The seven models of supplier engagement

7 Supplier Engagement models DBOM Limited Partnership

Limited Partnership

Alliance Date 14.06.12

Outsourcing

Traditional Supplier Engagement Models

Engaging

Delivery Partner 1

Summary of each of the 7 Models (1) • Outsourcing: Lump sum fixed price whereby work is given to the market to develop, design and deliver with option to extend to maintain and/or operate (usually GRIP 2 or 3) • Traditional: Lump sum fixed price whereby NR manages the design development contract, the detailed design and construction contracts separately • Engaging: Contractor(s) brought in at GRIP 4 (or earlier) on reimbursable basis until risk and scope is defined enough to enable a target cost or lump sum fixed price to be agreed • Delivery Partner: Market partner is integrated into NR programme management team at GRIP 3 (or earlier) in order to bolster skills and is targeted with operating below opex target as well as incentivised (but capped) on all let contracts on pain/gain basis Date 14.06.12

2

Summary of each of the 7 Models (2) • Alliance: Contractor(s) brought in at GRIP 4 (or earlier) on reimbursable basis until risk and scope is defined enough to enable a target cost to be agreed. NR staff are integrated into each contractor’s delivery organisation on ‘best man for the job’ basis. Development, design and construction risk/opportunity is shared across the alliance. All staff seconded into alliance are incentivised solely by the performance of the alliance/programme. An Alliance can be expanded into a Programme Alliance whereby some form of framework is established which enables joint performance targets between separate parties • Limited Partnership: This follows a similar approach to alliancing but usually involves integration of multiple parties into a single legal entity. All staff seconded into the partnership are incentivised solely by the performance of that entity within its terms of reference • DBOM Limited Partnership: This is an expansion of a limited partnership where the entity would also maintain and/or operate the built asset over a fixed period of time to an agreed budget, where all parties within the partnership share equitably the risk & opportunity. DBOM Alliance can also operate in a similar way outside of a legal entity Date 14.06.12

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CONTRACT VALUE

Selecting the Best Supplier Engagement Model for each Project •DBOM LIMITED PARTNERSHIP •OUTSOURCING

•LIMITED PARTNERSHIP

•ENGAGING •DELIVERY PARTNER •ALLIANCE

•TRADITIONAL

Move by lowering risk and/or raising value by packaging with other projects

BUSINESS RISK Date 14.06.12

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