An Introductory Guide to Best Practice in Construction

CONSTRUCTING EXCELLENCE
IN THE SOUTH EAST

A Guide to Best Practice in Construction

This guide has been produced to assist you and your organisation to benefit by embracing the enormous changes that are taking place in the industry. Companies implementing best practice consistently report significantly higher profits, increased customer and employee satisfaction, improved safety and productivity and reduced environmental impact.

We look at 10 key business practices that deliver real added value and are shaping the direction of the industry. We signpost local support networks and give tips on successful implementation. 10 Key Business Practices
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Procurement Partnering

Risk Management

Value Management Benchmarking

Sustainable Construction Supply Chain Management Whole Life Costing Health and Safety Lean Construction

SWISS RE Building, London. A Constructing Excellence demonstration project.

This booklet has been produced by the South East Centre for the Built Environment (SECBE) a new consortium of business leaders that exists to inform regional policy and drive business-to-business learning and networking. Further information: [Link]

A better built environment through better business

SECBE

Best Practice

What is Best Practice?

Best Practice is the knowledge that underpins examples of excellence. We can take this knowledge, share it and implement it throughout the construction industry. Over the last 10 years there has been a dramatic change in the way construction activity is being undertaken. This is not only in the form of new technology, but also in the way that construction projects are procured and managed.

This new thinking has been very successfully applied in other industries throughout the world. The work of organisations like SECBE and Constructing Excellence is to identify this Best Practice, widely demonstrate the business case for action and then support its application.

Whats in it for me?

We are all more demanding and more discerning than ever before wanting everything better, faster, cheaper, safer and easier. Increasingly informed clients are looking for companies that are demonstrably better more knowledgeable, experienced and progressive to consistently meet their business needs. Understanding and using recognised best practice in construction provides organisations with the opportunity to fully meet those business needs and make increasing profits to reinvest in its people, products and processes, or distribute to shareholders.

The latest national Key Performance Indicators (June 05) make the business case for action companies embracing best practice achieve better client satisfaction, happier employees, safer sites, reduced environmental impact and consistently make 10% more profit than those that dont.

Construction News

Contract Journal

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Procurement

Procurement follows the project lifecycle. Whilst the diagram shows the process for an Integrated Project Team (IPT), the same principles apply for all projects. First the client must identify and clarify business needs. Next the client will need to develop and prioritise a set of value criteria against which an Advisory Team can help assess possible options of which a construction project may be just one.

Modern procurement methods emphasise the need to select those companies that can work effectively in a collaborative relationship and who understand and practice the principles of Partnering. New forms of contractual arrangements seek to get all key parties to work together as early as possible to ensure the effective delivery of a project.
Gosport Borough Council Partnership in action. A Constructing Excellence demonstration project.

Procurement is the process of establishing the most appropriate method of managing the construction project and selecting the best team to design, deliver and sometimes operate the required facility. Lowest price tendering and lump sum contracts are giving way to better forms of selection and contract arrangements.

The IPT Process

Share Learnings

Project Closure
Identify Business Need
Develop Strategic Brief & Value Criteria

Process Review
Project Proving Integrated Project Team:
Implementation of agreed solution

Advisory Team:

The business need and value criteria together with the favoured option can then be used to establish a strategic brief. It is at this stage that the decision has to be taken as to which procurement route is most suitable for the project. Guidance from the Audit Commission and the Office of Government Commerce is very strongly in favour of the newer forms of procurement such as Design & Build, Private Finance Initiative and Framework Agreements for all but the most simple of construction projects. It is also recommended that an Integrated Project Team partnering approach is also adopted within these contract forms.

Develop & Confirm Solution & Team

Expanded Core Team And Clusters:

Create & Screen Strategic Solutions

Core Team:

Further information: [Link] Good clients guides [Link] Integration Toolkit

SECBE

Best Practice

Partnering is a management system that is based on a collaborative approach to working. It is therefore a very different style of working compared to the traditional adversarial approach that has been common in the construction industry for many years.
Mill House, Surrey Place, Guildford. A Constructing Excellence demonstration project.

Partnering

A partnering project has the following characteristics:

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It has been demonstrated on numerous partnering projects that by working collaboratively it is possible to achieve far greater value for money for the client, higher profits for the companies involved, improved quality and more predictability of project completion.

an agreed set of mutual objectives

work undertaken in a spirit of trust and co-operation an agreed problem resolution procedure open book pricing

It is normal for partnering projects to have a partnering charter that sets out the objectives of the team, which is signed by all parties as a statement of intent. Partnering is now widely used in all aspects of the construction industry. A number of forms of contract have been specifically written, setting out a framework in which the parties to a partnering project are to work.

a commitment to continuous improvement.

