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Strategy and Commercial Model

Strategy and Commercial Model. Rob Harries-Harris. Date: February 2014. 2. Agenda. Key Principles Governance Best Athlete Approach Effective Planning and Control Commercial Model Contractual Architecture Collaborative Management Plan. 3. Guiding Principles for DDP.

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Strategy and Commercial Model

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  1. Strategy and Commercial Model Rob Harries-Harris Date: February 2014 2

  2. Agenda • Key Principles • Governance • Best Athlete Approach • Effective Planning and Control • Commercial Model • Contractual Architecture • Collaborative Management Plan 3

  3. Guiding Principles for DDP • Ways of working based on: • Best athlete commercial arrangements • Resource mobility • Common goals • Trusting, but not cosy, relationships • Best practice without a nuclear premium • Partner Capabilities • Effective planning and control at the heart of delivery • Supply chain innovation • Construction expertise during client design • Delivery integration

  4. Client / ContractManagement Decommissioning Division Safety / Commercial Financial / Intelligent Customer DDP Board DecommissioningProgramme Partner Sellafield Programmes DDP Lead Partners Independent CostScrutiny DDP Management Group Work Allocation OtherSellafieldAlliances /Contracts DDPDelivery SLSelf-Perform Governance

  5. DDP Umbrella Agreement Decommissioning Division (Client) DDP Board Sellafield Programmes DDP Lead Partners DDP Management Group Work Allocation OtherSellafieldAlliances /Contracts DDPDelivery SLSelf-Perform Best Athlete Approach

  6. Work Allocation/Reallocation

  7. Delivering Improved Performance Effective Planning and Control SPI CPI SPI CPI SPI Phase 3 Phase 1 Phase 2

  8. Effective Planning and Control Asset Performance and condition/level of risk Future Demand Client strategies Baseline Work Programme Optimised Work Programme New Issues e.g. resilience Client Specifications Risk

  9. Annual Work Programmes Other Activity Schedules Accelerations & Carry Over Optimised Work Programme Annual Work Programme Incentives Through Work Current Risk Level Emergent Work Funding

  10. Commercial Models • Fixed Fee modified annually in light of annual work programme (for costs not associated with project execution) • Project Execution • Target Cost • Cost Reimbursable • Fixed Price

  11. Incentive Model • Four levels of incentives: project, programme, fee and annual work programme • Limited project incentives immediately available to Delivery Partner • Greater part of project incentives attributed to programme-level fund • Programme fund shared with Delivery Partners on annual basis. Fund moderated by KPIs: • Customer service & Relationship/Integration • Socio-Economic/SME Performance, Capacity/Capability Improvements • Innovation • Delivery on Time • Delivery on Cost • Delivery to Quality • Health, Safety and Environmental Requirements • Adherence to DDP Processes • KPI Performance will also moderate Fee and Annual Work Programme

  12. Sellafield Ltd. Delivery Partners Existing Supply Chain New Supply Chain Contractual Architecture Delivery partner access to / management of SL supply chain Work packages Umbrella Agreement Delivery partner access to / management of SL supply chain Collateral Warranties Work packages Work packages

  13. Collaborative Management Plan

  14. Disclaimer Important Information • This communication and its contents have been provided to you for informational purposes only. This communication is not advice on or a recommendation of any kind with respect to the matters described herein, including without limitation, contracting structures, contracting instruments, contracting strategies, related legal and commercial issues or any combination of such matters. This communication does not offer advice. • No information contained herein constitutes an offer or solicitation by or on behalf of Sellafield Ltd to enter into any contractual arrangement. Sellafield Ltd. makes no representations or warranties, express or implied, regarding the accuracy, adequacy, reasonableness or completeness of the information, assumptions or analysis contained herein or in any supplemental materials, and Sellafield Ltd. accepts no responsibility or liability in connection therewith. Opinions expressed in this presentation are subject to change without notice. 15

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