Family Housing Association (Wales) Ltd Collaboratively Working with Local SME’s

1. Family Housing Association (Wales) LtdCollaboratively Working with Local SME’s

2. Phil Dennis Director of Operations

3. Family Housing Association (Wales) Ltd • Partnering and Supply Chains • Opportunity to legitimise • Internal collaboration – capital and revenue • Incremental or wholesale change • Leadership • Pain and gain • Moving forward

4. Darrin Davies Head of Property Services

5. Historically We knew what we were doing. • Delivering construction projects competitively. • Partnering with Local SME’s. • Numerous procurement methods from Design & Build to Schedules of Rates. • Long term relationships with Local SME’s.

6. The Motivation to Collaborate Need to ‘Capture the Best’ • Limited number of ‘excellent’ contractors. • The shortfall in skilled and good quality trades operatives. • The increased work resulting from the investment in achieving the WHQS’s, the related stock transfer potential and the added pressure that would place on the Association’s ability to secure the services of Excellent Contractors.

7. Challenges and what FHA have done. Challenges • Open Book Accounting. • The cultural change required by all parties. • Data analysis, and so on. What we Have done. • The Re-organisation of our Property Services and Development teams. • Developed our ICT systems to cater for the open book accounting and data requirements. • Added to the roles of Officers within other Departments e.g. Finance, to assist with the Open Book Accounting processes.

8. Some Pros and Cons CONS • A huge – and disproportionate – amount of staff time involved in the change process. • The financial cost of the works, consultancy, training and development etc. • The financial costs as listed will be incurred to a greater or lesser degree into the future. PROS • Secured the services of 10 good quality LOCAL SME’s. • The development of a Steering Group. • The improved knowledge we have gained on the actual costs of construction activities. • The improvements – gained with the assistance of both the Construct Wales and Evolution-IP teams.

9. Time Line • Pre July 2004 - FHA demonstrated a thorough approach to partnering its construction processes in both Maintenance and Development schemes. • July 2004 - WAG Consultation paper on the distribution and delivery of Social Housing Grant. • October 2004 - First Ministers “Making the Connections: Delivering Better Services for Wales”. • January / February 2005 - Selection of Contractors for Hazel Court through and EU Notice. Contractors selected on quality NOT price. • March 2005 - WAG issue “Developing Partnerships. A new Approach to the Social Housing Grant Programme Distribution and Delivery”. • April 2005 - FHA met with its then contractors supply chain to explain the proposed changes to its construction services procurement. • July 2005 - FHA issue its EU Notice. • Sept – Dec 2005 - Selection process for contractors based upon quality NOT price. • April 2006 - Reorganisation of the Associations Property Services and Development Departments. • June 2006 - Signing of the Framework Agreements. • June 2006 - Commencement of the first year Contracts. • July 2007 – 1 Page Action Plan of Improvements

10. Change? The Need to Change? • The WAG guidance to RSL’s (draft July 2003): • Change Culture to achieve “Collaborative Working”. • Select on Value not Price. • Establish an Integrated Team. • Continuous Improvement through Performance Measurement. • Improved Outcomes through Long Term Relationships and Innovation. • Local Based Supply Chains. • Sustainable Community benefits through training & employment.

11. What do FHA want? Get Better at What we do Well. • Achieve Continuous Improvement in respect of Cost, Quality, Time and Customer satisfaction. • Remove inefficiency and and waste. • Share knowledge and expertise. • Allocate Long term, work smoothed contracts - conducive to direct employment. • Ensure a Non Confrontational Approach. • Protected margins . • Provide Business certainty.

12. What did The Association Expect? To be The Best • Value for Money. • Excellent Quality. • Excellent Health & Safety. • A Responsive Service. • Very Happy Customers. • Year upon Year Improvements – Continuous Improvement.

13. How the Association Has Had to Change. A massive and difficult learning curve which has come at a price in respect of staff resources and financial commitment. • Review Internal Processes – including Standing Orders • Review Roles and Responsibilities – Reorganisation. • Review Staff Skills – Staff Training and Development. • Review its ICT Systems. • Review its Accounting Processes. • Review its KPIs – How we measure our services .

14. Why has it Been Difficult? Contractors • Had little or no method of measuring the performance of their business. • Had little or no cost control within their business. • Had little or no process management within their business. • Had little or no continuous improvement experience or capability. • Had little or no quality control over works on site. • Had a variety of social & private clients they continue to work for. • Had committed to collaborative working to some degree. Some see it as ‘work for the next few years’. • Had changed very little internally to satisfy the needs and requirements of achieving continuous improvement.

15. Why has it Been Difficult? (2) Staff • There is very little experience in the ‘delivery of works on site’. • There was very little experience or understanding in the philosophies of Continuous Improvement. • Staff are exceptionally busy on the existing operational activities and are struggling with the workload, new objectives and training required. • There is constant changes in legislation, regulation, good practice in all areas which staff have to comply with. • Given the difficulties in programming the new build works, it is difficult to programme the PPM works. • There are competing calls made on all Departmental staff.