In addition, a number of private sector and the larger public sector clients have set up Framework Agreements with contractors. These Framework Agreements clearly define the partnering arrangements and support the development of long-term relationships by providing continuity of work in return for continuous performance improvement Further information: [Link] Constructing Excellence fact sheet [Link] Integration Toolkit [Link] Partnering the team; selecting the team; and partnering workshops [Link] Good client guides [Link] Register of Pre-Qualified Construction Services

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Risk Management

A risk register is a key planning tool. The register should be started at the inception of a project and actively used through to project completion. It can then be used to assess the way that risk on the project was managed so that lessons can be applied to other projects.

As well as identifying and assessing risks, the register is also used to assign appropriate actions for project team members against each risk item. The risks and associated actions should be reviewed on a regular basis throughout the pre-contract and construction phase.

It is important that financial allowance is made for all residual risk items. This ensures that it does not get ignored. Instead a decision can be taken as to the best approach in reducing the cost of this item. This could involve paying for more detailed investigation work to be undertaken and so providing better information on which the respective elements of work can be costed. Further information: [Link]/sdtoolkit/workbooks/risk/[Link]

Value Management

This is a method to identify the best way of meeting a clients business needs taking into account time, cost, quality and risk constraints. The value management process involves collaboration with the team responsible for design and delivering the project, and ideally includes end-users and other stakeholders. The first step is to clearly identify value for the client in terms of need, business benefits and priorities. Next will be the identification and evaluation of options this forms part of the value engineering process. Selected options will then be assessed in terms of their cost, risk and extent to which they contribute to satisfying the clients business needs.

On completion of the project the value management process should be appraised to review how successful it was in ensuring value for the client and the other stakeholders. Further information: [Link] Institute of Value Management [Link] Value management a quick guide

This process represents a systematic approach to generating and evaluating options to satisfy client requirements. It is carried out throughout the life of the project and is undertaken in parallel with the risk management process. It often features a value management workshop close to the beginning of the process once the principal parties for the project have been identified.

All processes and components suggested for the project would be critically appraised to determine whether better value alternatives or solutions are available.

SECBE

Best Practice

Sustainable Construction

Sustainable construction cohesively addresses the triple bottom line the social, economic and environmental performance of the industry. Areas for action include:
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being more profitable and competitive. It is recognised that businesses need higher profits to intelligently invest in its people, products and processes to improve their competitiveness. delivering buildings and structures that provide greater satisfaction, well-being and added value to customers and users.

respecting and fairly treating employees and the wider community. This includes improving health and safety, enhancing site and welfare conditions, and avoiding noise and dirt which would inconvenience local residents.

Sustainability Checklist for Developments in the South East

enhancing and protecting the natural environment, including protecting habitats, trees, waterways and other natural features.

minimising consumption of natural resources and energy during the construction phase and throughout the life of the facility. The buildings should be energy efficient and utilise energy from renewable resources by specifying recycled materials and renewable energy sources and considering the buildings future use. reducing waste and avoiding pollution during the construction process. 70% of landfill is reportedly generated through construction activity.

Further information: [Link]/sustainable [Link] [Link]/construction [Link]

Canary Wharf. A Constructing Excellence demonstration project. Information Influence Improvement 7

Benchmarking

Benchmarking is a method of improving performance in a systematic and logical way, by measuring and comparing your performance against others, and then using lessons learned from the best to make targeted improvements. It means knowing the answers to the following questions Who performs better?, Why are they better?, What actions do we need to take in order to improve our performance?.

Benchmarking focuses a companys improvement efforts on its success-critical issues. It ensures that improvement targets are based on what has actually been achieved by others. For organisations in the public sector, benchmarking provides quantifiable assurance that Best Value is being achieved. The national framework of Key Performance Indicators provide the basis for easy comparison:
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All Construction client satisfaction, Time, Cost, Quality, Safety, Productivity, Profitability Respect for People Environment

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Construction Consultants M & E Contractors Construction Products Industry

All Construction KPI

KPI wallcharts - Free (shown here) and Toolkits - 95 are available from: constructingexcellence@[Link] or tel: 0118 967 5545.

