Installers - Constructing Excellence

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Installers - Constructing Excellence

Over the last 18 months, Seven Housing

Associations and two Local Authorities,

together with Training and Employment

Agencies, have come together…..

Knowsley MBC

St Helens MBC

CITB

Job Centre Plus

Learning & Skills

Council

The Housing

Corporation

Green Apprentices

Arena

CDS Housing

Helena Housing

Knowsley H.T.

Maritime

Riverside

South Liverpool

H.T.


…to address some fundamental

issues…

Huge sums of

“New Money”

Entering Market

National

Construction

Skills Shortage

Repair costs

Contractors

struggling to

Recruit &

Retain

Competition

between RSL’s

for Best

Contractor’s

New Legislation

& Regulations

Long term lack

of investment

in skills training

Enhanced

Customer

Expectations

Static income


Huge sums of

“New Money”

Entering Market

National

Construction

Skills Shortage

Skill Shortage

Contractors

struggling to

Recruit &

Retain

Competition

between RSL’s

for Best

Contractor’s

Enhanced

Customer

Expectations

New Legislation

& Regulations

Long term lack

of Investment

in Skills Training

No Local Solution


These Issues are Widespread,causing

Considerable Concern…

“Over the next 3 years construction needs 65,000 recruits just

to stand still……the industry has attracted only 15,000 each

year since 1999” (CITB 2002)

The annual figures, collated from data provided by 544

associations, show that the weekly cost of repairs rose by

13.7% on last year, more than four times the rate of inflation.

Weekly management costs increased by 8.3%, almost three

times the rate of inflation (Housing Corporation, October 2003)

"It is also clear that associations are reporting underlying

cost pressures, which emphasise the need to explore new

procurement options to improve value for money (Housing

Corporation, 2003)

“..different vans all sitting outside different properties in the

same street, fixing similar repairs, is an example of lost

opportunity to coordinate service provision and purchasing

power” (Housing Today, February 2002)

“..we’ve managed to cap overall costs through long-term

manufacturer deals but labour costs are a concern. We’re

linked to RPI and the construction industry isn’t..” (Mike Brown,

Director of Property Investment, Whitefriars)


…driving us to find a collective solution

for Merseyside….

“Housing Authorities need to pay

heed to the skills shortage… but

too few have heeded the

warning…you can’t whinge if

things get out of control and

you’ve done nothing to plan for it”

(Howard Farrand, CEO, Whitefriars HG)


Fusion21: A Merseyside Solution


Originally named “Project Cinderella,

the design of Fusion21 is based on a

number of key principles….

Initial focus on planned maintenance and stock

reinvestment programmes

Collaboration based initially on Elemental Work-types

A “Collaborative Model” was required to plan and

coordinate these elements of repair and maintenance

activity

Corporate identify and brand image of each RSL

must be maintained

Intervention must create a “win-win” for all parties:-

Housing Associations and their customers

local unemployed people

Contractors/Suppliers/Consultants

Must be self-sustaining beyond initial grant-funded

set-up

Train for site readiness rather than qualifications


To meet these principles, The Partners

have committed to driving Local

Employment through “Intelligent

Procurement” …

Fusion21 was set up to link the massive

demand for repair and maintenance services,

on some 85,000 housing units, with a new

labour supply

With new ways of working, Fusion21

aims to address skill shortages by

training local people in the skills

needed to deliver the massive works

programmes in Merseyside

With collaboration as the key; Larger, longterm,

“work-smoothed” contracts can be

developed – creating a “win-win” in the

delivery of our programmes


… On 29th June 2002, all parties committed to Fusion21 at

the highest level with the signing of the Partnering Charter

in which each partner RSL has committed to work together

to deliver long term partnering contracts…

Developing strong Partnering relationships with our contractors

and suppliers

Integrating and dove-tailing our works programme to smooth

out peaks and troughs

Removing Duplication, waste and streamlining our working

processes and practices

Establishing Predictability of our future annual programme

costs

Setting benchmarks that we will use to Continuously Improve

our quality standards and processes

Developing skilled labour, providing local people with long term

Prospects for Employment

Sharing our knowledge and expertise

Delivering with Customer Focus, achieving satisfaction and

providing added value

‘ mutual support - trust - openness - learning - collaboration - change ’


The Fusion21 Strategic Overview


Fusion21 Procurement


Rethinking Construction…..

