2 rob harries-harris strategy and commercial model date: february 2014
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2
Rob Harries-Harris
Strategy and Commercial Model
Date: February 2014
Agenda
• Key Principles• Governance• Best Athlete Approach• Effective Planning and Control• Commercial Model• Contractual Architecture• Collaborative Management Plan
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• Ways of working based on:– Best athlete commercial arrangements
– Resource mobility
– Common goals
– Trusting, but not cosy, relationships
– Best practice without a nuclear premium
• Partner Capabilities– Effective planning and control at the heart of delivery
– Supply chain innovation
– Construction expertise during client design
– Delivery integration
Guiding Principles for DDP
Governance
Decommissioning Division
DDP Board
SellafieldProgrammes
DDP Lead Partners
DDP Management Group
OtherSellafield
Alliances /Contracts
DDPDelivery
Work Allocation
Independent CostScrutiny
DecommissioningProgramme Partner
Client / ContractManagement
Safety / CommercialFinancial / Intelligent Customer
SLSelf-
Perform
Best Athlete Approach
Decommissioning Division(Client)
DDP Board
SellafieldProgrammes
DDP Lead Partners
DDP Management Group
OtherSellafield
Alliances /Contracts
DDPDelivery
Work Allocation
SLSelf-
Perform
DDP Umbrella Agreement
Work Allocation/Reallocation
Master Plan
Need Identified
Master PlanSentencing
Make BuyAssessment
Buy Onlyor Make & Buy
Make Only
SLSanctionProcessRequired
SLSanctionProcess
Not Req’d
Delivery usingSL in-house
resources only
Delivery usingone or more of:
Delivery partnerDelivery Partner’s
supply chainSL in-house
resourceSL Supply chain
Business CaseAcquisition
Strategy
OptioneeringAgainst Criteria
Business CaseApproved
Business CaseNot Approved
LearningFrom
Experience
Delivering Improved Performance
Phase 1 Phase 2 Phase 3
Effective Planning
and Control
SPI
CPI
SPI
CPI
SPI
Effective Planning and Control
Asset Performanceand condition/level
of riskFuture Demand
Client strategies
New Issuese.g. resilience
Client Specifications Risk
BaselineWork
Programme
OptimisedWork
Programme
Annual Work Programmes
OtherActivity Schedules
Accelerations& Carry Over
OptimisedWork Programme
Current RiskLevel
Emergent Work Funding
AnnualWork
Programme
IncentivesThrough
Work
Commercial Models
• Fixed Fee modified annually in light of annual work programme (for costs not associated with project execution)
• Project Execution– Target Cost
– Cost Reimbursable
– Fixed Price
Incentive Model
• Four levels of incentives: project, programme, fee and annual work programme
• Limited project incentives immediately available to Delivery Partner
• Greater part of project incentives attributed to programme-level fund
• Programme fund shared with Delivery Partners on annual basis. Fund moderated by KPIs:– Customer service & Relationship/Integration
– Socio-Economic/SME Performance, Capacity/Capability Improvements
– Innovation
– Delivery on Time
– Delivery on Cost
– Delivery to Quality
– Health, Safety and Environmental Requirements
– Adherence to DDP Processes
• KPI Performance will also moderate Fee and Annual Work Programme
Contractual Architecture
DeliveryPartners
SellafieldLtd.
NewSupply Chain
ExistingSupply Chain
Delivery partner access to / management of SL supply chainD
eliv
ery
par
tner
acc
ess
to /
man
agem
ent
of
SL
su
pp
ly c
hai
nWork packages
Wo
rk p
acka
ges
Wo
rk p
acka
ges
Umbrella Agreement
Collateral Warranties
Collaborative Management PlanCollaborativeManagement
Plan(Operating Model)
ProgrammeManagement
People & CultureCommercialEHSSQOperations &
DeliveryICT
ProgrammeGovernance
StrategicCapability Plan
Programme RiskMitigation
TechnicalManagement
DesignManagement Plan
Commissioning
Project controls
Security Plan
LFE & KnowledgeManagement Plan
Audit Plan
DocumentControl
Health and safetyPlan
QualityManagement Plan
EnvironmentalManagement Plan
Annual WorkAllocation Plan
ContractManagement Plan
Tactical Make vBuy & Allocation/Reallocation Plan
KPI Management
Supply ChainStrategy Plan
Risk andOpportunity Plan
BenefitsRealisation Plan
Reporting Plan
StakeholderManagement Plan
ResourceManagement Plan
CulturalDevelopment
Plan
TrainingManagement Plan
Socio-EconomicPlan
CommunicationsPlan
InformationCommunicationsand Technology
Plan
Works planningand execution
DoseManagement Plan
Constructionmanagement Plan
EmergencyResponse Plan
HandoverManagement Plan
BusinessContinuity Plan
DisclaimerImportant Information
• This communication and its contents have been provided to you for informational purposes only. This communication is not advice on or a recommendation of any kind with respect to the matters described herein, including without limitation, contracting structures, contracting instruments, contracting strategies, related legal and commercial issues or any combination of such matters. This communication does not offer advice.
• No information contained herein constitutes an offer or solicitation by or on behalf of Sellafield Ltd to enter into any contractual arrangement. Sellafield Ltd. makes no representations or warranties, express or implied, regarding the accuracy, adequacy, reasonableness or completeness of the information, assumptions or analysis contained herein or in any supplemental materials, and Sellafield Ltd. accepts no responsibility or liability in connection therewith. Opinions expressed in this presentation are subject to change without notice.
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