Project 13: From transactions to enterprises

Clear articulation of the business case for the Enterprise, in the context of wider economic benefits and whole-life operation

Value is recognised and appraised on the basis of a broad spectrum of long-term outcomes. Value measurement goes beyond the output per capex £ and extends to outcomes per whole life cost £. Value is enabled through fit-for-purpose procurement, contract and reward models. The value model of the future is underpinned by highly capable people with a range of skills and a transparent performance management system that drives informed management and decision making.

As the maturity of the enterprise develops, the definition of value evolves from a focus on minimum capital cost, to whole-life cost for pre-defined levels of performance and ultimately towards maximising societal outcomes. This may include factors such as economic productivity, natural capital value and carbon intensity.

The Integrator can contribute on the suitability and sustainability of certain values that may resonate with the capabilities and maturity of prospective partners, specifically suppliers and advisors.
Example themes could be:

• Health and safety
•  Sustainability
• Employment and skills
• Equality and diversity
• Legacy
• Design & Accessibility

For an enterprise to be effective a clear and simple business case describing customer value, along with the economic benefits (whole life cost, affordability, carbon) should be transparent and openly shared. This should provide a common purpose and clear direction to all parts of the enterprise, including all partners and suppliers.

By identifying the value metrics an organisation wishes to be measured by, it also defines the trajectory of development the organisation wishes to take and so enables a common understanding of purpose to all those within the enterprise and its key stakeholders.

Data-driven insight can inform strategic decision making and assessments of value, connecting all functions and timeframes from real-time operation to multi-decade investment planning.

Value drives the organisation and the business case.

1. P13 Digital Transformation maturity matrix asset delivery
2. P13 Governance and value definition

1. Case study – Surrey County Council

Clear expression of the required outcomes providing a platform for goal setting, alignment and customer participation

Outcomes are defined based on customer and societal needs. They are defined in alignment with the goals and strategy of wider infrastructure systems.

The Integrator can support the Capable Owner with an added insight for establishing the customer outcomes. This includes planning for sources of data to measure and aid consistent performance measurement.

All parts of the enterprise should be aligned around clearly articulated customer outcomes. A focus on the outcomes required is a critical enabler to the shift from transactional working to aligned relationships. Clear outcomes enable goals and targets to be set and cascaded through delivery teams, plus the required behaviours to be defined whilst maintaining a focus on the customer benefits to be delivered.

Organisations are more likely to maximise the realisation of benefits when:

• Project teams and stakeholders have a shared vision of success as this has a positive impact on overall performance
• Benefits are owned and championed by influential stakeholders
• There is an agreed focus on the long-term objectives and how they can be measured as this reduces the risk of a project running out of control

Data-driven insight can help ensure customer value sits at the centre of all investment, with individual customers’ valuation of the services to their specific needs informing owner decisions. Customers are active participants with influence and control over expenditure and services. Strong relationships create opportunities to influence behaviours towards better outcomes.

The Capable Owner has comprehensive knowledge and understanding of present and future customer needs, including future technological and societal trends, in order to meet and exceed customer expectations.

1. P13 Commercial Handbook – commercial principles
2. P13 What is a Capable Owner?
3. P13 Digital Transformation maturity matrix customers

1. IPA – Project Initiation Routemap requirements module
2. Case study – HMT as an investor

Customer outcomes translated into clear goals and targets, cascaded through the Enterprise

Clear and consistent goals and targets are set and take into account benchmarks of projects across industries, including cost-benefit analysis and other measures, which are deployed to set performance targets and assurance during delivery and operations. This process defines the performance baseline and is the first step in development of the commercial strategy.

The role of the Integrator should complement the capabilities of the Capable Owner, by providing a critical insight into what is possible and too ambitious when establishing goals and targets. This process provides a platform for a constructive challenge to the brief, to help collaboratively define targets with expert advice.

Setting clear goals should aim to establish ‘back-to-back’ alignment throughout an enterprise, with all teams focused on goals they can relate directly back to the required customer outcomes.