“….The industry must replace

competitive tendering with

long term relationships based

on clear measurement of

performance in quality and

efficiency…”


To tackle the issues facing us, we

need to think and work in new ways…

Intelligent

Procurement, cost

control & SCM

Dedicated Install

& Supply

Chain Partners

Partner

RSL’s

Collaboration

Common Specs,

processes &

Partnering

Framework

Risk Management

& performance

measurement

Opportunities

for jobs

creation

Continuous

Improvement


…and realise benefits that are usually

inaccessible to single organisations

Cost Benefit

Scale

Supply Route

Standardisation

Long Term Contracts

Work-Smoothing

Strategic Cost Management

Impact/Time


...and there are real benefits to us all..



“our works

programmes”

Retain individual

control and

management of

programme

delivery

Procurement

costs minimised

Contract price

inflation

minimised





Process

efficiences

maximised

Understanding of

contractor

training needs

and costs

Speak with ‘one

voice’

Reduce contract

management

costs








“our

organisations”

Delivers

Regeneration

agenda

Greater certainty

in delivering

Business Plan

Improved

standards

Greater

accountability for

whole life costs

Potential to

deliver Clients

Charter

Share Best

Practice and

market knowledge

Retains individual

brand identity

“ our staff”

• Leading

innovation

• Part of

something

unique

• Personal

development &

learning

• Avoids

duplication

of

effort

• Releases time

for programme

management

and delivery

• Builds network

and market

intelligence

“our customers”


More effective

and efficient

delivery of

programmes


Organisation

retains control


Potential for

substantial cost

savings that can

be passed on


Price inflation

minimised

leading to

enhanced

provision


Best Value in

maintenance

delivery


Greater

consistency in

quality, price and

accountability


Access to

Fusion21 Skills

‘smart client’ ‘innovative partnering’ ‘job enhancement’

‘quality service’


… including our partner contractors,

suppliers and consultants

“works programmes”

“organisation”

“staff”




Greater influence on

design of programmes

Speculative costs

minimised

Process efficiencies

maximised

Reduce contract

management

costs





Greater business

certainty to enable longterm

planning

Access to a trained,

subsidised labour pool

Recruitment costs

minimised

Access to a wider range

of clients

• Leading innovation

• Personal development &

learning

• Avoids duplication of

effort

• Releases time for

programme

management and

delivery


Common working practices

and specification across

different clients


Inform clients of

resourcing needs to

deliver programmes

• Builds network and

market

intelligence


Supply chain efficiencies

maximised


Work with more informed

and flexible clients


Streamlined payment

systems


Risk more appropriately

managed and costed


Opportunity to work with

client to reduce nonproductive

costs that can

be shared with client


Stronger relationships

with clients


Share Best Practice and

market knowledge

‘true partnering’ ‘sustainable business’ ‘job enhancement’


Fusion21 Model

Programme

Integrators

Installers

SME Contractors

specialising in:-

Kitchens

Bathrooms

Windows/Doors

Gas-fired wet heating

Specialist Skills

required to assist

RSL’s/F21 in

integrating the

installers and the

supply chain

Manufacturers

& distributors

of the following categories:-

PVC windows

External doors

Bathrooms

Kitchens

Boilers and radiators

Plus all associated products


Contractual Relationships

Partner

RSL’s

Partner

Installers

Partner

Suppliers


The Thinking Behind this Model…

• Allows the client to select and manage the

contractors and supply chain directly

• Thus enabling clients to identify and

manage costs directly and more

effectively

• Maximises direct employment of labour -

thus increasing opportunities for Fusion21

Skills

• Greater control of customer-facing people

• Supports SME’s - the best supporters of

Fusion21 Skills to date


Supply Chain Strategy


To Purchase Effectively You

Need to Know the Following:-

How much is being spent?

What is being bought?

Who is it being bought from?

How buying is performed?

