Research Summary - Defence Sector
Paying lip service/Going through the motions
This post brings together the lessons that came out of this large study of 58 relationships in the UK Defence equipment procurement and support sector. The need to collaborate was driven by the ending of the Cold War and government demands for a peace dividend. Although the customer devoted considerable resources to the initiative, a lack of relationship planning and systematic management resulted in piecemeal implementation. A small number of projects were successful but the majority failed to reap the benefits. In part this was exacerbated by organisational upheavals in both the customer and suppliers as well as deep seated cultural distrust over their respective long-term objectives. Thirty years later the failure to understand the requirement for relationship management is still evident in recent criticism of MoD projects.
Executive Summary
Between 2001 and 2010 we examined 58 major Public/Private, UK Defence sector relationships valued at several £bn. This report summarises the findings from our research in an area of strategic national importance. It does not concentrate on the individual projects but rather on the particular relationship management features that characterise this sector. These are close, long-term relationships and there is a strong correlation between the survey data shown in the graph below and the opinions expressed by managers in interviews. This provides a particularly clear, honest, accurate view.
We summarise this work in two parts:
Services and Maintenance, 2001- 2004 (1-55)
Design and Build 2008 – 2010 (77- 79)
The portfolio relationship ratings are shown in the chart above. The majority are seen as Stable Pragmatists and Evolving Pessimists which indicates a general lack of continuous improvement and at best, acceptance of only average performance. It is also significant that the 10 lowest performing were the highest value relationships.
Overall Conclusions
This sector had existed for many years in a relatively stable state where productivity was only adequate and relationships were pragmatic rather than dynamic. The history was also characterised by cost and time over-runs and, political controversy. In the late 1980s and early 1990s significant changes in the political and business environment resulted in demands for considerable cost cutting, greater efficiency and an overall reduction in public spending. In response the customer decided that collaborative working with suppliers was a key mechanism for facilitating the transformation and achieving the desired results. However, a range of cultural and systemic influences resulted in numerous difficulties that strained relationships and inhibited their development.
The research programme was well received by the individual project leaders and many felt that it acted as a ‘wake-up call’. However, at Headquarters level the response was “your findings are very useful but we are about to begin another reorganisation and we will not have time to take any action”
At the time of writing this report the 2019 National Audit Office report, Managing Infrastructure Projects on Nuclear–Regulated Sites, found that in the three projects which started in 2011 with a current value of £2.5bn, there was a lack of clear relationship management. This adversely affected time and cost with estimated delays of between 1.7 to 6.3 years and a combined cost increase of £1.35bn. The report said it was disappointing to see the MoD making similar mistakes to ones it made 30 years ago.
Many of these lessons, which touch upon the fundamental principles of collaborative working, equally apply in other sectors.
The customer policy makers must clearly define the meaning of collaboration and articulate how it is to be implemented in detail including the necessary management costs. This must then be agreed with the supplier policy makers
The collaborative operating model must encompass all parties including operational personnel and stakeholders and, cover such aspects as governance, organisation structure, communications, business and administration processes and, continuity
The contract must be framed in terms of the collaborative objectives. This does not mean ‘business as usual’ with some additional terms and conditions
Implementation and the long-term ‘collaborative operation’ must be centrally managed to ensure that the initiative does not become fragmented
An objective relationship performance overview that is refreshed frequently is crucial to enable effective management of both individual relationships and a portfolio of joint enterprises
Collaboration must be instilled throughout the joint project organisation and maintained resolutely to enable the relationship to meet its objectives over the long-term, regardless of environmental changes
Because of the fundamental importance of the commercial agreement, the commercial staff must play an active role as part of the joint team ensuring that the contract supports the aims of the collaboration rather than constraining it. This means taking an enlightened, co-operative approach
A benefits tracking and sharing system is a central part of an incentivising package and must therefore be carefully crafted, implemented and managed to ensure that it remains a positive influence on performance and sustaining the relationship
Power conflict situations such as in monopolies or size imbalances can be overcome by successful collaborative working – a levelling of the ‘playing field’ mechanism
It is inevitable in Public/Private relationships that deep-seated ‘them and us’ attitudes will, unless carefully managed, have an adverse impact on collaborative performance. Good relationship management will build trust
Where the significance of the collaborative change programme is high and the project duration is long, staff resistance to adopting new ways of joint working will need to be jointly managed. This will not just be during the implementation phase but also in the longer term operation
Joint leadership is key to effective collaboration management. The leaders will have a belief in and commitment to the strategic intentions of the alliance, they will co-ordinate all in-house activities relating to the partnership and, they will be determined to work harmoniously with their opposite number to ensure the success of the joint enterprise
“It is almost policy that we let these relationships run without much management effort.”
“It was pure luck that a forward thinking, enlightened team happened to form.”
To read the full report click here.