Principles of Partnering

Kim Newman

MCIPS, MInstLM, MBIFM, MCMI

Purpose

To provide an overview of the principles of Partnering

To explain what Partnering really means To explain what benefits it can provide, and

what challenges may need to be faced

Background to Partnering

‘Win-win’ relationships are not a new idea Initially developed in the early 1990’s Egan – Rethinking Construction Practices developed and refined over the

past decade Now we now a lot about building partnering

relationships The concept is simple, the practice is more

involved

What is Partnering? Partnering exists where two, or more, organisations

develop a close and, generally, long-term relationship to work together as partners

Other names for this have included ‘Partnership Sourcing’, ‘Proactive Purchasing’, ‘Co-makership’ and others

It isn’t philanthropy: the aim is to secure the best possible advantageous position for both parties.

The principle is that teamwork is better than combat A Partnering relationship works because the parties

have an interest in each other’s success

What is Partnering? There is no standard model There are a number of interpretations of the basic

idea Partners regard themselves as part of the same

team with the same aim: to ensure that the end client is delighted

Even if the size of the Partners differ, they each have rights and responsibilities in making the Partnering relationship work

Partnering is not an end in itself or a panacea, but a means of strategically and continuously managing the business relationship to mutual advantage

Strategic Partnering

Strategic Partnering means sharing: Knowledge and information Challenges and solutions Risks and rewards Visions Resources and/or facilities

And requires teamwork, also Mutual trust Understanding

Define what you want from the Partnering relationship Agree the style of the relationship

Result – A committed and open approach to Partnering Agree tangible objectives

Result – Defined and agreed objectives for the Partnering Relationship

Agree continuous improvement Result - Agreed targets and mechanisms for measuring

performance Exit strategy

Result – A mutually agreed exit strategy Commit to a Partnering relationship

Result – Legal contract

Mutual Objectives

The proposed Partnering relationship must fit in with the organisations strategic plan

Partners must identify, understand and support each others objectives and work together to translate their individual objectives into common objectives, reflected in a Partnering Charter and strive to achieve the same goals

Key objectives often include: Minimise the cost of working together Gain advantages Delighting your customer

Continuous Improvement

A feature of all Partnering arrangements is the ability to continuously refine and improve processes

Performance indicators and customer satisfaction feedback provide valuable data

Apply lessons learnt Carry out constant reviews of performance vs

targets/objectives Recalibrate targets/objectives

Measuring Success Performance indicators should be established that are:

Objective Easy to record Target real improvement Can be monitored and controlled without creating a

burden Though some benefits are normally evident fairly quickly,

the full return may not be visible for a while Like any process of continuous improvement, the

rewards accumulate constantly Many of the rewards are qualitative so measurement

cannot be exact

Partnering Lifecycle 0 – 3 months

Awareness Knowledge

4 – 6 months Assessment of requirements Supplier selection

7 – 12 months Working together Value creation

12 – 24 months + Staying together Exit strategy

Legal contracts

Bespoke forms Strategic Partnering Agreements PPC2000/TPC2001 NEC Partnering Option X12 JCT98 non-binding Partnering Charter

To name but a few………………..

Partnering Roles Core Group

To meet regularly to review and stimulate the progress of the service/project and the implementation of the Partnering Contract

Client Representative Represents the Client in all matters relating to Service/ Project

delivery Partnering Advisor

To facilitate the smooth creation of the project partnering team, support the Core Group, provide advice and resolve problems

Partnering Facilitator An external party engaged on an ad-hoc basis to run workshops

as required

Integrating the Supply Team

Previous relationships have revolved around the use of power

Master and servant approach Short term and antagonistic Does not provide security or an incentive to

work together or do better Partnering shifts from traditional practice Power is changed into co-operation

Integrating the Supply Team Instead the Partners agree on:

Common goals Build commitment and trust Mutual support

Responsibility for developing a partnering relationship rests at the top with a committed board/core team

New duties will demand a range of personal skills and knowledge

Managers will spend less time on paperwork and more time managing relationships on a day to day basis

The best Partners will become an extension of your own organisation

Early stages of the relationship

Areas that you should pay attention to during the early stages of the Partnering relationship are: Make sure that everyone in both companies is aware of

what is happening, what will happen, and what part they have to play. Communicate progress and listen to feedback

Set up a joint mobilisation team to monitor progress. Look to the future, even if the initial period goes well don’t

think that everything is done and that no further work is required to the relationship

