Construction of the new submarines to maintain the UK’s nuclear deterrent is the latest major government scheme to be undertaken by a dedicated project delivery company. Richard Johnstone looks at how they work. Photography by Paul Heartfield
Julian Kelly, the MoD’s director general nuclear and Ian Booth, SDA chief executive. Photo Paul Heartfield
Later this year, you’ll be able to get on a brand new train east to west through central London, with stops including the Stratford site of the 2012 Olympics Games in the east of the capital. A short walk from another station on the line and you can catch a train from the capital to the continent – and the site of a new garden city – and you’ll also soon be able to board a high-speed rail link to Birmingham and beyond.
As well as being a list of major projects in the UK in recent decades – Crossrail, the Olympics, High Speed 1, the new garden city in Ebbsfleet and High Speed 2 respectively – these mega-projects are also linked by something else: they were all undertaken by standalone delivery companies, formed by government for the purpose of delivering one project. Add in the newly-created agency delivering the replacement of the UK’s nuclear submarines, and the public-private alliance that has just delivered new aircraft carriers for the nation, and it is clear that standalone delivery bodies are key to how government aims to improve delivery.
The trend of creating standalone agencies to deliver large projects can arguably trace its history to the development corporations formed after the Second World War to build new towns like East Kilbride and Milton Keynes but in their modern iteration, they have become focused on providing the expertise to deliver a project for a client – usually a Whitehall department – to a budget set by parliament.
Rather than a department undertaking or letting the construction contracts itself amid their day-to-day work, delivery companies are intended to provide a greater focus on a single project with the ability to bring in external managers from outside government – and, indeed, outside government pay strictures.
Professor Mike Bourne, programme director for the Cabinet Office-backed Project Leadership Programme at the Cranfield School of Management highlights the nearly-complete Crossrail as a key example of the use of delivery companies.
“If you look at Crossrail, it is a big project, it is going right across London, and they had to put together the resources to run a project all the way through and build their own capabilities, and it has been pretty successful,” he said.
Although he notes that the use of the delivery companies will depend on the project, and the programme is about teaching leadership across different environments, the structure helped provide stability for Crossrail, which at its peak was Europe’s biggest infrastructure project.
“It has enabled them to bring together a group of people to work together over a period of time, certainly it has done that, and it has created the environment in which that has worked.”
The ability of Crossrail Ltd, the delivery company, to bring together different clients – the Department for Transport and Transport for London – as well as the work with major civil engineering firms and Network Rail, is likely to feature in project management textbooks in the years ahead. Indeed, it is already being studied for lessons by those involved in the latest use of a project delivery company in government.
The Submarine Delivery Agency formally came into being on 23 April. The MoD agency has been formed to deliver the next generation of the UK’s nuclear deterrent, with the Dreadnought class set to replace the Vanguard class in carrying Trident nuclear missiles.
This giant £41bn project (a target cost of £31bn for four submarines and a £10bn contingency fund) to renew the nuclear deterrent from 2028 faces perhaps even more challenges than tunnelling a railway underneath London.
“The way you have got to think about it is this is at least a 50-year enterprise because we are building a set of boats – in this case the four Dreadnaught boats – that come in service in totality in about 20 years’ time, but then we’ve got to keep those going,” says Julian Kelly, the MoD’s director general nuclear. “We’ve got to keep a whole set of missiles going with the US [whose Lockheed Martin provide the Trident missiles] out until at least to the late 2060s, you need a set of warheads that are going to be effective to deliver the policy outcome all the way through to then at least. And we have got to have all the supporting infrastructure there.”
In an interview alongside the SDA’s chief executive Ian Booth, Kelly – who moved to the MoD in May 2017 from the role of director general of public spending and finance in the Treasury – sets out his approach for managing the scheme – breaking it down to deliverable parts then putting it back together to work out, as he puts it, “what are the risks, what are the issues, and in what order”.
Among the risks he highlights getting the right people in place across the SDA and the MoD, and suppliers to deliver the project, as well as understanding the state of the UK’s infrastructure and managing the international dimension. “Those are, and it is fantastic description, risks, but it is all those things.”
The ministry has therefore been looking across government to see what the lessons are from other projects for its own delivery agency. Booth says that both the Olympic Delivery Authority and Crossrail have informed the SDA – in fact the agency’s chair is Rob Holden, the first chief executive of Crossrail.
“There are good lessons out of them, and the Carrier Alliance,” says Booth, referring to the MoD scheme to build two new aircraft carriers that is nearing completion and which Booth led for five years before joining the SDA last September.
“Every project is different though – it would be wrong to say you could take how we did the Olympics and just apply it to a nuclear submarine. But there are quite a lot of common lessons – particularly having a really clear purpose and focus and keeping people absolutely clear on the end objective at all the steps along the way – and organising people to do that.”
Kelly notes that the Olympics had what he calls the “advantage” of a defined start date: the opening ceremony on 27 July 2012. “With major programmes like this, and Crossrail would face the same issue or High Speed 2 – how do you manage schedule? When is this going to be ready? How do you manage change, the fact that things will happen and [ensuring] everyone is being clear when you talk about the schedule.
“Ian is much more experienced about this than me, but just maintaining the discipline in the organisation as you go through a programme that takes this long and has this many moving parts is really important – and not straightforward.”
