The topic for this month’s RADAR Roundtable was use of a number of innovative initiatives introduced by Network Rail to improve the effectiveness of their capital program through enhanced collaboration. The session was led by Stephen Blakey, Commercial Projects Director at Network Rail (NR), and Paul Cacchioli, of G & T Fairway, who is seconded to NR as Head of Claims and Contract Compliance.
Stephen began the session by explaining the challenge that NR had in 2011 when they were pulling together a plan to deliver 25bn of rail infrastructure over the next five year control period (CP5). They had a primary objective to deliver ‘more works, more safely, more efficiently and more predictably with less access, fewer people fewer mistakes and fewer disputes.’ To deliver this program NR recognised they would have to work to develop much stronger collaborative relationships with the firms in their supply chain.
Commercial Directors Forum
An early initiative was started to engage with the Tier 1 contractors, and begin a dialogue to build a model to work in a more effective and collaborative way. This led to the creation of the Commercial Directors Forum (CDF). This is a regular meeting of senior leaders from the large contractors and consultants. It is a dynamic environment, which encourages challenge amongst the wider contracting community to find ways to improve the mechanisms for building a better railway.
For example, the CDF has come up with a number of significant changes to the usual contractual mechanisms. These included shortening payment terms, removal of retentions, putting a 5% tender weighting to sustainability in tenders, and with NR being certified BS11000 ( and most recently, ISO 44001).
The success of the CDF has created pressure from the Tier 2 contractors to be involved as well. Rather than make the meetings too large and unwieldy, the CDF has established four regional forums to encourage involvement from the SME sector. Stephen was quite clear however that NR does not dictate what happens in the CDF. Instead, it insists that the group is a collaborative venture and that decisions are made by the group, so that ownership remains with them.
Dispute Avoidance Panels (“DAP”)
In 2014, a review of the program highlighted that whilst the collaborative platform was working at a high level, industry research suggested that approximately one in five projects was still ending in dispute. On a multi billion pound program this was too high a cost. Consequently, the CDF began to focus on mechanisms to try and manage problems at project level before they flare up into major issues. The outcome was a pilot scheme based around the concept of Dispute Avoidance Panels. The concept is that a group of experts are invited to visit a project for a day, so that spend time talking to the project team to understand what is happening on the project.
The panel look at cultural as well as technical issues, in trying to assess the factors that may be having an effect on the successful delivery of the project as well as the team dynamics.
Paul explained that the DAP is focused on avoidance rather than with mediation or resolution. After the visit, the DAP produce a report setting out their “observations” which are categorized as either Critical, Essential or General. There are however, no compulsory recommendations and it is for the project leadership team to decide whether or not to take any action.
There are some practical challenge of the process including;
- Ensuring sufficient availability and engagement of the project team (not just the leadership) on the day of the visit to allow a full exploration of the issues.
- Ensure that a pre read pack is available for the DAP members.
- Sound time management to ensure the DAP are able to s speak to as many people as possible on the day.
It is also important that the project team understand that this is not an audit or a peer review process.
Some of the common themes emerging form the projects in the pilot include
- Clarity of language within change order provisions.
- Clarity of language relating to rectification costs
- Poor administration of the contract
- Lack of integration, particularly with traditional forms of contract
The feedback from the pilot has been very positive. The initial pilot was free to the project team. The acid test is whether the projects are prepared to pay for a panel visit in the future. The CDF fully supported the pilot and endorsed the deployment to a wider number of projects; there are currently 7 no proposed projects.
Network Rail can justifiably claim to be leading the way that organisations involved in the construction industry can learn to work together in collaborative groups. The Commercial Directors Forum and the creation of Dispute Avoidance Panels are great examples that the application of some simple ideas can have a significant impact on team effectiveness and positive project outcomes. They deserve a wider audience and there are discussions now taking place with bodies such as Highways England to see how the concept of DAPs might translate to other sectors. The ResoLex community will be watching for developments with interest.