16. What Skills do we need to Develop? The new skills we need to develop within the supply chain (either within the RSL’s or the suppliers) are: • Cost management e.g. cost modelling, cost control, cost improvements. • Supplier development e.g. CLIP techniques. • Programme production & management e.g. Accurate, lean and integrated programmes of works. • Supplier audit. • Value Engineering / Continuous Improvement. • Effective challenging. • Process management • ICT

17. What Skills do we need to Develop? Work Stream Leadership, What , Why and How: • Move away from traditional hierarchy of Department • Individuals fully responsible for the delivery of specific work packages. • To assist in the Continuous Improvement in Service Delivery. • Manage spend against budget • Monthly audits of costs and performance • Participation in Construct Wales LEAN review activities

18. The Construct Wales Programme An invaluable programme. • Has greatly assisted the Association and its contractors to get as far as they have. • A great opportunity for both the Association and contractors to learn from the improvements made by others both within and outside the construction industry. • A great opportunity for learning and delivery of continuous improvement. • A great opportunity for contractors to share experiences, improvements and therefore collectively deliver improvement to the Association. • The 1-2-1’s must continue whoever they are delivered by. • What we’ve achieved so far, whilst substantial, are only the ‘tip of the iceberg.

19. Added Value Opportunities What else has the initiative made available? • Central Materials Procurement. • Waste management – Green Dragon / Arena Network. • CITB – Training & Development Strategy • Supplier Development – CLIP Programme.

20. Stephen Sutton Commercial Director Sutton Brothers Builders Ltd

21. Collaborative Working FHA • A new Way? – NO - In-Words but principles are long founded • Sense of ownership • Stability • Continuity of work • Accountability • Main contractor still the project hub

22. Collaborative Working Supply Chain • Knowledge & Experience • Iron out Risks • Challenging status quo • Involved in developing the design • Improving our processes – Construct Wales • Time & Waste Management

23. Collaborative Working Financial Stability • “Pricing” Projects using The Open Book Process • Agreed % of OH&P • Cost Model • Labour, Plant, Materials, Management & Supervision • Improving our processes – Construct Wales • Estimates traditionally prepared this way • Complete supply chain • Actual Costs & confidence of recovering sustainable returns

24. Collaborative Working Improved Working Relationships • Experienced a marked improvement in FHA relationship • Open and constructive relationship • We feel valued by FHA • We value their business • We discuss projects and programmes of work very early on

25. Collaborative Working Greater Responsibilities • To the client • to deliver the project on time, within budget and to the right quality • To our employees • to provide continuity of work • For our sub-contractors • to ensure that they carried out their works in accordance with specifications • But under Collaborative Working, it is with our ‘supply chain’ contractors that the biggest culture change is happening • as they are now having to work ‘on their own initiative’ albeit with the main contractor

26. Collaborative Working Current Status • Ann Street/Bigyn Lane - £671,000 • a multi storey development offering 4 ground floor flats and 2 bungalows, 5 first floor flats and 1 second floor flat • 5% below the tender value submitted in 2005 • with inflation - 13% less!!!!!!!!! • Arthur Street - £678,000 • a development of 5 ‘special needs’ bungalows, 2 of which are specifically adapted for the needs of the impending tenants • due for completion in October • Cwrt Waddl - £323,000 • a development of 4 general needs bungalows, adjacent to the existing Cwrt Waddl Day Centre • due for completion in November

27. Collaborative Working Future • Year 1 of 5 – Overall very pleased with outcome • For benefit of our efficiencies we need continuity of work • At least 12 months • FHA to involve as in budgeting process on projects • WAG to approve a 3 year programme • We changed and adapted to the “New Way of Working” • We need the “Top of the Tree” to do the same

28. Collaborative Working Future-Finally • Presented to the FHA’s Tenant Group last month • The first time that I have ever been involved with the ‘end users’ of the developments we construct • “End Users” need to join our Steering Group to discuss and provide valuable observations for future projects

29. Paul Gibson Steering Group Chair & Senior Partner of George Gibson

30. Previous Working Relationships Tenders • 3 or 5 year cycles • Lowest Price • Second/third year profit

31. Previous Working Relationships Partnerships • Specialist Labour shortage • Stability • Tender costs with uplift

32. Previous Working Relationships Collaborative Working • Investment /Plan for the future • Risk Management • Proactive approach • Cost Analysis / knowledge • Continuous Improvement

33. Collaborative Working Two Positives • New Methods of working • Understanding Costs One Negative • Time – The Steering Group

34. Workstreams

35. Collaborative Working Workstreams • Cost Control & Monitoring • Continuous Improvement • New Work / Opportunities • Learning & Sharing

36. Nigel Hawkins Quantity Surveyor

37. THE FIRST EIGHTEEN MONTHS - THE GOOD, THE BAD AND THE UGLY

38. The Good • Greatly improved communication • Better understanding of each others businesses and working methods • Improved standards • Performance statistics - cost tracker - weekly stats - monthly stats • Suppliers improvement targets

39. The Good • Training programme • Realisation of true costs • No blame culture • Appreciation of team effort • Improved workload for supply chain • Predictability of costs • Improved programming of works • One-to-one training

40. The Bad • Cost models made to fit budgets • Lack of training on cost tracker • Cost tracker not “the finished article” – eighteen versions in eighteen months • Cash flow affected whist trying to resolve issues • Double entry of data • Cost models initially based on unrealistic data

41. The Bad • Too much time spent on Collaborative Working • Greatly increased management time • Large numbers of KPIs • Rise in number of call backs – no incentive for right first time • Change brings about inefficiencies • Ineffective work smoothing

42. The Ugly • Too many meetings • Too much training • FHA had to learn too! – we didn’t know all the answers! • Natural resistance to change – “I’ve been doing it this way for the last 30 years………..” • Lack of understanding of what was required – on both sides

43. The Ugly • Payment delays – queries, audits, mistakes • “10% of my workload takes up 30% of my management time.”