Outsourcing in Utility Networks Changing attitudes to break out of the aggressive/defensive cycle caused by contractual relationships
In-house hierarchy Function SM FLM Teams FLM Teams
Client-Contractor hierarchy Function Contractor Client Contract Management Inspection SM SM Teams FLM Teams SM FLM Teams FLM Teams
Contract Development in the 1990’s Procurement function led Schedule of rates contracts – 100’s of prices items Many KPI’s – 20+ but lack of focus Client side costs increase – contract management Contractor side costs decrease – competitive bidding Net cost reduced but only for initial years
21 st Century Solution Partnering, Alliancing leading to Improved Relationships But where is “Appreciation for a system”? Does the client & contractor really understand contractual risk and accountability?
Water Supply Networks Q: Identify up to five examples and prioritise Contractor Working Well Could Do Better Us 5 5 Them 5 5 Client Working Well Could Do Better 5 0/1 1/2 10+ Us Them
Final Outcome 1. New contract focus on asset performance. 2. 10 key activities → 25 sub activities. Budgets & volumes agreed by activity 3. KPI’s: DG 3 DG 7 Repeat failures 4. £ 30 m operation 15% reduction in 2 years 75% of savings on client side 5. Industry leader
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