Working together for change

Already proven in Europe, the use of collaborative working is now rising in the Middle East. MEP Middle East finds out a manufacturer's perspective of the benefits that partnering can bring.
Working together for change
By Administrator
Sun 04 May 2008 04:00 AM

Already proven in Europe, the use of collaborative working is now rising in the Middle East. MEP Middle East finds out a manufacturer's perspective of the benefits that partnering can bring.

Collaborative working or partnering is beginning to take off in the Middle East. Contractors and consultants who may have been used to working in this way in other areas of the world have brought the lessons learned about the process with them to their new roles in the region.

And clients and developers are now also showing a keen interest in the process, with the promises of lower price, faster build and better final product attracting their attention.

But to ensure the full benefits of partnering can be gained, everyone in the construction process should be involved - from the client to the supplier - and each has a different role to play as part of the overall team.

The roles of contractors and consultants are perhaps among the simplest to understand, but just how can a manufacturer and supplier help contribute to a more efficient and cost-effective project?

The road to change

Gary Turner, general manager of Fagerhult Lighting Group is a firm believer in the benefits of collaborative working. He has been central to the firm's involvement with the process over the past eight years and has seen clear benefits for both the manufacturer itself and the projects on which it has been involved.

The change to collaborative working came to a fore for the firm in January 2000 when Turner, alongside three other directors, completed the management buy-out of UK-based manufacturer Whitecroft Lighting from its public limited company (plc).

The four recognised that the business had to change if it was to survive in the tough trading conditions being experienced in the UK construction market at that time.

At around the same time Charles Lever, then building services director (MEP) of major contractor Taylor Woodrow had begun embarking upon a change programme. This programme has since revolutionised the way that supply chains work in the UK construction industry.

The UK Government via the Department of Trade & Industry (DTI) subsequently issued a booklet under its Rethinking Construction banner as a guide to partnering in the construction industry.

This outlined what the different parties in the construction process must do to ensure that the partnering process could become robust enough to be used time and time again.

It also tackled the issue of pricing and detailed a model that guaranteed those construction companies who committed to the partnering process would always receive a below market average price for their equipment.

Turner and Lever met at this time of change and so began a relationship that is still thriving. With both men now based in Dubai, Lever as general manager of MEP contractor Rotary Middle East, their respective firms are again working together to incorporate the benefits of partnering into projects.

"We knew we had to change, but not in isolation, the [UK] construction industry also had to change," explains Turner. "The ultimate client was getting a raw deal with cost and time overruns being the norm and so many errors at both design and installation phases of a project.

It was difficult for anyone in the construction chain to retain a client for a second job because the atmosphere was so adversarial," he stresses.

Lever had witnessed the same problems, and with MEP costs often accounting for nearly 50% of the total cost of a construction project he knew that if those elements were right the chances of achieving an on time, on budget project would be dramatically increased.

With this in mind, Taylor Woodrow laid down strict criteria for suppliers who wished to become part of what became known as the Strategic Alliance Partnership.

This move was soon followed by other major construction firms such as Bovis Lend Lease, Skanska and Laing O'Rourke. Turner knew that if his business was to become involved in this process it also had to embrace change.We culturally were as aggressive as anyone else [in the UK construction sector]," he says. "We spent a small fortune doing estimates and designs for so-called customers who didn't value what we did.

In response, as a business Whitecroft changed its focus and set the new aims of being very valuable to a smaller number of customers and a higher percentage of repeat business.

In 2005 the Whitecroft business became one of the UK's fastest growing lighting firms, with over 50% of its sales being created directly through Strategic Partnering.

At the end of that year the firm was acquired by Swedish lighting company Fagerhult and in early 2007 Turner was asked to open a group office for the Gulf States based in Dubai.

Partnering: the supplier's perspective

So what does partnering mean from a supplier's perspective? In short, if a supplier is involved in a long-term relationship with a client they know that they have to invest in providing that client with their best expertise and experience, even at the early development stage of a project.

Standard solutions can be utilised to reduce costs; programme times are reduced by using off-site assembly methods; and risks of co-ordination problems are greatly reduced as the specialist suppliers are involved very early in a project to iron out any potential issues such as the interface between ceiling, lighting and air handling equipment.

The client will also receive a lot of intellectual input to its project; Turner explains: "Specialist suppliers, by their very nature, live and breathe their subject matter and can contribute significantly to the professional team when it comes to the selection of the very latest technology.

Of course there are many cynics who suggest that once a client has chosen its partners it will end up paying more than if every job was sent out to a traditional tender.

Turner refutes this: "In our experience, the cost of the total installation always comes down [when using a partnering arrangement]. The DTI model of pricing allows us always to offer a client a below average price for the item it is buying.

If you then add to this the fact that by being smart in design less products are being utilised, then partnering is a sure-fire way of the whole construction chain remaining competitive," he stresses.