Data-driven insight helps everyone in the value chain understand how their actions impact customers. Customer experience is a primary driver of business performance, tracked in real-time.

Customer outcomes translated into clear goals and targets, agreed and cascaded through the whole organisational ecosystem.

1. P 13 Commercial Handbook – creating a performance baseline

1. Alliancing Code of Practice – general principles

Strategy in place describing future approach, way of working and organisational culture Clear vision statement in place that is driven by value, outcome and target definition and that is used as reference for all processes and strategies

A joint vision is in place and agreed between the enterprise partners that clearly links to the outcomes and value defined. The vision reflects the business strategy and guides all decisions and behaviours across the enterprise.

With previous experience and knowledge a mature Integrator should be able to provide advice and ensure that vision and strategy are both realistic and flexible enough to factor in contingencies for potential risks.

An initial strategy should be developed, describing how the organisation will be set up and how it will work. At this stage, given there may have been limited partner involvement, it should be at a principle level and provide a clear intent, with further opportunity to develop process and organisational detail as other parts of the team are brought on board.

A strategy provides clarity on direction, it is a statement of intent on how the organisation wants to work and the changes it will need to make. It provides the opportunity to build commitment within the owner organisation and to engage with wider stakeholders

The digital transformation strategy should address both digital delivery and smart infrastructure (delivery of new assets and the operation/maintenance/use of existing assets) and align closely to corporate strategy, supporting development of the enterprise.

Define the delivery strategy and model with particular focus on the outcomes, ensuring the voice of the operation is articulated.

1. P13 Private sector governance
2. P13 Blueprint – enterprise governance
3. P13 Role of government bodies in supporting enterprises

1. Case study – Manchester Metrolink

Senior leadership committed to a new way of working to realise a high performing Enterprise

Leadership teams are recognised as the champions for change across the range of enterprise participants. Leadership behaviours consistently promote active collaboration across participant boundaries and are selected on the basis of capabilities and experience in relation to initiation or delivery of complex programmes.

An empowered Integrator could support the Capable Owner with this process as required.

Successfully moving from a transactional to an enterprising model is in itself a behavioural change programme and, therefore, requires effective leadership at all levels within the organisation. Establishing a leadership group committed to a new way of working is an essential foundation in creating an enterprise.

Digital transformation is seen as fundamental to business success and recognised as much wider-ranging than simply focusing on new technology or an IT function.

Senior leaders across the Capable Owner committed to a new way of working and learning environment, in order to become an employer of choice and breeding ground for industry.

1. P13 Capable Owner maturity tool
2. P13 Digital Transformation maturity matrix leadership

1. Successful Alliance Leadership Behaviours                                                                    
2. Case study – Anglian Water

The behaviours required to deliver the required outcomes should be identified for that particular case and then used in establishing the Enterprise. These could be very different for different Enterprises

Enterprise team is fully motivated and strives to achieve partnership objectives in a collaborative manner. Commitment to shared cultural values e.g. EDI, H&S, sustainability.

The understanding of the Integrator should ensure that the defined behaviours are communicated and practiced effectively throughout the enterprise.

A critical step in establishing an integrated and collaborative enterprise is defining the behaviours that will deliver value. With clarity on the outcomes to be delivered and the goals of the enterprise, the behaviours required to achieve them can be defined. This alignment from outcomes to goals to required behaviours should be clearly defined.

The behaviours set out are central to developing the commercial model, partner selection and establishing the right environment for the enterprise.

Digital behaviours are included. Partners understand how digital transformation impacts them individually and how their performance relates to the digital transformation strategy. There is recognition that continuous innovation is required to keep pace with the rate of change in digital technologies.

1. P13 Blueprint – roles and responsibilities extract
2. P13 Blueprint – skills, beahviours and leadership

1. Successful Alliance Behaviours (general)

Define a commercial model that: – Measures value from a baseline – Mandates outcomes or needs – Is designed to drive the required behaviours – Rewards information value throughout whole asset life

Commercial structures are strongly linked to realisation of outcomes on a long-term basis, as well as collaborative and integrated ways of working.