If this information is not known in

detail, and used strategically, then

the cost base will be too high…

Efficient and effective

Procurement is reliant on

the collation, recording

and analysis of detailed

procurement data and a

foundation of high quality

business processes.

Knowing how much is

really spent requires

specialist management

information systems,

reporting and analysis

tools.

Building an accurate

picture of Procurement

expenditure is a

significant challenge in

most businesses.

Organisational and IT

structure complexity and

poor categorisation of

expenditure, all cause

businesses to lose

visibility and detail of

what they are spending.


Key Objectives

• Identify and manage costs more

effectively

• Specify components based on needs

- not brands (no more “Sacred

Cows!!)

• Form long-term relationships with

core suppliers

• Commit significant, predictable

volume

• Remove inefficiency – without

reducing supplier margins

• Improve supplier efficiency and

competitiveness

• Create a win – win!


Process Name:

Fusion21 Sourcing & Procurement Process

Start

Sourcing

1. Establish Project

Team

4. Supplier Short-

Listing

5. Define Product /

Service

Specifications

6. Contract

Negotiations

2. Project Planning

Procurement

7. RSL Project

Implementation

3. Supply Planning

8. Strategic Cost

Management

Strategic Cost

Management

Project

Completed

Key: Action Decision

Sub-Process

Connector

File

Flow


A Vision for a Materials

Sourcing & Procurement Process

Capture Procurement Data

Centrally

Lower Administration Costs

Implement Sourcing

Prices

PROCUREMENT

SOURCING

Strategic Cost Management

Identify Further Savings

Achieve Optimum Cost Savings

To implement a process to ensure the sourcing cost savings identified

are implemented effectively through the optimum procurement

activities and involving the capture of all procurement data centrally to

enable long-term strategic cost management.


A Typical Open Procurement

Process

Savings Possibly

Eroded from 15% to 5%

Through an Open Process

Failure to Apply Cost

Matrices Accurately

Sourcing Invoice Loading Activities with

Achieve “hidden” Savings and “extra” of 15% costs

Material Prices

c2.5%

c2.5%

85%

Forecasted

Project Expenditure

c2.5%

c2.5%

Installer

Material Waste

95% Installer Unauthorised

Material “Call-Offs”

Material Quantities

Many organisations operate an Open Procurement Process that is not secured from start to

finish. This loss of integrity results in the ability of process users to manipulate the financial

transaction and / or the process. The result from an Open Procurement Process is usually

the erosion of the material cost savings identified during the Sourcing Process.


Closed Procurement – an overview

of the Fusion21 Model

Projects Projects Projects Projects

Software

Sourcing Cost

Prices

X-Source TM

Strategic Cost

Management

Closed Procurement

Process

The Model has been specifically designed to ensure that Fusion21 has centralised control of the

material costs within RSL Projects and ensures that prices achieved during the Sourcing process

become ‘actual’ Procurement costs. In addition the Model allows the creation of the detailed

information required to enable the continuous Strategic Cost Management of materials at a level

comparable with a best-in-class industry such as the Automotive industry.


Programme and Project

Delivery


Project Management Process

Fusion21 Supply & Programming

RSL Project Scoping, Costing & Approval

Project Implementation

Project Completion & Review


High Level Strategic Programming

Fusion21

Workstream

RSL

Requirements

Installation

Supply Chain

Installation

Requirements

Product

Requirements

Product Team

Product Team

High Level

Scoping

Product

Specification

Installer

Selection

Programme

Integration & Work

Smoothing

Supplier

Selection


Project Scoping, Costing & Approval

RSL

Requirements

RSL Budget

Programme

Project Brief

Project

Team

Briefing

Project

Partnering

Framework

Project Data

Capture

Scope & Risk Schedule

Outline Project Agreed

Supply Target

Costing

Installer

Target Costing

Target Cost

No

RSL

Sign

Off

Yes

Complete Pilot

Property


Project Implementation

Pilot

Sign-off

Launch Project

Pre-Start Meeting

Contract Terms Finalised

Supply Chain

Installer

RSL

Order Materials

Deliver Materials

Detailed Survey

Install

Manage Project

Delivery

Tenant Liaison

Issue Resolution

by Product Team

Supplier Invoice

Installer Valuation

Acceptance

Change Control

Final Account

RSL Valuation

Actual Cost

Overall Project Cost Verification


Project Completion & Review

Project

Implementation

Fusion21

Workstream

Individual RSL

Projects

Material Supply

Installation

Variance

Reporting

All RSLs

Projects

Key Performance

Indicators

Supplier &

Installer Payments

Fusion21

Normalisation &

Review


The Fusion21 Programme


Collective strength….

