The Alliance is an innovative approach to the procurement of the Guild Living pipeline centred around collaboration. Guild Living is a developer focussed on creating and operating later living communities. We worked with Guild Living to develop an Alliance approach which was generated in response to a brief from Guild Living, the objective of which is to avoid the pitfalls of most traditional forms of procurement in the UK. We also recognise that our clients have a desire to innovate and get closer to the supply chain in doing that.This requires disintermediation of traditional layered procurement and contract hierarchies and the potential need for different incentivisation models to drive behavioural change. We believe that innovation,including MMC applications will not be successful unless you also innovate its associated delivery model.
The main pitfalls of ‘traditional’ procurement have been identified as:
• Unexpected cost overruns impacting on profit levels
• Unexpected programme overruns
• Conflict and litigious project behaviours
• Unfair risk transfer
• Poor quality workmanship or misalignment of expectations with finished product
• Poor profit margins for contractors
• H&S and environmental failures
• Rigid hierarchies separating clients from the supply chain
• Poor communication amongst the team
• Inappropriate project team members (capacity/capability issues)
• Distance from the supply chain
Innovating in procurement requires behavioural changes. This was reflected in the Guild Living Alliance Mission Statement and Behavioural Objectives:
We have reached a position with a framework of three contractors which turns the traditional ‘them and us’ approach within the industry on its head and into an approach which is:
1. Founded on collaboration and long-term relationships
2. Structured around early and constant contractor buy-in and insight
3. Fair in its distribution of risk and liability (apportioned by who is in control of the risk) and focused on early risk mitigation
4. Incentivised to encourage lean but appropriate pricing with clear
procurement and change protocols
5. Controlled around scenarios in which costs can increase
6. Managed in its approach to delay damages
7. Reflective of a fair profit margin and appropriate payment and solvency mechanisms
8. Design focused to ensure best value design and smooth handover of design at point of contract
9. Focused on the use of MMC consistently across the portfolio
These criteria are tailored to deliver more certainty both prior and during the contract in terms of the key drivers of cost, programme, quality, H&S and sustainability. They have been documented via an Alliance Charter and a suite of Alliance Contracts (amended NEC4 Option C).
In addition we developed a specific strategy to increase the Pre-Manufactured Value (PMV) of Guild’s projects. We did this to drive the link to better outcomes that we know PMV enables. Our PMV mission statement was as follows:-
How will we achieve the Mission Statement?
1. Model the PMV result to benchmark other projects (non-Guild Living) to understand the relationship between PMV and values. Benchmark projects to be 5-10 storey residential buildings excluding basements and demolition.
2. Align construction metrics across the Alliance contractors (for values) on Guild Living projects.
3. Agree on common digital methods/ tools to measure.
4. Use the PMV Estimator Tool (Stage 1 and 4 RIBA), together with the lessons learned from previous projects delivered by the Alliance contractors to understand the PMV designs for the live Guild Living projects.
5. Model likely improvements against the Improvement Criteria.
6. Identify a common systemised approach, in line with the Guild Living Brand Standards,creating a product and building process that will have a positive influence on the Improvement Criteria, using MMC/PMV lessons learned for future projects.
7. For future projects onwards, refine the Brand Standards, incorporating an optimised PMV target, in line with a system and construction process approach that enables the positive value impact, and the PMV score for specification (DfMA)
To learn more about the better outcomes that PMV delivers and the MMC Category Framework which enables this, see our PMV guidance in our Knowledge Hub here
