 

Britain’s rail infrastructure owner and operator Network Rail believes it is already on the case and has found new ways of working that are both more efficient and effective.  Network Rail is criticised in the McNulty report for its “...lack of customer-driven relationships and partnerships through the supply chain, with supplier management tending to be driven by contractual imperatives”.

Ian Ballentine Programme Director at NR acknowledges the importance of an effective partnership relationship with contractors.  To this end he says they are exploring various supplier engagement models to build on the Efficient Infrastructure Delivery programme already underway.  Says Ballentine “Network Rail is planning for earlier engagement with its supply chain as it delivers investment.  This will help ensure the most effective solutions and approaches are considered before the costs are incurred.   We plan to use a number of supplier engagement models to achieve this”.

Giving suppliers a ‘seat at the table’ through early engagement in project planning improves communication and understanding, reduces risk, and improves efficiency through better mutual understanding of the needs, capabilities and considerations of the various project partners. 

The degree of strategic alignment between partners has wide-ranging impacts.  A simple example is passenger satisfaction - a key concern for Network Rail.  Relatively small delays on maintenance projects can have significant impacts on the railway.  If contractors don’t appreciate and share the values of punctuality and reliability, the performance of both agencies is negatively impacted. 

The efforts made by NR already are acknowledged by McNulty “Over the last year, the Study has observed significant changes in the orientation of NR and the train operating companies (TOCs). NR is clearly committed to change, to a new focus on its customers’ needs, and to greater levels of safety, transparency and accountability. The TOCs also appear to be achieving greater coherence of views between themselves, and are showing greater willingness to work in partnership with NR.”

The topic is something of a minefield – and one that is still being explored and codified. The recent House of Commons report ‘Public procurement as a tool to stimulate innovation’ quotes Professors Luke Georghiou, Jackob Edler and Dr Elvira Uyarra of the Manchester Institute of Innovation Research - "The complex and changing procurement landscape and the overcrowding of the policy through procurement agenda has, over time, resulted in a proliferation of guidance and reports which can be confusing, even contradictory, to procurers". 

Despite this, both NR and the UK’s other major transport procurement body the Highways Agency seem to be making headway.  Acknowledging it’s not always about cost and technical capability these agencies are considering client-contractor strategic alignment in their framework agreements. The Highways Agency Strategic Alignment Review Toolkit (StART) assesses inclusion, leadership, sustainability, supply chain and cost as a means of increasing suppliers’ alignment to the principles found its Procurement Strategy and Strategic Plan, alongside performance data when selecting suppliers.  On the back of its Efficient Infrastructure Delivery (EID) transformation programme Network Rail is using early contractor engagement and new engagement models to optimise the supply chain’s input and resources, shorten the delivery time of infrastructure projects, increase trust through implementing shared goals and objectives, establish more appropriate risk allocation and provide the best value output for a given level of capital expenditure

Partnerships done well can bring substantial benefits to both sides.  NR identified that Crossrail and the Reading redevelopment – two separate projects with different clients and objectives – afforded excellent opportunities to share access time and resources during implementation.  They established a single team, the Crossrail and Reading Programme team, to deliver these two schemes in a way that most effectively exploited the synergies.  NR announced in June that it would complete the redevelopment of Reading’s railway a year early.

The change raises many questions.  How does one organisation assess its strategic alignment with another?  If not well aligned, how best to improve?  What are the implications for contracting companies?  Are the savings one-way, or do contractors stand to benefit as well?  For local authorities - what change is needed, politically and organisationally, to employ such methods?

For suppliers the challenge may extend beyond aligning with the client if they also partner for delivery.  Established companies have strong cultures and finding the right ‘fit’ can be challenging, especially if attitudes to customers, pricing or delivery differ substantially.  Framework managers Steve Matthews and Prof Steve Denton of the successful joint venture between WSP Group and Parsons Brinckerhoff claim good communication, mutual respect and commitment to the integrity of the partnership can overcome most issues.  Says Steve Matthews “Sometimes it’s necessary to lock ourselves in a dark room and thrash it out until we come to a mutual understanding.  Once we reach that point, we can come out again and we honour the agreement.”

Strategic alignment is not new and many large companies in Australia and the US have undertaken internal overhauls under the label ‘culture transformation’ – a process which assesses dominant organisational values and drives a change in behaviour to ensure these reflect the desired outcomes required of the business plan.  The manifestations of poor alignment range from inefficiencies and not meeting targets through staff disengagement to irresponsible and unaccountable behaviour.  See Enron or the recent subprime crisis for illustration.

There’s a lot of expertise available to assist in achieving good alignment and successful partnerships.  The Association of Sustainability Practitioners are considering how it is possible to achieve sustainable change by aligning attitudes, values and purposes using ‘Attitudinal Intelligence’.  Says Cliff Edwards of The Realise Organisation, an expert in objective behaviour analysis, “Taking the time and effort to find good fit is a bit like buying insurance.  For big projects, the cost of getting it is wrong is significant, but these types of processes can help insure against that risk.”

Even at the less major project scale of procuring local bus services, the largely rural Dorset County Council has reformed its bus procurement process replacing short-term contracts previously awarded to the lowest cost operator with long-term partnering contracts that emphasize quality. The number of contracted operators has been drastically reduced, resulting in almost £1m of savings for the Council and offering some promise that the new contracts may encourage innovation and help launch new commercial services.

With efficiency gains, improved performance and effective risk management on offer there is no doubt that strategic alignment, supplier engagement and partnership delivery is part of the future for transport procurement and project management and delivery.  The question is how quickly those lagging behind can catch up without getting left behind.  Not sure how to broker a successful partnership?  Maybe it’s time to lock up in a dark room and sort it out. 

Join the expert discussion on partnership working at our special events!

New Transit is delighted to be leading an initiative exploring the challenges, opportunities and benefits associated with more partnership focused delivery and the impact on transport procurement. Two events have been organised to bring together the very latest thinking.

Our expert panel includes Ian Ballentine (Network Rail), Jenny Wright (Highways Agency), Nick Maltby of Bircham Dyson Bell - a leading legal firm specialising in procurement, Cliff Edwards from The Realise Organisation (business psychologists) and Prof Steve Matthews from WSP Group. An industry leaders’ round table event is taking place on 14 July, with a major conference in London on October 13th. Topics on the agenda include: establishing effective partnerships; evaluating strategic alignment; utilising objective behaviour analysis; the value of early contractor engagement; managing performance based contracts; and the importance of organisational culture and leadership.

To be involved, or for further information, contact alison.dunatov@landor.co.uk