Having returned to the Gulf after an absence of almost 20 years, Turner was initially unsure if the principals of partnering world survive the rigours of the ultra-fast and aggressive Gulf market.

He has however been pleasantly surprised. "If ever there was a market with a need for a structured approach to partnering in construction it is here in the Gulf," he states.

"Partnering reduces costs, project complexity and increases the speed with which design and installation can be completed, and in our world where quality management time is at a premium, surely partnering is a must?" he stresses.

While many of the downsides of an adversarial construction process remain, things are changing Turner notes. "Now clients are realising that the initial cost of a scheme is only one issue.

Clients are beginning to understand that the true cost of a building is measured through its whole life cycle and with energy costs rising and an acceptance that through smart design we can achieve our design goals in an energy efficient way, clients are rightly demanding more from their construction teams," he states. Smart designing

‘Smart design' is something that Turner is passionate about and he believes that this is an area where a specialist supplier can really add value to the construction process.

One of the first major projects we became involved in with Charles Lever at Taylor Woodrow was a general hospital in South London. As usual there was a severe problem with the budget and seemingly nowhere to go," he explains.

Because we were part of the team we worked alongside the consultants, architect and MEP contractor and looked into the detail of the lighting design

"We managed, mainly by utilising the latest lamp and reflector technology, to reduce the number of luminaires by 30%. What's more, the projects aesthetics were also improved, so it really was a win-win situation.

No-one was blamed but everyone took the plaudits when the job was named PFI Hospital of the year in 2002," he adds.

The process of re-evaluating a design can be problematic, but if all members of the construction team are involved it can also prove very valuable.

"Re-evaluating a design can be a contentious issue if the construction chain is in its classic vertical hierarchy, with the specialist supplier at the foot of the supply chain," agrees Turner.

"However in a partnering arrangement the supplier is expected to contribute in ensuring that the optimum design is used, because invariably it will save initial costs, installed costs and running costs.

In the fast moving technological world we live in it is no surprise that even a six-month-old design can often be improved upon," he states.

Collaborative working: the benefits

• Allows suppliers to invest in providing their expertise early in the development phase of a project.

• Standard solutions can be explored to ensure reduced costs through the use of high volume products.

• Programme times can be compressed by the use of off-site prefabrication methods.

• The risks of co-ordination problems are greatly reduced due to the early involvement of specialist suppliers.

• The technique ensures that the latest technology is always considered as suppliers are dedicated to their area of expertise such as new lamp technology or new reflector design.

• Ensures the suppliers deliver the right products to the right project at the right time.

• Pricing and design guides will be made available for all parties involved on projects, thus ensuring that standard design and pricing is utilised.

· Value for money is guaranteed by the desire of

the supplier to remain a partner in the overall construction team.

Partnering in the Middle East

There are several individuals and firms now leading the way in the Middle East to a more enlightened way of securing best value from their supply chain.

Turner cites Lever and Cedric Carr, MEP pre-construction director for Al Futtaim Carrillion as among them. "Cedric Carr is actively promoting the utilisation of specialist suppliers who will sign framework agreements with [Al Futtaim Carrillion]," states Turner.

In his view whatever happens [the firm has] to directly or indirectly supply the majority of MEP equipment installed in its projects.

Such firms recognise that by having structured framework agreements in place with suppliers they can get the best advice and technical guidelines to ensure that designs are both cost-effective and robust. In addition, by offering business on a repeat project basis firms can guarantee that they are getting the right price for their clients.

The early appointment of suppliers by including them in a supply chain strategy means that no time or effort is wasted by the design and construction teams and high quality, value engineered solutions can be provided to clients.

Potential benefits of involving suppliers in partnershipsDesign, development and planning stage

• Product selection standardisation.

• Supplier input into design parameters, value engineering and buildability exercises.

• Specialist expertise & experience brought in early in the design process.

• Long lead advice.

• Continuous product improvement.

• Product innovation.

Strategic supply management

• Integrated supplier networks.

• Pre-negotiated pricing and cost structures for reduced cost and programme.

• Integration and collaboration of supplier information.

• Supply input mapping and cost reduction strategies.

• Establishing, monitoring and reporting against agreed Key Performance Indicators (KPI).

Purchasing, manufacturing and building

• Aggregation of demand.

• Marketplace intelligence.

• Supply and demand forecasting.

• Predictability of delivery.

• Decrease in defects.

• Increased speed to market.

• Final product in line with client expectations.

• Predictable out-turn costs.

End-use maintenance and service

• Standardisation of product maintenance.

• Better product understanding by maintenance staff.

• Help with replacement strategy.

• Replacement cost control.

• Reduced equipment downtime costs.

• Better maintenance regimes.

• Reduced customer dissatisfaction.

• Reduced performance problems

RELATED LINKS:Partnerships with promise

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