SECBE

Best Practice

Supply Chain Management

Supply chain management is a relatively new term in the construction industry. It involves integrating the operations of all organisations involved with the delivery of a particular product or service. This extends from the primary producer all the way to the end-user.

In construction this will include the primary material suppliers, component suppliers, manufacturers, distributors and intermediaries, installers, trade contractors, lead contractors, designers and the client organisation.

Supply chain management has become a central issue for many clients and companies. This is because it offers the prospect of making significant cost savings and improving value by enabling companies to work more effectively together across the entire supply chain.

Portsmouth City Council Gas Central Heating Partnership

Management practices have to support more collaborative ways of working. This includes designing systems to ensure accountability and also providing support and incentives to supply chain partners.

Effective operational and management practices are necessary to make supply chains work. Operational issues look at how materials are ordered and delivered to site, how trade contractors are selected, how they are involved with designing and planning the works, and how invoicing and other transaction costs can be reduced.

Manufacturers are developing integrated supply chains involving key component suppliers and installers. This pre-assembled supply chain then competes with other supply chains to work with lead contractors or clients. The lead contractor and client organisation in turn are assembling their own supply chains to deliver key products or services. Further information: [Link] Strategic Forum Implementation Toolkit on Integrated Supply Chains Accelerating Change Report(2002)

Due to the vast range of products and services within the construction industry it would be impossible for any organisation to know, let alone manage, all of its suppliers. Therefore leading companies are organising elements of specific supply chains that are most critical to their success.

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Whole Life Costing

This is a method used to measure the costs of ownership of a building. It takes into account the initial capital cost of creating the building plus the cost of maintaining and servicing the building over its whole life. The reason why Whole Life Costing has become such an important issue is the recognition that the cost of maintaining the building often far outweighs the initial capital cost. Studies have shown that for every 100 of capital cost there is 500 operational expenditure over the life of the building.

This issue has become highly relevant with the increasing use of the Private Finance Initiative where the service provider is responsible for both the construction and operation of the facility.

An anticipated cost profile of the building over its planned life is generated with a Discounted Cash Flow method used to calculate a single cost figure. This enables the project team to analyse the impact of the capital cost decisions. A higher initial capital expenditure can often be justified by taking into account the impact this will have in terms of maintenance, servicing and other forms of operational costs associated with managing the building. Further information: [Link]/sectors/housingforum BSi Document on whole life cost CE factsheet

Whole life costing takes into account this operational expenditure when deciding on the initial design and specification of the building. In this way it can be seen as a form of investment analysis.

Dartford Bridge. A Constructing Excellence demonstration project. 10 SECBE Best Practice

Health & Safety

There are two key issues with regard to health and safety in the construction industry. The first is respecting peoples rights to be protected against risks that affect their safety and long-term health. The second is that construction sites that are effectively planned and managed are more productive and profitable as well as being safe. The starting point for health and safety is effective planning of construction works. This starts at the design stage, where the 1994 Construction (Design & Management) Regulations provide the appropriate framework. The design process should involve a detailed assessment of the construction process to make sure that no problematic health and safety issues are inherent within the design. Next is the detailed planning and scheduling. This should include clearly identifying processes for the execution of each element of the works. See Health & Safety Checklist for key items.

Health & Safety Checklist

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Access on site Scaffolding Ladders Roofwork

Welfare facilities

Excavations Asbestos Plant

Manual handling Traffic vehicles Tools and machinery Hoists Fire Emergencies Hazardous substances Noise Hand and arm vibration Protecting the public Electricity & other services

Finally, the organising and controlling of works on site. In preparation for this it is necessary to ensure that the people who are working on the site are:
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trained and properly competent to do the work safely

properly supervised and given clear instructions

provided with the right tools, equipment and protective clothing

Performance against each of these issues needs to be regularly checked and any shortcomings remedied. Further information: Respect for people and CE factsheet [Link]

knowledgeable about health and safety issues

Further information: HSE InfoLink 08701 545500 RIDDOR 0845 3009923 [Link]/sdtoolkit/reference /achieving Achieving Excellence Guide 10

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Lean Construction

Lean is an approach to managing production activity. It first focuses on understanding what value means for the client and then seeks to systematically reduce or remove any processes that add cost but do not add value. The five principles of Lean
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specify value from the customers perspective

identify and integrate the processes that deliver value produce only what is wanted when it is wanted

make value flow by eliminating bottlenecks and disruption pursue perfection through continuous improvement

Examples include waiting for information and materials, reworking due to defects, double handling of materials, unnecessary movements around site due to poor site layout and access arrangements, and compulsory competitive tendering

This approach has been widely adopted in a range of industry sectors and is now being increasingly applied in construction. One of the key principles behind lean construction is the integration of processes. The aim is to get construction activity to flow through the elimination of factors causing delay or disruption. It has been estimated that 30-40% of construction activity does not add value for the client.

