Rail
Driving industry change
10 years of collaborative working through the Commercial Directors’ Forum
Stephen Blakey on the journey of the Commercial Directors’ Forum and its key achievements
AT the end of 2020, Network Rail held its last national Commercial Directors’ Forum (CDF), bringing one of its most successful industry engagement initiatives to a close. The baton of future CDFs has now been passed to the five devolved Network Rail regions; Eastern, North West & Central, Scotland, Southern, and Wales & Western.
Launched in 2011, the Commercial Directors’ Forum set out with a lofty aspiration; to drive industry change across the rail sector and establish collaborative working as the standard approach to improving commercial stewardship of railway investment. It began with some 30 delegates from Network Rail’s Tier 1 capital works suppliers meeting at a conference centre in Westwood. These longstanding competitors gathered in the same room and initially gave the idea something of a lukewarm reception. There was a blend of caution, curiosity and pockets of cynicism. Some were expecting that, once again, they would be told how things should be done, rather than be asked. But the emphasis was on having a conversation, asking questions and seeking to understand the blockers to our collective success. Through this dialogue and collaborative effort, we hoped to find ways of doing things better.
It was also about role modelling the right behaviours in the belief that these would be a catalyst for collective change and the strengthening of relationships. Our aspiration was to establish a crucible for change and an environment of transparency and trust from which to base our collaborative journey. And, indeed, it was the platform from which Network Rail developed its collaborative strategy for the Control Period 5 (CP5) capital works portfolio and where we committed to obtain independent accreditation of our collaborative capability through BS11000 by 2012.
Delivering key outputs
To ensure it wasn’t simply a talking shop, it was important to identify key issues and deliver tangible change. This was achieved in the first instance through a focus on improving the speed of payments from Network Rail to Tier 1s and, in turn, from Tier 1s to Tier 2s. The output was a Fair Payment Charter that committed signatories to pay suppliers within 28 days and to cease the use of retentions. Whilst the charter was voluntary for Tier 1 suppliers, Network Rail formally changed the payment terms in its capital works contracts from 56 to 21 days and abolished the use of retentions.
Two facets were fundamental to CDF’s success: i) the building of trust through open and honest exchange; and ii) the concept that ‘the price of participation, is participation’.
As a result, by 2012 the CDF was seen as a serious undertaking. In addition to burgeoning attendance from key suppliers, professional institutions and industry stakeholders began to enrol as regular delegates. Convening every six months, the forum established several working groups to address a range of thorny issues – from safety and sustainability through to change control, claims management, benchmarking and efficiencies. These working groups comprised volunteers from within the CDF, who defined the problem and proposed outputs via a ‘quad of aims’ – a simple chart that helped ensure every team member understood the aims and objectives of each initiative and, most importantly, the outputs. They would then develop a solution which, once validated by the CDF delegates, would be deployed and adopted across all CDF organisations.
It took a lot of collective effort amongst the members to maintain momentum and two facets were fundamental to CDF’s success: i) the building of trust through open and honest exchange; and ii) the concept that ‘the price of participation, is participation’. The latter not only set the expectation of delegates whilst attending each two-day CDF, but also applied to participation in working groups that would set targets and priorities each year. With the working groups meeting up to three times between each CDF, membership represented a serious commitment. But the delegates kept coming and the appetite to participate grew to the point where numbers had to be capped at 80.
Extended engagement
Over the years, the forum faced several challenges; from finding the optimum ‘drum-beat’ and format, to maintaining a manageable number of working groups. Importantly, the forum had become mature enough to regularly take stock, reflect and challenge itself as to how to do better. It now included delegates from industry who were ‘agent provocateurs’, included specifically to act as critical friends and constantly provoke and test our approach. One such challenge was around how to extend the engagement to Tier 2s and SMEs without becoming unwieldy and diluting relationships built over the years. The answer – which unwittingly was the precursor to future CDFs in a devolved structure – was a franchise model.
This model established regional and asset-based CDFs across the country with the majority of delegates drawn from the regional supply chain. The emphasis was on Tier 2 and SME representation, supplemented by relevant Tier 1s (not the other way round). These regionally-led CDFs focused on local priorities, with Network Rail’s regional commercial directors ensuring working group continuity and alignment. It proved to be a highly effective model and a blueprint for the future.
By 2016, the strength of empowerment and advocacy across the regular delegates reached its height and CDF was widely recognised as market leading, with a number of industry awards to prove it. More importantly, the forum had delivered a range of industry-changing improvements including:
- A rail sector fair payment charter (an industry first).
