Charter Housing long-term partnering framework - Constructing ...

Charter Housing long-term partnering framework - Constructing ...

ShowcasingExcellenceCase study 2: November 2006Charter Housinglong-term partnering frameworkHousing Quality Standards it was becoming clear thatthe system needed to be improved.“It was apparent to us that we were not deliveringvalue,” explained Paul Helyar, assistant corporatedirector responsible for maintenance at Charter.“Efficiency and cost effectiveness of the maintenanceprocess was all in question and then following a bestvalue review of the maintenance service we knew actionWhen people think about best practice, it is oftenassociated with bigger organisations. When you focuson ideas and themes such as integration andcollaboration it is generally connected with majorprojects that showcase best practice to the rest of theindustry.Sometimes though, the best examples come fromsmaller organisations and a series of projects led by aneducated client that is prepared to invest time andmoney to improve the way things are done. That isexactly what Charter Housing decided to do when theyembraced the concept of partnering after a best valuereview of its maintenance processes.Charter Housing Association, which is part of the SerenGroup, is a premier provider of affordable housing andmanages approximately 4,500 residential units in southeast Wales. Its stock had been maintained in a verycompetitive, traditional manner with up to thirtycontractors seeking to win work based on price, notvalue. However, with the need to meet the Welshhad to be taken.”The results of the review revealed that Charter’scustomers wanted a change in the way the serviceswere provided. They were dissatisfied with some of thecontractors being used and the way the service wasstructured generally.“Different contractors were calling to carry out similartypes of work and the service was top heavy in terms ofadministration,” said Paul Helyar. “Our customers toldus that Charter and its contractors do not seem to be onthe same team.”At about the same time as this review in 2003, theWelsh Assembly Government and ConstructingExcellence in Wales produced a best practice guide forconstruction and maintenance work. Charter’s board ofdirectors seized the ideas outlined by Egan and Lathamand decided that the housing association needed toadopt long-term framework agreements to deliverbetter value.

Charter does have a reputation for being quite progressiveacross a number of areas,” said Paul Helyar. “Because ofthis innovative culture it was willing to consider new ideaslike frameworks. We knew that we needed to pursue apartnering route but we did not know how to implement theframeworks needed to deliver improved services.”Following an introduction from Constructing Excellence inWales, Charter’s team began working with Evolution-IP,consultants specialising in setting up improved constructionprocurement methods. Their role was to develop withCharter a strategy and then facilitate the implementation ofthe new way of working, the main themes of the strategybeing procurement and customer involvement.This was an entirely new approach for everyone involved,except the Evolution-IP team led by Vassos and hiscolleague, Tony McKernan.“To work effectively, a single integrated supply chain musthave an informed client who understands what its objectivesare,” explained Vassos Chrysostomou.“We were lucky as Charter knew exactly what they wanted tohappen – cost reductions, more efficiency and a better serviceand a value driven approach to delivering maintenance acrossits housing stock.”Working with Evolution-IP, a procurement strategy, calledCharter CFM – customer focussed maintenance – wasdeveloped and approved by Charter’s board in the springof 2004. The aim was the procurement of a singleintegrated supply chain to deliver planned and reactivemaintenance based on long term collaborativearrangements, utilising open book accounting methods.More importantly, the client had identified the work load tobe delivered for the first six months of the project, agreed abudget for the works and decided that the project wouldbe managed on an open book costs model.“The strategy was to focus on core work streams - kitchensand general building repairs, electrical repairs and upgrades,plumbing and bathroom installations and gas servicing andmaintenance,” said Tony McKernan.“Next we had to reduce the sixty or so firms that wereThe next task now was to explain the concept to variouscontractors and select who would be the long-termpartners. Charter managed this with a contractors’ openday in June 2004.“Over a hundred contractors had replied to ouradvertisements, and we held the open day at a local hotelin order to outline the objectives of our new strategy andreasoning for the new approach,” explained TimBeckingsale, the maintenance manager for Charter at thetime of the change over.“Charter’s chief executive explained our plans and thenVassos Chrysostomou of Evolution-IP outlined the detail ofthe new programme and the challenge ahead.”interested to a short list of eleven.”A pre-qualification CD questionnaire was issued to allinterested contractors. They each had a month to respondand were asked a series of questions about theirexperience and approach to collaboration, attitudestowards health and safety and there was a focus onexploring the culture of the potential contractors as well.“There was a full scoring matrix,” said Tim Beckingsale. “Itwas very important that we chose like minded organisationsto work alongside as partners. Two areas we wereespecially interested in was the approach to training and thecapacity to cope with the work and the strategy.”

