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Transportation
Kelly Burdall
Digital Transformation Director, London, UK contact form
When we discuss digital, we like to focus on the benefits of adoption – from time savings to increased predictability and higher quality outputs. But in an industry which still overwhelmingly bases contracts on the traditional time plus materials calculation, how can we be sure we are actually incentivizing innovation and adoption? And are we ready for the change that advances in digital technology will bring?
The architecture, engineering and construction industry has been slow to modernize. Excel spreadsheets and printouts remain common despite the introduction of newer and more efficient solutions and techniques that better support productivity, certainty, and quality. And despite widespread project delivery challenges, there is an industry-wide reluctance to seek out new ways of doing things.
So what’s going wrong?
It’s a big question with lots of contributing factors (and we definitely can’t handle it all in one article). But alongside mindset challenges and skills shortages and everything else that we like to talk about, one key thing that seems to go unnoticed a lot of the time is that the traditional commercial model actually discourages innovation. After all, if you are being paid on an hourly basis then spending lots of time and money on new solutions that will reduce your billable hours doesn’t make much sense. And there is little incentive to go the extra mile ensuring projects will be delivered on-time and on-budget if there are no consequences.
There are obviously caveats to this. With digital solutions now so powerful, the industry has little choice but to adopt them, and there are many vocal enthusiasts to the change. We’ve also seen a rise in organizations listing digital requirements in their bids, and so specifying an approach that they’d like the designers to take. But without ways of rewarding businesses taking this leap, we are starting a race to the bottom, with businesses competing on those factors our current commercial models value – time and materials.
Yet time is only one factor in overall project success, and the time a designer or engineer spends doesn’t necessarily correlate with overall project time. Instead, we need to start assessing success on three key factors: project time, project cost, and quality.
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These are the factors that are generally agreed to reflect the success of a project, so why are we not measuring the value of our work by how it contributes to this?
At its core, if you want certain outcomes on a project, then you need to incentivize the people responsible for delivery to produce them. And the most efficient way to do this is to tie the charging not to time and materials, but to outcomes.
Incentivized contracts encourage innovation by rewarding results – directly linking monetary reward to the achievement of project goals. This incentivizes everyone to adopt the solutions and processes that will secure the strongest outcomes and rewards the development and adoption of new digital solutions.
These are the factors that are generally agreed to reflect the success of a project, so why are we not measuring the value of our work by how it contributes to this?
At its core, if you want certain outcomes on a project, then you need to incentivize the people responsible for delivery to produce them. And the most efficient way to do this is to tie the charging not to time and materials, but to outcomes.
Incentivized contracts encourage innovation by rewarding results – directly linking monetary reward to the achievement of project goals. This incentivizes everyone to adopt the solutions and processes that will secure the strongest outcomes and rewards the development and adoption of new digital solutions.
It’s not just theory – we’ve seen some great examples of this kind of approach working really well. For example, on a recent program that combined an incentivized contract with a digitally enabled approach we saw a 24% reduction in program cost.
To achieve this, the design team used their expertise to estimate the time and cost at the beginning of the project, then started shaving that number down with the savings to be gained from different digital solutions. This helped us identify and quantify the benefits for ourselves and our stakeholders right at the start, rather than trying to retrofit in a digital approach part way through. As the team saw the impact their decisions were having on the project, it also empowered them to make further changes to maximize their impact. The commercial model supported this not only by incentivizing the design team to take this approach, but by closely aligning them with the contractor, facilitating collaboration and reducing the volume of rework.
There are challenges to this approach. When projects do go wrong, traditional time plus materials contracts insulate the design team from the cost of rework, where incentivized contracts may penalize them for challenges outside their control. But at the same time, if we are incentivized to do things right first time, that’s better for cost, program and quality.
It can also be challenging to measure some of these outcomes. Time and cost are fairly established, but there is currently no consensus on how we measure quality, and that lack of clarity can make it difficult to plan for and measure that outcome. Quality may also mean something different to different organizations. For example, while we can now produce much higher quality data handovers, consisting of 3D designs or a digital twin, if the client is not digitally mature enough to use these formats, then they might consider traditional PDF’s as higher quality, as they are easier for them to access.
