Clarity and focus The company is still working through the partnership but progress has been made. “We’ve conducted 360-degree feedback and had relationship meetings. We’ve probably done a lot of this in the past but hadn’t followed up to check that learnings or recommendations were implemented. Nor had we developed our systems appropriately to ensure our contractors were clearly briefed so they could be best placed to execute work in the simplest and easiest way.” WE is now tracking the contract differently and has become more detail-focused, looking beyond only the ultimate asset delivered outcome. Skelton says the process also revealed some internal changes that are required to become more efficient, such as giving particular projects an estimated cost range, based on similar completed tasks. “Sometimes
we have to get out of our own way if we’re slowing things down or adding in complexity which results in cost,” he adds. Most of the change will come from having quality communication which clearly assigns responsibility and accountability. “A lot of these are fairly simple things to get right just by having a conversation. If you workshop a challenge, project or issue together rather than just taking a position on it you move forward more effectively to the agreed result.” For example, WE is now using its balance sheet and early ordering to fund purchasing previously devolved to its contractors. This is to counteract shortages in supply at manufacturing facilities that have lengthened lead times from six to 36 weeks. This is about managing delivery risk, which ultimately sits with the network owner, says Skelton.
It is also adding oversight to more parts of services delivered by its contractors to end customers as the wider market is becoming interested in its pipeline for capital projects to meet the government’s emission reduction targets. “Now growth is picking up and accelerating at pace, we have to ensure we are doing things with visibility that makes it effective and efficient across the entire supply chain.” Images reproduced with permission of Wellington Electricity
Trust levels had been so high that when WE became more hands-on and started to query costs, the memory about what was actually required seemed to have been forgotten. “Our approach to supplier management did not reflect our tenet of continuous improvement. Our light-touch had facilitated a relaxed approach and when we tried to return to required levels there was a fair amount of inertia to overcome, which resulted in some unnecessary tension.” A fresh look WE recognised there were benefits and efficiencies to be gained from ensuring scheduling was on track, and maintenance programmes coordinated with other works so crews and outages could be fully planned and utilised. It decided to make a clearer delineation between a reactive process (restoring supply) and a corrective process (addressing the defect). Skelton is absolutely clear that any fault over lack of clarity rests with WE. “What we accepted set the next standard or performance level. We have to ensure we have clear and
visible expectations and both parties are aware, so any gap in delivery is obvious. Any issue should trigger an immediate triage to employ a corrective action, set a timeframe and assign a person responsible for getting things back on track.” WE identified that adopting the structure of an SRM system presented a clear opportunity to reset outcomes and ensure they were “crystal clear across the contracting relationship”. It consulted State of Flux for advice. They challenged WE to consider if it was asking the right questions around performance and what it was that it actually required. “They made us think about what information we needed to receive and how it’s used to inform decisions,” says Skelton. For instance, instead of only specifying the outcome for the asset build, it needed to include more detail around required timescales, quality and cost, and share those expectations with its supplier. “State of Flux made us consider the transparency of our reporting system so the contractor knew what we were measuring.”
CEO TIP: Acknowledge success
“Having conversations about good performance builds trust. If the challenges you have only concern about 5% of the contract, ensure it’s not all you talk about. Some of the positives, if you understand why they are successful, may unlock the answers to problems raising concern. It’s also important not to make assumptions. When you ask for the counter party’s perspective on what went wrong and why, you might find it’s wildly different from what you thought. Be prepared to accept that sometimes, the change needed may rest with you.”
Greg Skelton, Wellington Electricity CEO
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