Case study - Partnership to precipitate performance

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The concept of partnership to improve working relationships and performance up and down the supply chain has been used successfully for a number of years. However, when National Grid, the electricity transmission network owner for England and Wales, decided to deliver a substantial part of its investment into the network through a series of regionally focused partnerships, the new rules of engagement precipitated a new way of working. Hans Van Veelan, managing director of Systems for Areva T&D in the UK and a member of the Alliance supervisory board and Geoff Singleton, Alliance manager for National Grid discuss how this collaborative approach, adopted by National Grid, will allow the various stakeholders throughout the supply chain to work more closely than ever before, delivering the programme to the high levels of quality and safety.


National Grid identified a number of key issues, the first and most important of which was to ensure continual improvement of health and safety. The second was the level of available expertise. While there is global competition for the supply of switchgear, transformers and the application of new technologies, there is a huge shortage of suitably skilled and qualified people in the UK’s electricity industry.
The Alliance approach
In order to manage these issues, National Grid offered a number of regionally based framework contracts to major international players over a five year term. These contracts work on the basis of target costing, involving all the partners sharing the pain or gain of achieving the target for actual cost. The key to the success of this new working approach is to demand the strongest levels of collaboration between all parties and to drive it by aligning their needs.
Areva T&D was one of many companies who expressed an interest. As a result Areva T&D joined with Mott MacDonald and Skanska to form a joint venture company (AMS JV) which entered into a selection process to become an Alliance partner for National Grid in one of the four substation areas – the North, Central, South East and South West.
Collaboration is king!
The selection process was multi-faceted, based not only on the technical and project management expertise, but also with great emphasis placed on the cultural fit of the partners, their behaviour and ability to work collaboratively.
The AMS JV team demonstrated exactly the type of collaborative behaviour National Grid sought. When combined with the in-depth technical knowledge and experience, the AMS JV was the perfect choice for the technically demanding South-East area and in October 2006 the AMS JV Alliance was confirmed as National Grid’s preferred partner.
The make-up of the Alliance shows the depth of collaboration possible across the partners. The Alliance management team is headed up by a senior National Grid manager who reports to a joint supervisory board made up of AMS JV and National Grid personnel. Regardless of employer the best person for the job has been chosen to fill each role. For everybody this has been a leap of faith with an interesting combination of different working relationships. The dynamics of the organisation have changed for everybody, where bosses have become clients and clients have become subordinates – suffice to say this presents interesting cultural challenges which are being actively addressed.
The collaborative approach and culture is driven across all four substation Alliances, and National Grid will assess the performance of the approach by measuring the success of their overall capital works programme for England and Wales. Therefore a significant proportion of the AMS JV’s incentive payments are reliant on the performances of other Alliances. All four substation Alliances must deliver their programmes safely, to time and to cost otherwise none of the area partners will receive their additional incentive payments. It therefore follows that if another area Alliance is in danger of missing its target, there is an incentive for the AMS JV to help them. Almost overnight, players who were competitors in the selection process have now become aligned to the common objectives of the Alliance approach.
What does the future hold for the Alliance?
The four Alliances will focus on substation development and construction. The work will also be required to connect new infrastructure, such as wind farms and other new electricity generation plant and enhancing and replacing existing assets to ensure the continued safe and reliable operation of the electricity network.
The key to the success of the partnership for National Grid and the Alliance partners is firstly, having the belief in the success of the Alliances. All of the partners have to adapt their behaviours and ensure that there is alignment of vision, values, objectives and behaviours. Finally and most importantly there has to be a solid commitment to raising the safety standard – this can be done by providing the right focus on safety which will be developed right from the start of the project, ensuring there are no accidents in any of the projects.
National Grid will benefit from forming this Alliance as it creates an opportunity for the best partners available in today’s market to come together – partners that can deliver a world class service and set new benchmarks in the execution of National Grid’s capital expenditure programme.
AMS JV’s involvement in the Alliance also brings important benefits. It allows Areva T&D as an organisation and the AMS JV as a group of companies, to be able to secure resources and to plan into the long term. With this collaborative approach the JV can now have a five year window against which it can plan and organise itself. Furthermore, the philosophy of the gain and pain principle is another key benefit - all partners, by working together and by sharing objectives and optimising their processes in the way that they work, will allow for gains to be made in the project for the benefit of everybody.
National Grid is expecting to spend over £2.5 billion through this mechanism over the next five years. The AMS JV is at the start of a long and exciting journey and the next step is for the JV to move into a central location which is almost complete. It’s important that it starts to look and feel like a single Alliance as it moves forward into the mobilisation stage. This secure and long term commitment will enable AREVA T&D to plan, manage and harness all necessary resources and capacity to set a new benchmark in the delivery of electricity transmission substation solutions.
By ensuring the partners embrace the Alliance approach with its common vision, set of values, goals and objectives, National Grid is confident it can maintain the safe and reliable operation of the high voltage network by replacing assets and by connecting new infrastructure to meet the growing demand for electricity.