- A rail sector sustainability charter (an industry first).
- A minimum 5% tender weighting for sustainability (an industry first).
- BS11000 certification of Network Rail, with key suppliers following suit.
- Significantly shortened payment terms (from 56 to 21 days) and the removal of retentions.
- An improved approach to assessing safety competencies during the tendering process.
- Joint development of a consistent framework for collaborative behaviours.
- The use of the New Engineering Contract third edition (NEC3) for complex programmes and long term frameworks.
- Review and collective adoption of the Rail Method of Measurement (RMM).
- The publication of a range of best practice guidance notes on issues such as disallowable costs and fees, change control and claims management.
Many of the above aspects, first tackled at CDF, went on to mature and become ‘business as usual’ for the rail sector. For example, key elements of the Fair Payment Charter are now enshrined in Network Rail’s standard terms and conditions, along with many best practice guidance notes and, of course, the use of a standard commercial taxonomy for capital works, the Rail Method of Measurement.
The national CDF continued to inform the collaborative agenda, outputs and publications right up to 2020, including:
- Network Rail’s accreditation as one of the first six organisations from around the globe to the international standard for collaborative working, ISO44001.
- Published guidance on 12 key enablers to successful alliances.
- Development and use of NEC4.
- An industry-wide survey of commercial practitioners’ perceptions and challenges.
- Further best practice guidance and improvements to standard terms and conditions.
- The creation and roll out of dispute avoidance panels (DAP).
- The publication of the first standard form of subcontract for rail (NR22).
The Triple Ts
One of the most valuable outcomes from the national CDF was the creation of four successive cohorts of the working group called Tomorrow’s Talent Today. Known as the ‘Triple Ts’, these successive groups comprised commercial practitioners who were seen as potential commercial directors of the future. Their remit was to bring a practitioner’s perspective to the forum. In addition to informing areas of focus, validating proposed solutions and being rail industry ambassadors, they were charged with holding the CDF to account and testing sentiment and awareness of outputs via an industry-wide commercial survey.
We have established the rail sector’s collective credentials and capability, showcasing the power of collaborative working.
The credibility of the Triple Ts has gone from strength to strength, and the value of being part of a network of high potential practitioners working alongside commercial directors is obvious. Advocacy from suppliers as to the value of the Triple Ts is strong and was summarised by Alasdair Reisner, chief executive of the Civil Engineering Contractors Association (CECA), in his executive summary to the latest Triple T commercial survey, published in December 2020:
“One of the things that the Commercial Directors’ Forum can be most proud of in its history is its decision to set up the Triple Ts working group. Over the last 10 years, more than 40 future leaders from CDF member businesses have played an active role in both the working group and forum. But Triple T members have not only been participants. Through their industry surveys, they have also provided a vital resource, developing real data on how the CDF has changed the way our sector operates.”
As well as the CDF, sentiment and advocacy from longstanding and more recent delegates is very strong towards the Triple Ts. Both have been cited as a force for good and highly effective models for driving a collaborative agenda directly with the supply chain.
Devolution to the regions
In December 2020, the national CDF was brought to a close. In its final forum, the following was offered up to the regions and industry at large:
- Working collaboratively was a key enabler to our industry responding well to the COVID-19 pandemic.
- Collaboration, whilst more relevant and prevalent than ever, must flourish after the pandemic.
- The Triple Ts’ excellent 2020 commercial survey should be taken forward by the regions.
- ‘The future’s bright, the future is CEMAR’ and Network Rial must conclude the deployment of its cloud-based contract management system so it becomes business as usual.
- All suppliers should consider supporting the Conflict Avoidance Coalition and signing up to the pledge.
- Through the development and deployment of dispute avoidance panels (DAP) and associated conflict mitigation processes, the Royal Institution of Chartered Surveyors sees Network Rail as a ‘gold standard’ client in the pursuit of conflict avoidance.
- Tier 1 and 2 suppliers are encouraged to use the first standard form of subcontract for rail, NR22 (to support NR 8 and 9), developed through a CDF working group and now formally launched.
- A follow-up standard form of subcontract for the NR12 (NR23) is planned for spring 2021.
- The time is right for CDF to be devolved to the regions.
There are some recurring themes to be considered, ranging from safety and sustainability through to efficiency, benchmarking and continued collaborative working. Each region is well placed to take advantage of its own previous experience and the blueprint of the franchise model, and draw from the items highlighted above as it feels appropriate. In addition to the inherent agility and focus a regional approach will bring, the regions will also be able to immediately harness the strength of sentiment from those suppliers that are advocates of the CDF model.