Adding Value to Public Procurement MSc [Strategic] Project Management Association for Project Management: Value Management Special Interest Group

Conference 2014 Friday 30th May Leedsmet Metropolitan University Starting at 9:30 for 10:00 The Rose Bowl Building Lecture Theatre 'A'

Pre-Event Introduction. Value 'Value' might be summarised for project development purposes to:

Value = Benefit / Cost ( or resources required) PFI (Private Finance Initiatives) and PPP (Public, Private Partnerships) and 'partnering' in contracts in general are intended to do that. Add value! Perhaps they will do this by lowering the 'cost' in the value equation. But also by raising the 'benefits'. The single most negative factor associated with 'Value Management' is its un-intended, and incorrect, association with 'cost reduction'. Cost reduction at the expense of benefit is undesirable. And the opposite of VfM (Value for money). Further Reading: HM Treasury "Investment Appraisal" the 'Green Book' can be found at: https://www.gov.uk/government/publications/the-green-book-appraisal-and-evaluation-in-central-governent The APM's VM SiG pages at http://www.apm.org.uk/group/apm-value-management-specific-interest-group PFI (Private Finance Initiatives) PPP (Public Private Partnerships) PFI was intended to achieve a number of benefits in the delivery of public services. Improve effectiveness and efficiency in the delivery of services typically delivered by public bodies and public workers in the U.K. And to raise private capital to fund that. This second aspect has been undisputedly achieved, and much debate surrounds the former. PPP encompasses other models of 'outsourcing' and shared capital investment, and includes great innovation in contracting approaches, including for instance, the sale of derelict land assets to fund shared public-private ventures for returns that include more efficient more sustainable modern assets (buildings) as well as public works (such as park land and improved street landscapes) and a share in the investment returns through an SPV (Special Purpose Vehicle, company). The passing of public services into private commercial interests has always provoked an emotional response, based on the perceived risks. The Press has fuelled these concerns. the Public Accounts committee report the conference reviews also raises concerns. Private contractors should also be benchmarked against the preceding performance of services while that was in Public delivery. On the whole, this was quite variable. Leading some Local Authorities to outsource services they had found difficult to manage when under their direct control.

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Adding Value to Public Procurement MSc [Strategic] Project Management Association for Project Management: Value Management Special Interest Group

Conference 2014 Friday 30th May Leedsmet Metropolitan University Starting at 9:30 for 10:00 The Rose Bowl Building Lecture Theatre 'A'

The perceive benefit of commercial efficiency based on the profit motive, might also include a flawed assumption. It is also clear that the 'Public Service' challenges do not diminish when the supplier is changed. It is our pre-conference contention that there is no appreciable difference between the public and private sectors' supply abilities (instead we suggest this is simply a commonly held stereotype) although the variability of the demands of those private markets might be great, public market sectors can be no less complex than commercial and also range, as do commercial markets, from simply to complex. Each sectors' markets are equally variable. Whatever the case, the House of Commons Public Accounts committee are saying: "get better at it". They are also clear about they are recommending. Further Reading: See the full House of Commons Public accounts committee 47th report into "contracting out services to the private sector" at: http://www.publications.parliament.uk/pa/cm201314/cmselect/cmpubacc/777/777.pdf Partnering. While PFI and PPP innovations were developing, the engineering and construction contracting sector in the U.K. had been coming under some scrutiny since post war, through a series of white papers over the degree of waste through inefficiency that was perceived. (One of the potential solutions to this being considered in the 1970's was Industry Nationalisation!) The most important of those white papers being: Latham's in 1994 and Egan's in 1998. Latham's report led on to the NEC EEC suite of standard form contracts, which are now di rigour for U.K. Government contracts and generally popular. What is different about them is that they seek to foster collaboration between the contracting partners primarily through the device of schedule programme updates that require key risk items to be identified (clause 32) and the requirement for 'early warnings' similarly a risk information sharing requirement. The NEC3 arguably seeks to remove systematic the issues that allow contracting risk to generate costs to one party or the other. Egan's report went further proposing that the industry seek more collaborative 'partnering' relationships between client and contractor and tier one contractor and the tier two and three suppliers, as is the case in other sectors. He offered Toyota car manufacturing as the model for this. Causing some consternation in a sector that could not perceive itself anything but radically different from car manufacture. Despite this the last ten years has seen a major shift towards off site manufactured pre-fabrication, in construction, much more than the layman might imagine, and the uptake of much partnering contracting amongst clients. Again to variable effects.

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Adding Value to Public Procurement MSc [Strategic] Project Management Association for Project Management: Value Management Special Interest Group

Conference 2014 Friday 30th May Leedsmet Metropolitan University Starting at 9:30 for 10:00 The Rose Bowl Building Lecture Theatre 'A'

It should also be noted that in manufacturing the variance of highly integrated supplier instances and much less integrated (or not integrated) supply chains is also high. Egan's team forecast not just capital savings but greater operational advantages, better health and safety and more guaranteed profit margins to those involved. In short less risk to contractors and at the same time more value to clients. Pre-conference it is our contention that the operation of partnering arrangements, offer the same challenges to partnership working, be they either PPP, PFI or simply commercial supply chain integration. Further Reading: A review of The Latham Report: "Constructing the Team" can be found at: http://mice.sta.uwi.edu/contracts/lectures/10-best%20value.doc The Egan Report: "Rethinking Construction" can be found at: http://www.constructingexcellence.org.uk/pdf/rethinking%20construction/rethinking_construction_report.pdf What might I get from this conference? If you are a practitioner in a commercial supply chain or a public client, or a contractor to public clients, you will have an interest in this debate, and gain insights from seeing a cross section of expert views and practices. You will have an opportunity to benchmark your own area's performance and review it in a wider context. The conference will allow you to identify critical factors to effective supply chain delivery and partnering approaches. You will also have the opportunity to make contacts to assist your future initiatives. If you are post graduate student and MSc student or a researcher you will have a theatre full of primary data! And the framework for a master's dissertation. Study with us. Link to on-line prospectus for: Sunday attendance Part Time; Evening attendance Part Time And Full Time courses in: MSc Strategic Project Management. http://courses.leedsmet.ac.uk/strategicprojectmgt_msc MSc Project Management. http://courses.leedsmet.ac.uk/projectmgt_msc Email course leader J.Heathcote@Leedsmet.ac.uk Also shorter continuous professional development, Advanced Professional Diplomas in PFI PPP Contract Management Project Strategy and Programme Management Contemporary Issues and Project Strategy

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