Lean construction includes elements of value management by asking if the design fully satisfies the clients requirements. It then focuses on design for construction. That is, does the design allow for efficient construction processes? Can the design be developed to overcome buildability issues without compromising on the buildings functionality? The next step is to look at the various processes involved with delivery of the project. This will include detailed design development, material logistics, on-site materials management and sequencing of the works.

A series of tools can be used to understand the way processes are currently undertaken in order to find better ways of working. These include:
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Value Stream Analysis a system to identify which parts of the process add value. Five Whys a method of finding the root-cause of problems so that they can be systematically removed. Last Planner a planning tool for improving workflow on site.

Further information: Construction Lean Implementation Programme Tel 0845 605 55 56. Lean Thinking (ISBN 0743249275) by James Womack and Dan Jones [Link] Lean Construction Institute
12 SECBE Best Practice

How you can get involved with Best Practice

There are three opportunities for you or your company to share Best Practice:

Local Constructing Excellence Clubs see back page for details (Individual & Corporate membership fees 50 100) Regional South East Centre for the Built Environment
(Corporate membership fees 500 1,000) Services: Information Influence Improvement

Four Business Priorities:

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Client Leadership value based procurement Planning Process streamlined planning system application People Performance quality workforce at all levels Business Performance Increased productivity, reduced waste

National Constructing Excellence in the Built Environment

(corporate membership fees 3,500 7,000) Services: Business-to-Business networking Showcasing and Exemplers Innovation and Research Leadership and Influence Measurement and Diagnostics Tailored Services for business improvement

Five Member Forums:

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Building and Estates Housing Clients Infrastructure and Local Government

Further information: [Link] [Link]

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Serving the construction industry and its customers

Our Construction group provides a complete legal service to the players in the construction, engineering and technology industries and their customers.
Our Construction group is a team of specialists experienced in advising on all types of projects and disputes. We cover all sides of the industry: public and private sector property owners, developers and funders, architects and engineers, surveyors and project managers, contractors and sub-contractors, suppliers and service providers. In an area where both law and practice are always changing, our Construction group is able to respond quickly to clients' needs, adding value by giving clear and accessible advice and help. We can also draw on the resources of Blake Lapthorn Linnell's related specialised practice groups, such as Real Estate, Planning, Environment Tax, Insolvency and EU law.
Our services cover assistance with all of the following: building and engineering contracts consultants' appointments and warranties project structuring, financing and PFI procurement, operation and facilities management dispute resolution, adjudication, mediation, arbitration and litigation European regulation and public procurement
For an initial discussion, please call

Richard Wade 01865 254244 or email constructioninfo@[Link]

[Link]
Offices in Southampton, Oxford, Fareham, Portsmouth and London

the natural choice in law

Best Practice in Collaboration

Collaboration

The South East Centre for the Built Environment is a not-for-profit organisation, business owned and business driven. We have three core values: We work very hard to build relationships with key providers of business support services for the built environment sector to understand what is available, signpost to our members and add value where appropriate. We are the key regional Partner for Constructing Excellence and the Constructing Excellence Clubs are integral to our work. Innovation Education

Constructing Excellence Business Clubs

Constructing Excellence Clubs provide a substantial network of support for businesses wishing to find out more about any of the practices discussed in this guide. SECBE encourages its own members to join local Clubs and recommends all managers to discover the benefits of this resource and exchange ideas with a wide range of construction professionals locally. Constructing Excellence Clubs Berkshire Tony Myhill 0118 967 5545 tony@[Link] Kent Mick Lynn 01580 201 308 mlynn@[Link] Milton Keynes Jon Lever 01234 269 977 jon@[Link] Oxford Graham Blackburn 01865 799 782 gblackburn@[Link] Surrey Mark Pearce 01483 776 389 mark@[Link]

Brighton Andrew Symonds 01273 692 611 [Link]@[Link] Hampshire Gillian Wright 01256 766 839 gillianwright@[Link]

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