Driving Transformational Change in the Water Industry: Achieving Project 13 Maturity

Introduction

This article delves into the water industry’s primary challenges in driving transformational change in capital projects, the necessary adjustments to overcome these challenges, and key practices to catalyse, cultivate, and sustain the transformation needed to achieve Project 13 maturity.

As UK Water Companies gear up for AMP 8, OFWAT’s message is clear. The Regulator is deeply concerned about the industry’s current rate of capital investment, which falls short of the commitments made for AMP 7. Concurrently, OFWAT emphasises the need for even larger capital investment commitments. “Given the scale of the task, there has to be a real change in how companies deliver outcomes. That means new ways of working and innovative new solutions.”

The Water Industry Knows What to Do

At its core, Project 13 advocates for creating high-performance organisations defined by trusted partnerships between Owners and Contractors. To achieve this, Owners must transition from traditional cost-focused procurement approaches to developing the skills required to work with long-term partners, articulating their desired outcomes, and maintaining a value-driven mindset. These partnerships should be characterised by commercial arrangements that align incentives with outcomes and integrated ways of working as a cohesive, virtual enterprise. This shift challenges and replaces traditional ways of working that have become counterproductive.

It’s the How that’s the Challenge

While aspirational features of Project 13 are important, they alone do not generate the new behaviours and ways of working required. Champions of the new owner-contractor relationship must pay close attention to project-level integration and collaboration. By fostering a strong commitment to change at both organisational and project levels, enterprises can successfully implement the necessary shifts in mindset and behaviour.

The Scottish Water “Integration” Story: Driving Behaviour Change at the Project Level

Scottish Water, providing services across Scotland to over 2.5 million homes and businesses, has been addressing these challenges since the inception of Strategic Review 21 (SR21), a multi-billion pound six-year program. They partnered with VISION Consulting to transform the time- and cost-efficiency of capital projects while maintaining quality, customer care, and environmental commitments.

VISION Consulting introduced Scottish Water to Commitment-based Management™ (CbM), focusing on transformational leadership, governance, and cultural behaviour change. By applying lean construction principles combined with VISION’s CbM approach, Scottish Water launched initiatives to encourage collaboration and reduce lean and coordination waste. The “50-30 mission” aimed for 50% faster time to site and for 30% less cost. The brand ‘Get to Site in Half the Time’ was born.

By redesigning capital project execution paths and implementing CbM and lean construction practices, Scottish Water achieved significant time and cost savings. Early pilot projects demonstrated time savings of between 51% and 72% and cost reductions of 21% to 66%, worth approximately £6.5M. By September 2022, Scottish Water reported an average 23% time saving across 29 active “Factory” projects, with cost savings on target at 30% and a 5% gain share improvement.

VISION demonstrated its ability to instigate vital behaviour changes in deeply rooted cultural environments, collaborating with Scottish Water to design new ways of working and providing teaching, coaching, and mobilization to embed new practices.

Seven Practices to Drive a New Kind of Productivity

The following seven practices capture the key culture change elements required to radically improve productivity:

1. Form Integrated Design Teams

The Integrated team, comprising members from Scottish Water and Alliance Partners, evaluated project concepts, selected designs, and halved the time required to reach an agreed design and plan.

2. Collaborative Planning and Delivery

Integrated teams delivered outcomes — for some capital project types in as little as 16 weeks — using lean and agile approaches with bi-weekly sprint meetings and daily stand-up sessions.

3. Manage Promises, Not Tasks

Shifting from task management to commitment management, CbM practices enhanced action-oriented conversations, focusing on reliable promises and customer satisfaction.

4. Cultivate Better Listening

Enhancing listening skills involved understanding moods and what people care about, helping Project Managers and Product Owners detect and explore stakeholder moods to foster reliable promises.

5. Teach in Action / Learn by Doing

Developing CbM skills through coaching during project meetings, observing dialogue dynamics, and intervening to generate strong assessments, clear offers, and reliable promises.

