Industry

12 NOV 2018

IT'S VITAL WE THINK BIG PICTURE AND PUT OUTCOMES AT THE HEART OF INFRASTRUCTURE

Too often firms are losing sight of long-term goals and become obsessed with short-term outputs, according to Turner & Townsend's Ian Ballentine. He believes outcomes should be the foundation of business cases, revenue structures, and models for building and operating the asset.

Infrastructure investment captures the imagination in a way that is matched by few other industries.  From new transport connections to energy generation, the scale, visibility and complexity of major programmes mean they invite intense public interest – especially around cost and timescales.

We’re not afraid of this scrutiny.  But at the same time, it’s vital that we remain focused on the big picture.

In commissioning major infrastructure schemes, our ultimate goal is not just to deliver a new or upgraded asset, but to address the country’s greatest strategic challenges and opportunities.  We also want leave behind a positive legacy in our industry by innovating, reducing carbon and developing skills.

Too often, we lose sight of these goals, becoming obsessed with short-term outputs.  Instead, we need to disrupt our traditional approach – putting big picture outcomes at the heart of our business models.

Embracing asset management

First, we need a change in perspective.  Infrastructure will last for 20, 30, 50 years or more.  Clients must therefore focus not only on the delivery of a major capital programme, but the whole-life performance of the infrastructure assets they create – through operation, maintenance, replacement and ultimately decommissioning. 

To take a whole-life approach, we need to think about asset management as a strategic discipline, rather than the day-to-day maintenance and operation of assets.  

Instead of starting at the handover of a project, an asset management strategy should determine how and when to deploy capex and opex over the asset’s lifetime.  This often requires the early engagement and alignment of various organisations so that the impact of decisions can be properly considered. 

The maturity of the asset management discipline varies worldwide. Turner & Townsend’s recent Enhanced Performance survey of 1,200 infrastructure leaders showed that just 24 per cent believed that whole-life asset management would improve performance.  However, in the UK, this rises to 49 per cent and we are increasingly seeing stakeholders responsible for asset management involved in the early stages of major programmes.

The right organisation for the job

Clients need to create an organisational structure geared around outcomes.  In setting up major programmes, they must ask what kind of organisation they need to be to deliver the intended outcomes at each stage, and how this organisation will transition throughout the life of the programme.

Moving through engineering, planning, procurement, delivery, and into operation, what does a client need from its corporate functions?  What does it need from the supply chain?  How can it integrate these different functions and businesses so there is motivation towards common goals both in the short and long term?

It’s incumbent on the leadership team to define the answers to these questions in a clear programme strategy, supplemented by a target operating model; this should transition as the programme moves through its lifecycle.

Procuring for success

The leadership team must spend time in the early stages of a major programme developing the programme strategy and structure, and not get immediately focused on the tangible outputs such as planning consent, contracting and timescales. 

Decisions on the shape of the client organisation should go hand in hand with the procurement and supply chain strategy.

Traditionally, we procure mainly based on price and capability.  Price is the easiest and most tangible lever through which to assess a bid, control the contract and hold the supply chain to account.  

However, if we want the supply chain to be long-term partners, we need to give greater weight to capability, but also build in behaviour. After all, it’s the people who will ultimately work with the client and deliver the requirements. We need to measure whether partners can help us deliver not only an asset, but socio-economic or legacy outcomes.  

This doesn’t mean we de-prioritise cost – far from it.  It’s about understanding that the cost and method of delivery are not the only key differential elements of a bid.  For long-term, collaborative-style contracts, the behaviour and motivation of individuals and how this is bound together in their own corporate DNA should also be a very strong factor in selecting the right organisations. 

Leadership focus

In summary, we need the right people focusing on the right things.  Before setting up a major infrastructure programme, client leaders need to create a robust strategy based on whole-life value, and design the right long-term operating model, client organisation and supply chain to fulfil it.

With these fundamentals in place, we can all be more confident that infrastructure will fulfil its grand promises and stand up to public scrutiny.

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