‘A chance for true collaboration’: managing suppliers
The distinctive nature of the nuclear submarines project is reflected in its use of single source suppliers, as there is often only one provider for much of what is needed. Kelly says that although there’s “nothing unique” in the fact that the MoD and the SDA need to get the commercial arrangements right across the project, he adds “the degree to which we are reliant on single source suppliers is probably unique”.
The scheme will be a test of key procurement reforms. The Defence Reform Act 2014 established the Single Source Regulations Office to monitor defence contracts not put out to competitive tender, while a departmental single source advisory team shares the lessons.
Kelly says “the degree to which we have to think about how you manage and incentivise single source suppliers probably marks out this area compared to most other areas of defence”.
However, this also creates an opportunity. “If there is any part of government commercial activity where you can really think of partnership, this is probably it,” he notes. “We are not about to build submarines somewhere other than Barrow [with BAE Systems] and we are not about to build nuclear reactors somewhere other than Derby with Rolls Royce. So, if there’s ever a context to really make good partnership working work this has to be it.”
Booth says the SDA is “working closely” with the regulations. “It is not always easy to negotiate a single source contract, and they give us a framework to do it, but also cause all of us to try harder. That is what it should do.”
Indeed, all involved see more opportunities than problems. Kelly highlights the chance to “train and grow great people”, while Holden eyes the opportunity to rebuild the industrial capacity the UK had when constructing the predecessor Vanguard class.
He adds: “I don’t see any reason why we can’t do that, particularly if we apply the rules and principles from single source regulations in the way that they are meant to be applied.
“We have to achieve a true collaboration with our supply chain in the same way there was proper collaboration in the delivery of High Speed 1 and the 2012 Games through the ODA.”
Holden, whose work delivering the High Speed 1 rail link and two years heading up Crossrail places him among the UK’s most experienced project delivery professionals, sets out three key factors for keeping projects – and delivery bodies – on track.
These are a need for people on both sides of the table – at the delivery agency and the sponsor – who know what success looks like and have learned from mistakes, as well as open lines of communication, and a high level of trust.
This last point was key to projects, he said. “That was certainly my experience at High Speed 1, where at times we had a difficult relationship with the Department for Transport, but at the end of the day there was a high degree of trust and I think the same at Crossrail – Transport for London and the Department for Transport, our joint sponsors, actually trusted me and the team I put together.”
At the SDA, one of Holden’s key roles is helping build that team that knows what success looks like and which has learned from mistakes. He has helped “find a group of people who have private sector backgrounds but are knowledgeable of the way government works and have been involved in a range of projects, some in defence and some outside of defence in different guises”.
“I think with the appointment of Ian Booth we have somebody who is experienced in delivery of projects over a long period of time,” he tells CSW. “He is pulling together a team at the moment which I hope will be a team that sticks together for a period of time and will have in it people from different sectors who have also experienced success in delivery of projects.
“It is that combination that I hope will help the executives and also give confidence to the sponsors – the Ministry of Defence’s senior civil servants and ministers – that we know what we’re doing and will help them to deliver a successful programme.”
The need for open communications – what Holden calls a culture of no surprises – means that the agency head must be ready to provide the truth about a project. The department also needs to be able to ask the right questions.
“Ministers and senior civil servants need to be told things that they may not want to hear,” says Holden. “Yes, occasionally you have surprises, but most things actually creep up on you and if you have good lines of communication you can forewarn people that things might be coming up that they need to know about, so it might be a bit of surprise but it is not the surprise that it would be if there had been absolutely no forewarning.”
One of the problems he has experienced in the past is that the departmental sponsor team is “just full of policy people and they don’t know the right questions to ask”.
Holden notes that one of the best project sponsors in a department that he worked with was this month’s CSW cover star Graham Dalton.
“He spent a lot of time in practicing his trade before becoming a civil servant and therefore he was in a much better position to ask the right question and also to understand the problems that we were dealing with and the problems that we might need some help with.”
Holden acknowledges that a lot of this can come down to personal relationships, and here the SDA already seems to have set off on a good footing. Kelly and Booth are relaxed and easy in each other’s company.
“The thing is, if you’re in the Treasury you’re not the one making a lot of the day-to-day decisions,” reflects Kelly as a former senior official in the finance ministry. “The job in the Treasury is to apply as much pressure as you possibly can to get people to take the financial envelope seriously.
“It would be wrong to say you could take how we did the Olympics and just apply it to a nuclear submarine, but there are quite a lot of common lessons”
Ian Booth, SDA
“Sat here with Ian, the difference is we have actually got to take the real decisions to make that work. The lesson you learn is to apply the same level of discipline and rigour, but you have really got to manage the detail. When you get to this level you’ve got to be giving Ian’s team – and then Ian to his team – clear objectives so he can really manage the detail in a disciplined way and work out what are the issues, what are the indicators that they should be flagging something, escalating it, forcing us to make some other decision or trade-off, whatever it might be.”
Asked if he enjoys being the one who now makes the decisions, Kelly smiles. “It is just different decisions. I loved my role at the Treasury, and this is a fantastic job and I’m really enjoying it, really enjoying working with Ian and the whole team.”
Booth agrees. “I’m loving it too... and we’ve got some fantastic people – really committed, really clever, really earnest people just trying to do a really good job”.
In such a circumstance, “you can’t really complain”, he says. “That is just a great place to work.”