As digital adoption across the industry increases, it will change the way we work and measure value. Tasks that once took days might be completed in hours or even minutes with the help of automation software, AI, and other digital solutions. But as we look to the future, it’s worth all of us asking ourselves whether our commercial models are really helping us get the most value from our time and materials, and whether we could be doing more to incentivize innovation.
Kelly Burdall is the Digital Transformation Director for UK Transportation, helping us deliver more efficient, high-quality and sustainable design. Find out more about how we are delivering differently here.
Please note that you are now leaving the AtkinsRéalis website (legal name: AtkinsRéalis Group inc.) and entering a website maintained by a third party (the "External Website") and that you do so at your own risk.
AtkinsRéalis has no control over the External Website, any data or other content contained therein or any additional linked websites. The link to the External Website is provided for convenience purposes only. By clicking "Accept" you acknowledge and agree that AtkinsRéalis is not responsible, and does not accept or assume any responsibility or liability whatsoever for the data protection policy, the content, the data or the technical operation of the External Website and/or any linked websites and that AtkinsRéalis is not liable for the terms and conditions (or terms of use) of the External Website. Further, you acknowledge and agree that you assume all risks resulting from entering and/or using the External Website and/or any linked websites.
BY ENTERING THE EXTERNAL WEBSITE, YOU ALSO ACKNOWLEDGE AND AGREE THAT YOU COMPLETELY AND IRREVOCABLY WAIVE ANY AND ALL RIGHTS AND CLAIMS AGAINST ATKINSRÉALIS, AND RELEASE, DISCHARGE, INDEMNIFY AND HOLD HARMLESS ATKINSRÉALIS, ITS OFFICERS, EMPLOYEES, DIRECTORS AND AGENTS FROM ANY AND ALL LIABILITY INCLUDING BUT NOT LIMITED TO LIABILITY FOR LOSS, DAMAGES, EXPENSES AND COSTS ARISING OUT OF OR IN CONNECTION WITH ENTERING AND/OR USING THE EXTERNAL WEBSITE AND/OR ANY LINKED WEBSITES AND ANY DATA AND/OR CONTENT CONTAINED THEREIN.
Such waiver and release specifically includes, without limitation, any and all rights and claims pertaining to reliance on the data or content of the External Website, or claims pertaining to the processing of personal data, including but not limited to any rights under any applicable data protection statute. You also recognize by clicking “Accept” that the terms of this disclaimer are reasonable.
The information provided by Virtua Research cited herein is provided “as is” and “as available” without warranty of any kind. Use of any Virtua Research data is at a user’s own risk and Virtua Research disclaims any liability for use of the Virtua Research data. Although the information is obtained or compiled from reliable sources Virtua Research neither can nor does guarantee or make any representation or warranty, either express or implied, as to the accuracy, validity, sequence, timeliness, completeness or continued availability of any information or data, including third-party content, made available herein. In no event shall Virtua Research be liable for any decision made or action or inaction taken in reliance on any information or data, including third-party content. Virtua Research further explicitly disclaims, to the fullest extent permitted by applicable law, any warranty of any kind, whether express or implied, including warranties of merchantability, fitness for a particular purpose and non-infringement.
The consensus estimate provided by Virtua Research is based on estimates, forecasts and predictions made by third party financial analysts, as described above. It is not prepared based on information provided by AtkinsRéalis and can only be seen as a consensus view on AtkinsRéalis' possible future results from an outside perspective. AtkinsRéalis has not provided input on these forecasts, except by referring to past publicly disclosed information. AtkinsRéalis does not accept any responsibility for the quality or accuracy of any individual or average of forecasts or estimates. This web page contains forward-looking statements based on current assumptions and forecasts made by third parties. Various known and unknown risks, uncertainties and other factors could lead to material differences between AtkinsRéalis' actual future results, financial situation, development or performance, and the estimates given here.
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