Equal Partners Changing relationships Customer & supplier alignment in private sector construction Construction Clie

1. Equal Partners Changing relationships Customer & supplier alignment in private sector construction Construction Clients’ Group Conference 13th November 2008

2. Review & consolidation of existing information Understand customer & suppliers drivers & priorities Highlight major issues and opportunities Identify existing & future procurement models and methods Explore new areas of cooperation Identify areas for improvement for customer & suppliers Create a ‘road map’ for implementation of step changes improvements Improve industry performance Objectives and scope of the study

3. When we started this project: The construction industry was virtually at capacity (now?) Projects were larger and more complex Costs were rising (now?) There is greater regulation & legislation Most major customer organisations have record forward workloads (now?) Financing for projects was available (now?) Many major designers, consultants and supplier organisations: - struggle to attract and retain qualified staff - are unable to generate sufficient margin Now the economy has created unprecedented events Background

4. Face-to-face private sector client interviews Chief Executive interviews Supply Chain workshops Communicate client messages at CCG conference Report draft in progress Launch event in January 2009 Methodology

5. Developers Argent BAA Berkeley Group British Land Crest Nicholson Hammerson Hermes Igloo Regeneration Iiliad Group Land Securities MEPC New Swindon Sovereign Stanhope Unite Group Retailers Asda Stores Limited Halfords MacDonald's Musgrave Budgens John Lewis/Waitrose Somerfield Stores Corporate GSK Microsoft Nationwide Pfizer Utilities/Public services BT Openreach Bristol Water Royal Mail Somerset Housing University of Reading Interviews Suppliers workshops Adams Kara Taylor Applied Solutions Arup Bovis lend Lease Buro 4 Candy & Candy Clarke Bond Charles Rich Cundalls Emcor Robert McAlpine Faber Maunsell Hyder Kier Kingspan Floors pcm Rider Levett Bucknall Robert McAlpine Scott Wilson

6. MAJOR CHALLENGES FACING CUSTOMERS • Rising material prices (now decreasing) • Rising utility prices • Effect of economic situation and impact on industry • Project cancellations & delays • More innovative financing solutions • Uncertainty in the supply chain – reversion to type • Impact on skills • Value of stock reducing • Opportunity to differentiate

7. Findings from Client Interviews Understanding customer’s business Aligning to/meeting their expectations Developers vs Corporates Informed vs Uninformed Adversarial vs Collaborative Relationship development and management Innovative solutions Proactive guidance and expertise Supply Chain structure Effective communication Versatility and adaptability Whole life vs Capital cost CSR and sustainability

8. Supplier Workshops Designers & Consultants QSs & Project Managers Contractors Manufacturers Outputs of supply chain workshop, conclusion and industry improvement action plan will be revealed at the launch event in January 2009

9. Good Customers: want a dialogue, are open to new ideas work closely with & invest in their supply chain communicate effectively – drivers, needs, aspirations Good Suppliers: Should select customers – enlightened, right fit Invest in and align to their customers – BIG WIN Develop & demonstrate leadership – set the agenda Develop soft skills Commit to proactive and innovative approach Final message

10. Equal Partners Changing relationships Customer & supplier alignment in private sector construction