The Integrator needs to have an extensive level of knowledge of the various contracts and incentivisation mechanisms, to be able to conduct a scenario analysis and see how they may be implemented within the values of the enterprise. This should include an assessment of suitability of partners and optimal risk distribution in the enterprise.
Discussions around the model should be facilitated by the Integrator to provide a medium of communication within the ecosystem to define the best form of incentivisation. The role of the Integrator may be impartial at this point depending on their agreement with the owner.

The commercial model for an enterprise measures value in relation to existing baselines or benchmarks for delivering outcomes, rather than value being defined through cost based competition to deliver a defined scope. Partners in an enterprise will therefore generate a return by adding value, not by delivering work.

The commercial model incentivises outcomes and whole-life thinking, which unlocks integrated digital/physical solutions. ‘Information assets’ are recognised as having real value and appropriate valuation models are introduced. Partners are rewarded for the value they add to information.

Relationship and trust based contracts developed and lead to improved value and better overall outcomes for the enterprise and the customer.

1. P13 Commercial Handbook – commercial strategy
2. P13 Commercial Handbook – enterprise risk management
3. P13 Digital Transformation maturity matrix commercial

1. Successful Alliance Commercial Models
2. Case study – Turner & Townsend

Initial organisational model agreed, including:

• Capabilities required to deliver
• Clearly identified lines of responsibility for integration
• Collective responsibility for solution development
• Clear interfaces with asset management and operation
• Clear strategy for offsite manufacturing and on site assembly

Organisational models are designed in alignment with outcomes and value defined. It includes a capable leadership team and oversight by different board levels.

The structure and responsibilities of the different partners in the enterprise should be agreed between the Integrator and Capable Owner. This is to ensure that the perspective of suppliers and advisors are adequately considered. This should increase clarity of responsibilities for partners that may join the enterprise later on.

As engagement within the enterprise and with key stakeholders builds – and having defined the proposed commercial arrangements – the proposed organisational model can be developed.

Common causes of failure relate to how a project is set up to be delivered. A good execution strategy will:

• Clarify interfaces between the sponsor and the client
• Clarify interfaces between the client and the supply chain
• Identify key transition points and hand-offs in the project’s lifecycle
• Define the delivery approach
• Ensure the delivery approach remains flexible
• Enable continuous improvement through the project life
• Help maintain focus on the full project lifecycle and end user

The enabling principles for more integrated working should also be set out.

Digital capabilities defined and understood across all owner functions and partners, including digital agility to learn, unlearn and relearn skills and behaviours.
Systems approach to effectively integrate digital and physical systems recognised as a key capability.

Define the role of the Capable Owner in the enterprise in order for other members of the team to be clear on their accountabilities within the enterprise.

1. P13 Competencies required of a capable infrastructure leader
2. P13 Digital Transformation maturity matrix capability

1. Case study – Team 2100

Strategy that identifies and provides for the selection of the right partners and roles; based on capability, leadership and behaviour. Applicable within the internal and external contexts

Appropriate incentives for each enterprise partner that reward collaborative, outcomes based behaviour.

The Integrator is responsible for ensuring that the different partners work collaboratively to add value and collectively innovate. The defined qualitative values need to be translated in the enterprise’s integration strategy, with a clear definition of the system hierarchy. A clear medium for communication needs to be established to enable this process to happen effectively.

The knowledge of the Integrator is key to enabling the enterprise to identify and realise opportunities for optimisation by having an overarching understanding of the scale of potential strategic benefits. This should factor in considerations raised by advisors and suppliers.

Given the commercial model for the Integrator incentivises delivery of outcomes, not delivery of work, selection through cost based tendering is not relevant. The selection process for the Integrator will be based on capability, leadership and the required behaviours.

The Integrator can take a number of forms. Bringing together the delivery capabilities required to develop an effective Integrator will often lead to owner capabilities and teams being included in the Integrator. It could also include a number of different and diverse partner organisations. These design decisions should directly follow the prior definition of the required Integrator capabilities.