6. Mobilisation: Make Trouble by Asking Why

Mobilisers challenged traditional practices by questioning value and necessity, driving action to address blockers and motivate change.

7. Continuous Improvement

Learning Teams provided time and space for reflection and improvement, focusing on understanding Commitment-based Management distinctions and resolving long-standing mistrust.

The Need for Collaborative Contracting

As much as these practices can contribute to improving capital projects efficiency, Capable Owners will recognize that one of the major sources of gravity dragging organizations and projects into the past comes from traditional procurement and contracting techniques that over-specify requirements, create friction for innovation and risk management, and create distorting incentives.  These traditional contracts create an environment in which people who want to be collaborative can be stymied by people who are committed to hew to the contract language.

There is a good, proven solution for this.

Integrated Project Delivery

Project 13 echoes the objectives of Integrated Project Delivery (IPD), which is a collaborative project contracting and delivery approach that maximizes project value, reduces waste, and improves overall project outcomes through an Integrated Form of Agreement (IFOA) that:

• Fosters Collaboration: IPD brings all stakeholders, including owners, designers, contractors, and suppliers, together in the early stages of the project to foster collaboration and teamwork.
• Aligns Incentives: IPD aligns incentives between project participants, including sharing risks and rewards, to encourage collaboration and reduce adversarial relationships.
• Improves Communication: IPD emphasises open and transparent communication between project participants, enabling them to share information and work together to solve problems.
• Optimises Project Value: IPD seeks to optimise project value by focusing on project outcomes, not just cost, and using innovative solutions to deliver the best value for money.
• Reduces Waste: IPD aims to reduce waste by improving project planning and management, eliminating unnecessary processes, and using lean construction principles to minimise waste and increase efficiency.

Embracing the key practices outlined in this Paper – Lean Construction and Commitment Based Management – readies Capable Owners to become reliable partners capable of executing and reaping the advantages of Integrated Project Delivery (IPD).

Conclusion

Incorporating these practices at both project and management levels helps organizations build the capacities of a Capable Owner, fostering strong relationships and trust among stakeholders. This commitment to responsible ownership drives innovation, reduces risks, and optimizes the delivery of complex projects efficiently and successfully. By adopting a mindset focused on continuous improvement, organizations can achieve Project 13 maturity and deliver better outcomes for all stakeholders.

Footnotes

Possibilities: A Better Future

Project 13 is defined by five pillars that evolve through three stages of maturity to produce better outcomes for owners and better profitability for delivery partners:

• Becoming a capable owner
• Governance that focuses on value, clarity of purpose, and outcomes over cost
• Tight operational integration and collaboration
• Delivery organization and commercial arrangements that align incentives
• An emphasis on digital transformation as a mechanism to support the above

The core idea of Project 13 is to overcome a legacy of transactional relationships and distrust, creating a difficult and adversarial work environment, unnecessary cost-overruns, and poor value for money.

Obstacles to Progress

Utilities face self-imposed, self-reinforcing blind spots, representing the powerful hold of traditional practices and a mindset that limits possibilities. These challenges include:

• Blindness and What We Take for Granted: Daily practices often blind us to what we are doing, leading to vague commitments and a lack of genuine promises.
• Corporate Moods: Restrictive moods rationalize the status quo, limiting possibilities and shutting down conversations for systemic change.
• Distrust: Adversarial, transactional environments foster distrust between water companies and contractors, leading to overly detailed documentation and defensive project planning and delivery practices.

Antidotes

To counter these challenges, organizations must declare a commitment to new ways of working, launch pilot projects to prove the effectiveness of new practices, and scale successful initiatives across the organization. Key actions include:

• Taking Commitments Seriously: Promises drive action, requiring a cultural shift to genuine accountability and collaboration.
• Viewing Organizations as Networks of Commitments: Understanding projects as networks of promises helps manage complex tasks and relationships.
• Collaborative Contracting: Collaborative action and contracting approaches foster trust and shared goals, enhancing project outcomes.

By adopting these practices, organizations can build and sustain trust, shift away from restrictive moods, and achieve the transformational change required for Project 13 maturity.