What makes a Partnering relationship work? Preparation Commitment Honesty Integrity Trust Openness Shared values Monitoring and improvement Sharing of information and resources Effort Creativity Flexibility

Partnering – Cause and Effect

CollaborativePartnering

Behaviours Attitudes

Processes TimeMetrics

Mutual respect

Committed

Open/sharing

Trust

Focus on mutual gains

People involvement

Devolved authority

Pro active

Prevention driven

Relationship positioning

Self regulation

Frequent feedback

Shared success

Shared design

Mutual investment

Learning organisations

Team based

Single sourcing

High switching cost

Infrequent re-sourcing

Staying Together

Team building Early wins Value workshops Shared planning Coaching and mentoring Risk management Benchmarking Training

Benefits of Partnering and Integrated Teamworking

Achieve best practice and quality standards

Increase flexibility Reduce administration costs Plan more effectively Opportunities for innovation Transform a supply chain into a value

chain

Planning, sharing and managing programmes of work

Sharing of programme information Supplier involvement in programme

development Joint programme review Client definition of outputs and standard Supplier implementation of the output based

programme Client quality management

The Partnering Team

Selecting the team Cross organisational training and

development Managing performance Managing risk and reward Overcoming problems, celebrating success

Selecting Partners Generally governed by the OJEU procurement process but issues

to consider are: How important is the service? What does the end Client want and need?

Define the criteria for selecting partners Management style Company culture What experience do suppliers have? What has been the suppliers performance to date? How important is your business to a supplier? Does the relationship offer the potential for improvements and

rewards?

Changing Cultures and Mindsets

For Partnering to work a cultural change is required, as well as a change in mindset of those involved Partnering is not a one-off solution but a culture

that is applied continuously Risk and reward Team work Developing a ‘no blame’ culture Knowledge management Output focus

Change Management

Scepticism will be rife – inside your own organisation as well as your suppliers

It might be generated by: Incomprehension Unwillingness to change the status quo General fears of the unknown Specific concerns about an individuals future role Or a mixture of several of the above

Change is rarely welcomed, although it is fundamental to survival

Commitment from the top is therefore imperative

Change Management

Changing attitudes - internal and external Responsibility must not be evaded Problem solving skills must be developed Staff at all levels must be aware of the

benefits

Communication Dissemination of information throughout the organisation

will ensure that there is an awareness of the potential changes and people are aware of their role in those changes which encourages buy in

Appropriate communication channels must be identified Partnering involves the exchange of information that

previously may have been available only to a few senior managers i.e. Open book accounting

Good communication is almost as vital as trust. Joint management teams Open, frank and constructive dialogue is essential

Dispute Resolution

3 Stages Partners accept that problems will occur

Problem solving hierarchy for dealing with all problems as they arise, before they become disputes

Reference to a Core Group Alternative dispute resolution procedures

Conciliation Mediation

In a Partnering relationship a disagreement does not signify the end of a relationship, but the beginning of an improvement

Key Issues

Cost vs price Lowest price is never the sole measure

Long term vs short term The focus is on the long term

Quality control vs quality checks Promotes health rather than curing sickness

Single sourcing vs multiple sourcing Emphasis is on quality Partners Decisive factor is performance

Potential Difficulties

There are no precise and universal rules The relationship must be tailor made to the

organisations in question Partners must clearly state what they wish to

achieve from the relationship, to do this they must understand their own requirements

Partners must establish both internal and external procedures in order to cope with the new philosophy

The relationship must be managed continuously

Potential Difficulties

Impatience Arrogance Different cultures Unrealistic aspirations Complacency Reluctance Openness/confidentiality Fear of the unknown

Summary

Partnering is 95% perspiration, 5% inspiration. Partnering requires more time, not less Requires the full support of all involved Partnering places ‘value above price’ and

‘quality above quantity’ Focuses on continuous improvement Key principle is that the customer and supplier is

in the same business and should work together

Essential Ingredients The successful ingredients of a Partnering relationship are:

Commitment from senior management from both organisations Recognition that Partnering requires effort from both parties A clear strategy that defines the aims, objectives and long term goals Clear communication of these aims etc, to employees within the

Partnering organisations Clear measurable, value for money benefits Agreed, measurable, and realistic performance indicators Candid, frequent and open communication between all parties Effective mechanisms for dispute resolution An exit strategy that specifies under what circumstances each party

would want to withdraw from the Partnering relationship Above all TRUST!!

Questions ??