85,000 Properties

£1 Billion


Our “starter for ten”…..

5 RSL’s

4 workstreams

£185 Million


This year….

5 RSL’s

4 workstreams

£22 million


The Fusion21 Structure


Fusion21 Core Structure

RSL Board of Management

Mike Brogan

CEO

Dave Neilson

Procurement Director

Integration

E C Harris/Mansell

Sourcing and Procurement

Value Works

Development & Mentoring

CWC


Fusion21 Integrated Structure

Board

Core

Group

C.I. Challenges and future direction

Product Group

Leaders

Product Group

Experts

Product Champions

Problem Escalation & C.I. Opportunities

RSL Projects & Delivery

Project Delivery


Progress to date


Contract values on site £7.8m circa £1.8m

completed at Dec 03

Networking and learning culture

established

Product Teams established which have:-

Agreed common performance

specifications across RSL Partners

Designed and implemented Partner

Installer and Supplier selection

processes based on quality, service and

cost

Maintained a very high level of quality

whilst achieving significant cost savings

Managing specific issues by establishing

specialist corrective action teams

Identified numerous opportunities for

improvement and added value


Implemented a “closed-loop” procurement

system unique to the industry

Established cost management frameworks

that will allow Fusion21 to strategically

manage cost over the lifetime of the

Partnership

Developing a unique e-procurement

system to manage supplier and installer

transactions

Integration Team established with some

members based in Fusion21 offices

Appointed specialists to manage

relationships with Partner Installers and

Suppliers as well as developing their

potential within the Partnership


Discussions to set up a door factory

dedicated to the employment of

disabled workers.

Also potential for a door and window

recycling unit on same site, both plants

using able and disabled labour from the

region.

MPH, one of our key window partners,

have opened 2 additional production

lines dedicated to Fusion21 work

resulting in 13 extra jobs being created

by the company

Runner up in Building Magazine’s

Awards “Best Approach to Partnering

2003”


Fusion21 Skills


Funded by…

Ambition:

Construction

European

Social Fund (ESF)

Neighbourhood

Renewal Fund

To deliver 250 jobs in the

first 3 years of operation


…the aim is to use this funding to address skill

shortages by linking local unemployed people with the

demand created by the massive works programmes in

Merseyside. In particular, the following skills………..

Window fitting

Gas Fitting

Bathroom Fitting

Kitchen Fitting

Multi-Skilling

Painting & Decorating

Plastering

Plumbing


Fusion21 Skills is a partnership between Knowsley MBC,

Green Apprentices & Job Centre Plus to recruit and train

unemployed people into specific jobs with Fusion21

Partner Contractors

JETS

Job Centre

Plus

Others

1

Gateway

2 3 4

Intensive

training and

work

experience

Subsidised

employment

Open

employment

Green Apprentices

Recruitment and training

for work

Fusion21 Skills - Contractors

Work placements &

graduate jobs


Progress to date


Most successful “Ambition” pilot in the

country (source: ODPM)

205 people entered training

121 people into work

100+ with RSL contractors

further funding secured to deliver a further

320 jobs


Continuous

Improvement


The Fusion Approach to

Continuous Improvement

• The Fusion process for Benchmarking

and Continuous Improvement will be

as the Seven Point Plan.

• Fusion will initially Benchmark its

Installers against the 10 Respect for

People, and 9 Housing KPI’s.

• Data to support the KPI’s is now

being collected by Installers

• The use of SPI’s and Toolkits will

then be employed to drill down into

weak areas,in order to effect CI.


The Seven Point Plan for

Continuous Improvement


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