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Teamwork makes for quicker, more profitable projects

Construction has already taken many of the task force concepts to heart. Jackie Whitelaw reports.

Long term relationships with clients and suppliers, trust, mutual benefit, shared risk and shared learning are all having an effect on the bottom line. Balfour Beatty Construction decided 12 months ago to use partnering to boost its performance.

'The task force is urging us all to change the commercial terms on which we work to sharing risk and reward,' says BBC managing director Paul Lester. He is pleased with the result.

'It means we can bid a real price and work together with the client and suppliers to then get the cost down.'

To sharpen up the service it provides and trim its own costs, Balfour Beatty has started to rationalise its supply chain.

'We have a goal as a group to cut 75% of our suppliers (down from 28,000) and work with two or three preferred suppliers for each material or commodity product. So far we have reduced the number by 8,000,' says Lester. 'The goal is to take cost out of the supply chain, not reduce prices, and to work with our suppliers to improve productivity.'

The group goal on margins is to achieve 3% - which, Lester says, alliancing will help. 'Last year we achieved 2%, at the moment, half way through the year, we are hitting 2.7%.

'The challenge for us is to manage the different styles of work we will be doing in the future. We are going to have to be schizophrenic because we estimate that in three to four years time around 30% of our work will be true partnering; 40% will be some sort of hybrid version which is not quite perfect but better than before; and the remaining 30% will be traditional contracting.'

Galliford is another contractor that has been enjoying increased margins thanks to its commitment to partnering. But it also reckons that whatever the efforts of the task force, old fashioned contracting will still make up about 30% of its workload.

That is not a problem, according to Galliford managing director George Marsh.

'One of the understandable questions from clients who want to follow the partnering route is how do we know we are getting value for money. It helps when we can demonstrate that we can win our share of the work in a straight cost based tender.'

Already the other 70% of his work is either pure partnering or where customers have bought on more than price alone. Turnover is up 30% to pounds 185.1M and margins were 1.3% in the year to the end of June. Marsh sees 2% as easily attainable for the future.

Both Marsh and Lester believe the Egan task force targets for industry improvement are achievable.

'I think the initial challenge is to get everyone to embrace the targets,' Marsh says. 'And we should celebrate every improvement,' says Lester.

Much further down the supply chain, Graham Wood, managing director of pipe coupling manufacturer Flexseal Couplings, says initial reaction to the task force report was that there was not much in it for his company. But the partnering bandwagon has trundled out as far as the building and civil engineering merchants.

'In the past, all they talked to us about was price; now they are interested in a more holistic approach and aspects like backup service and quality are being taken into account in our negotiations.'

Benefits of partnering can also be seen, very obviously, on high profile DBFO schemes. Bob Clapperton, director of operations for Amey Construction, points to what is being achieved on the M6 extension where Amey is in alliance with Sir Robert McAlpine, Taylor Woodrow and Barr in the Autolink joint venture.

'We are a single team, and if there is a problem we engineer our way out of it.' The job is on target to complete several months early and with cost savings.

Clapperton is 'absolutely convinced' the task force targets are achievable, but there is more work to do. 'We still need to cut out the people watching what other people do - and to do that we need to gain the confidence of our customers.'

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