Self driven widening of the service offering

In many instances, the customer’s department which interacts directly with the first tier contractors may only be responsible for the delivery of capital construction projects. Many first tier contractors are extending their market offering to such areas as facilities management, waste management, and management consultancy; to name three popular examples.

A first tier contractor who shows an aptitude for understanding the wider business of their customer may develop the ability to provide services to wider departments within that customer organization. The research behind this thesis has demonstrated that such a procession of events not only demonstrates an excellently performing first tier contractor, but also shows faith in that contractor from the customer organization. In some cases, this development is actually suggested and driven by the customer. The ability to then successfully deliver this paradigm shift in service delivery becomes excellent performance in itself. Customers may view such broadening of service provision as excellent performance due to the bundling effect of services and the potential economies of scale that can generate. Washington’s Property Director indicated:

“…what we might have then in year one is building a small Washington, year two building a big Washington in steel and then year three they build a big Washington in wood. So what you do is you look to create that capability over one or two or three years…”

Some customers have excellent performance criteria at the business strategic level. Excellent contractors are viewed as those who can expand their business offering strategically in line with their customer’s business expansions. With such contractors, a multi year plan can be put in place for the first tier contractors to achieve which can involve establishing the ability to take on different types of projects. Either this or the contractor can be expected to develop the ability to deliver similar projects in a wider geographical location. Washington’s Property Director suggested a need to:

“…get used to working in that region, get used to establishing a supply base, maybe go and employ a project manager who lives in that region…”

Performance against such a strategic plan can be benchmarked and can be used as a quantitative measure of an excellent performing contractor.

The contractors selected for such development by customers tend to be selected, however, on a subjective basis which hinges upon the relationships and the ‘ability to work together’ which the customer experiences with the contractor. Washington’s Property Director stated that:

“…it’s more subjective that objective, you get close to these guys and these companies by working with them on a day to day, week to week basis.”

This assertion suggests a qualitative input driving a quantitative output for excellence, which is similar to a scenario discussed with Oakland during their case study). An enabler of such a strategic growth plan therefore is the senior management relationship and commitment to the plan which is a key driver to the process. Relationships and commitment are not a measured element, but customers do insist on having key contractor personnel in place with whom they can work. Customers employing the strategic growth plan also state that compliance with and performance against output KPIs was used as a way to divide up future workload. This compliance however would simply allow contractors to expand their workload within their existing sphere of competence. This was seen to be an excellent example of the difference between complying with ‘output’ KPIs demonstrating good performance and being rewarded; and excellent performance against the ‘satisfaction’ elements which really impresses the customer and results in true business changing rewards.

Furthermore, compliance with measured KPIs is treated by customers as merely a signifier that a contractor is ready to become part of a more strategic group. The contractor can then be assessed and potentially progressed from a strategic performance perspective. Customers have stated that there have been contractors being managed and interacted with at the strategic level who have fallen away from a strategic group level. Such falls are often due to poor performance against their measurable items, demonstrating that the basic output deliverables of the programme are still required for a contractor to remain part of the programme at all. These organizations which fell foul of output KPI performance have had to re- examine their business model before attempting to return to the level of strategic partner.

Customers are becoming increasingly aware that such improvements will not be delivered immediately upon appointment of contractors. Drawing benefits from

excellent performing first tier contractors requires a relationship of two to three years according to Oakland’s Property Director, He said:

“…we’d get up to optimum productivity from that supplier, optimum relationship position some time after you’ve outsourced. So I’d say it takes two to three years to get to optimum performance”.

This awareness demonstrates that customers are willing to exercise patience in the development of their first tier contractors. The short term focus on delivering time, cost or quality whilst still important is becoming a given element of contractor performance. Customers are realizing that the way to achieve the necessary outputs is spending the time to manage the excellent performance driving inputs.