Developing an integration capability is an important part of establishing an enterprise.
The organisational design will have defined the capabilities required within the Integrator, the commercial model will have defined how the organisations who make up the Integrator will be commercially incentivised to deliver the agreed outcomes for less. This enables integration partners to be procured and selected.

All role definitions and selection criteria include digital requirements, covering skills and behaviours that are highly transferrable between sectors. In selecting partners the owner understands its own needs so as not to be dictated by vendor-led decisions.

Define what level of integration will be carried out by the Capable Owner, in order that a strategy can be created to define and deliver all other necessary integration.

1. P13 Role of the integrator
2. P13 Commercial Handbook – selecting the right suppliers
3. P13 Work design and wellbeing within integrator roles

1. Successful Alliance Integration Strategy
2. Case study – Different ways to form an integrator

Strategy that:

• Identifies critical ecosystem capability including digital enablers
• Secures early involvement in solution development
• Achieves alignment through commercial incentives, behaviours, packaging strategy, long-term goals
• Maximises value of investments through integrated digital-physical systems

Procurement process is seen as a key enabler to drive the lifecycle development and engage high performing, engaged and capable teams. Key principles of project selection, approval and initiation flow through to procurement strategy.

Contracting strategy includes a clear risk management approach that shares risk at the enterprise level as appropriate for individual partners, as well as across projects and programmes.

A procurement process that supports development of the wider enterprise is a key enabler and one of the most challenging changes when compared with traditional practice. A reliance on tendering approaches throughout the supply chain will reinforce the transactional nature of traditional delivery.

Identification and selection of wider enterprise partners follows a number of key steps:

• Identifying the capabilities that will deliver most value and have greatest impact on the effective delivery of the required outcomes
• Adopting a selection process that predominantly uses capability and behaviour to secure the right enterprise partners
• For strategic partners, adopting incentivised back-to-back commercial arrangements
• Establishing relationships that align outcomes, commercial goals, behaviours and attitudes
• A process that secures partner input earlier, when there is a greater opportunity to add value (this requires an understanding of which partners can add value and a process that integrates them at the right time)

Requirements for sourcing and procurement strategies are formulated early to allow long term relationships with the supply chain. This uses demand forecasting to identify the nature and type of suppliers. It includes the selection process involving key aspects of behavioural assessments as well as capability, innovation and value/outperformance. The focus on behaviour at the sourcing stage is important for selection and scene setting.

It is important that there is an understanding of the behaviours required of the whole team, including the supply chain. A key aspect is engaging the supply chain through frameworks so that the teams can be formulated early.
It will also require an approach to supplier framework management and development, that integrates the supply chain into the whole team approach, underpinned by behavioural mobilisation, development and integration. This is a focus on a one team approach with behavioural change for the suppliers and the alliance, and the integration of the delivery teams.

This is then linked to the required processes that bring the teams together through work allocation methods (including self nomination) top down early target cost setting, joint solution development, and integrated teams.

Commercial incentives encourage information sharing, aligning partners’ rewards with improved outcomes.

Effective integration of traditional and disruptive partners delivers smart infrastructure, maximising value from integrated physical-digital systems. Delivery of new information assets increasingly valued as important as corresponding physical assets.

Use the business outcomes as key parts of defining the procurement strategy, in order to ensure the full ecosystem understands how each company’s input relates to these outcomes.

1. P13 Commercial Handbook – contracting in an enterprise

1. Case study – Highways Agency

Imbed system to provide information to continuously measure ‘as delivered’ and ‘as operated’ performance against customer outcomes

Business case and delivery milestones are benchmarked based on consistent performance metrics that are defined across industries/sectors at a national level. Performance is measured continuously.

One of the core responsibilities for an Integrator is to consistently measure and improve productivity. It is therefore necessary for this to be translated through the ecosystem by ensuring appropriate targets are set for all partners (including the wider ecosystem that may be less involved).

The development of the digital twin means that data increasingly provides visibility of actual, as-operated through-life performance. Integration of data streams reveals new insights, including forecasting future performance at asset, network and system levels.