The short list of eleven was identified and a series of sitevisits, meetings and collaborative assessments wereundertaken over the summer of 2004. The emphasis wasalways on a two way sharing of information with theobjective of matching the cultures and determining if thecontractors and Charter could work together. Chartermade certain that their clients were involved in selectingthe contractors, which placed an emphasis on service andvalue as well as culture.“The emphasis was always on culture and value,” stressedTim. “We did not discuss the commercial aspect of theproject until the very last stage when we identified the finalset of contractors. Once they were confirmed then webegan to negotiated how the open book model ofaccounting we had chosen was going to operate.’’It was not surprising that everyone needed help andencouragement to adapt their internal processes and resistthe desire to step outside of the framework and behave ina traditional confrontational manner from time to time.“We pressed on and overcame the initial concerns anddelivered some excellent results,” explained TimBeckingsale.“Customer satisfaction is running at 93%, responsive repaircosts are below the 2003 level and we improved the backoffice function as well, for example – only two invoices permonth are produced by each contractor for up to 1000repairs per month which means we are more efficient.”The aim of the model is to protect profit and overhead andremove the incentive to engineer more financial gain fromthe job at the expense of real value. In essence, it is amove away from price as the arbiter of winning work andmove towards actual cost, which in turn allows thecontractor and customer to release real value. Septemberwas set aside to discuss the open book costs model, whilstEvolution-IP and EC Harris went through the accounts andundertook the necessary financial analysis.“It was a very new concept for everyone, but by usingcollaborative training sessions and working together on realprojects, the team began to build strong relationships andestablished a culture,” said Tim.In October the project started to work on real projects.Moving from theory to reality was not always a smoothtransition and everyone found the next few months a steeplearning curve. Not least because the contractors wereproviding an integrated asset management service –delivering both planned and reactive maintenance.Evolution-IP identified that the speed of change requiredwas not always supported by the internal processes of thecontractors and the client.“The change needed to make this kind of strategy successfulis all about the culture and people’s behaviour,” explainedTony McKernan.“The job itself is the same – fitting a kitchen or repairing agutter for example – but behaviour and attitude sometimescan get in the way of the process.”The success of the new framework relies heavily on theaccurate measurement of data and the contractors use aseries of Key Performance Indicator to underpin thecollaborative working and open book approach toaccounting, in order to improve their businesses and theway they operate as well as deliver a value driven service.However, the levels of data required in collaborativeworking are far more than in traditional working becauseof the level of monitoring and benchmarking required.This meant that the use of IT became a central part of theinternal processes, measuring and sharing information.“Some times the sharing of information did not alwayscome easily to everyone, especially with regard toperformance,” said Tim.“Traditionally, revealing performance data might beassociated with failure – now everyone had the opportunityto work together to resolve an issue and improveperformance as a single integrated team.”

So, IT became a tool that was used to encourage betterintegration across the supply chain and a weapon withwhich to undermine the traditional blame culture thatoperated before the new strategy.Paul Helyar, who took responsibility for theimplementation of the new strategy in May 2005, sumsup the story:“Working as a single integrated team has helped ourcontractors become more efficient and effectivebusinesses that understand cost and objectively managetheir performance. Indeed, our contractors are telling usthat the new way of working has brought real value tothem in terms of their service to Charter as well as withother clients.The partnership framework has been such a success wehave renegotiated for the next twelve months already.We are now able to focus on operational delivery of themaintenance programme in a way that was not thoughtpossible. Wehave a morestrategic planningstyle allowingmore efficientdelivery and anability to sharebest practiceamongst theteam.”Charter – facts/figuresCharter is part of the Seren GroupIt manages 4,500 residential units in south east WalesCharter administers 3680 tenancy agreementsCharter’s team that was responsible for the CFMframework is comprised of:Paul HelyarTim BeckingsaleNathan GouldTony McKernan of Evolution-IPVassos Chrysostomou of Evolution-IPHarry Meese –CW Electrical“Charter’s new CFM procurementstrategy has transformed the way wedo business. Collaborative workinghas allowed us, as an SME, toimprove all areas of our business byplanning and investing for thelonger term sustainability and development of our people,”explained Harry Meese, managing director of CW Electrical.“Being part of a collaborative team has enabled ourmanagement team to concentrate even more on the mostimportant areas of our business. We have introduced newand innovative ways to control the project from purchaseorders to open book accounting. The removal of retentionsand renegotiation of completed contracts, constant underpayments and disputes with main contractors have all butgone. We are now able to concentrate on important health andsafety issues, quality, continuous improvement, and trainingand joined up constructive thinking. Employees areempowered to drive the projects on the ground involved in thedecision processes and are part of the larger team. One of themost pleasing outcomes of collaborative working has beengiving us the freedom to invest heavily in training andemploying apprentices. We currently have over 50% of ouremployees taking NVQ’s and employ three apprentices. All ofthis has been achieved from a standing start two years ago.“Sharing best practices has meant a much fitter, leanercompany with long term sustainable profits. Open bookaccounting is a much simpler way of operating and it hasmade us look at all costs areas within our own company andof course led to us being more profitable. Cash flow problemshave become a thing of the past with upfront payments ofagreed overheads and profit with monthly invoice to cover themonths work normally paid within 21 days.“The support from Charter Housing CFM and the other partnershas been first class and sustained throughout the first twoyears. We hope that collaborative working is here to stay, aftermore than 20 years in the construction industry we have notfound a better, fairer, more professional way of working, for allin the industry.”Harry MeeseManaging DirectorFurther information on this case study is available through:Paul Helyar, Assistant Director (Maintenance)T: 01633 212375 E: Chrysostomou, Evolution-IPT: 020 8468 7722 E: vassos@evolution-ip.comPrinted onrecycled paperIf you have a possible Case Study or Demonstration project,then contact us on:T: 02920 493322 E:

More magazines by this user
Similar magazines