Performance measured against goals and targets which have been agreed and cascaded through the whole organisational ecosystem, based on the customer outcomes.

1. P13 Digital Transformation maturity matrix asset management

A structured and shared programme of organisational change and improvement initiatives to develop and maintain integrated, collaborative and agile teams with the necessary skills

Commitment to select and nurture the team on the basis of collaborative potential towards a high performing team. Leadership is committed and actively encourages this way of working.

An enterprise will integrate teams from different organisations. It is also likely to include teams made up of individuals from different organisations, brought together through a ‘best for task’ process.

These teams are highly effective as they combine capabilities and perspectives, with effective integration ensuring they are not limited by the interfaces and hand off approaches found in transactional arrangements.

Developing and maintaining these teams is a core competence of an enterprise. There should be an established and continuous ‘high performing team’ process applied to all relevant enterprise partners, allowing teams to collectively review their progress and agree ongoing improvement initiatives.

Owner and enterprise partners have clear understanding of their digital skill gaps and priorities to address them. Training programmes are developed or redesigned to provide digital skills needed by the enterprise. Staff understand their personal responsibilities including for information security and data quality.

Gap analysis to be undertaken to analyse how much improvement can be achieved by the whole ecosystem as it works together collaboratively, both at a macro and micro level.

1. P13 Organisational innovations

Key enablers to integration identified and established:

• Shared systems, processes and infrastructure, providing access to information
• Best for task selection of integrated teams
• Objective setting and review process for performance management

Enterprise partners operate as ‘one’ and are not restricted by any barriers to integrated working. Governance of enterprise enables this way of working.

Integrated teams can only be enabled by creating the right environment and right conditions for this way of working, including:

• Common information structure and reporting
• Where required, access to common reporting systems
• A common digital model
• A common project delivery process
• A process for setting and reviewing team and individual performance in an integrated organisation • Project objectives cascade through an integrated team; individual development and reward remains a partner responsibility
• Co-location where it is identified as an important enabler to integrated working

Coherent digital planning helps ensure alignment across different functions and partners. Key platforms are understood and implemented, with integrated, agile and scalable systems in place across the enterprise. Data is available by default, with visibility across multiple functions (e.g. strategic planning, operations, asset management, capital delivery, customer facing) to meet enterprise needs. Digital skills are central to professional development, performance reviews and career progression.

Define which members of the team are accountable for common data, communications, collaboration and integration.

Processes in place to manage the enterprise at outcome, programme, system and network level

External stakeholders actively engaged in ‘do-with’ approach to establish long term relationships and fully comprehensive value appraisal.

The Integrator is expected to establish a clear medium of communication between enterprise partners to ensure that interfaces are managed effectively and efficiently.

An enterprise places greater emphasis on maintaining effective relationships between all partners.

This emphasis on effective relationships is supported through a structured and continuous process that provides a coherent review of partner contribution and progress. It should include quantitative measures, such as delivery performance, and qualitative measures such as leadership and behaviour.

The process should highlight agreed gaps and generate a continuous improvement plan.

Effective enterprises maintain a dynamic process for managing both project performance and b2b relationships.

Create a common performance management system for the enterprise that enables collaborative and transparent working.

Development of skills, suppliers and sustainability systems; reducing barriers to entry for SMEs and digital start-ups

There is a targeted approach to innovation, including behaviours and processes, to strengthen the ecosystem. Risk appetites are understood and partners share investment and rewards, towards shared development and success. Open innovation provides opportunities for digital disruptors and start-ups, incentivising digital suppliers to join ecosystem.

Learning environment and culture where it is safe for all to work, learn and collaborate.

1. Case study – Aquam Corp
2. Case study – From T5 to Heathrow Expansion

Key enablers to integrated delivery established:

• Common reporting
• Clear integrated delivery process and milestones

Commitment to free-flowing information and sharing of knowledge within the enterprise that strives for an ethos of continuous improvement.

The teams collaborate around shared data. There is a common data environment across the entire delivery process.

The enterprise creates a set of values and behaviours which it works to and will be held to account against.