Leisure operator Cannons wanted to triple the number of its health and fitness clubs in three years. Building reports on how it used partnering in the supply chain to drive out waste, reduce construction time and improve quality, and three industry experts give their views
Leisure operatOr Cannons unveiled an ambitious expansion programme in 1997. The aim was to treble the company's health and fitness clubs in three years, from 16 to 44. But if the programme was to be successful, Cannons knew that the way it procured construction services would have to be changed.

Over the previous three years, the operator had experienced all kinds of problems with contractors. "To budget, on time and at quality appeared to be optional extras," says Ken Redman, Cannons' technical director. And the company's use of fixed-price competitive tendering had inevitably led to claims.

"Cannons is a leisure operator, not a property developer," says Redman.

The company leases purpose-built shells which it then fits out as health and fitness clubs. But it felt that the construction problems it had experienced over the last three years had distracted from its core business as a leisure centre operator. Cannons also realised that its construction process was wasteful and inefficient: all the health clubs had similar features but this was not recognised in the construction process, with each project being treated individually. "We were reinventing the wheel every time and there was no security of delivery," says Redman.

This was where Mace came into play. In 1997, Cannons brought the specialist on board for its construction management skills. However, Cannons quickly found that using construction management did not solve all of its problems:

it still had the distraction of dealing with the subcontractors and it had to shoulder most of the risk for each project.

But by keeping the same construction team together for several projects, Cannons found that it was able to move from construction management to an informal partnering arrangement with the core team of employer's agent, architect, and M&E design-and-build contractor.

As the partnering arrangement developed, Mace's role changed from that of construction manager to main contractor. And because the volume of work was so high, Cannons brought on board two other contractors – Pearce Leisure and Dutch contractor Pellikann – to add "commercial tension" and to ensure that it was getting value for money.

This partnering arrangement enabled Cannons to move to a fixed-price design-and-build contract on the basis that risks to the contractor would be minimal. And crucially for Cannons, the move meant that it was now producing a generic design with which it became familiar, rather than repeating the process each time.

To differentiate itself from the other contractors, Mace decided to improve price and value by streamlining the fit-out process. The first act was to remove repetition from the initial stages by developing a generic brief for design and specification. This included production of a common internal layout for the clubs, along with standardised construction details for areas such as the changing rooms and crèche. "It allowed us to introduce standardisation to the roll-out," says Mark Reynolds, a partner at Mace.

At the same time, the contractor worked with its partners to calculate what a scheme should cost per square foot. This information provided a useful way of comparing the costs of a scheme. A more detailed cost model was then produced to enable quick feasibility studies to be undertaken for a given development proposal.

To get a clearer picture of the construction process, Mace mapped the supply chain. This offered a better understanding of how the supply chain was configured and increased the predictability of delivery: if any hold-ups occurred, it could locate which firm was responsible and take steps to solve the problem or find an alternative supplier. The map could also be used to check whether the materials being sourced were good value for money.

One problem that the mapping highlighted was with tiles for the changing rooms. These were on the project's critical path, but were frequently delivered late. Mace therefore proposed a change: tiles would be trucked to a central store before they were required, ensuring that supplies were always on hand.

On site, Mace introduced a productivity management system, known as Last Planner. This was to "ensure that work plans were assigned each week", says Reynolds. This, in turn, helped managers to anticipate problems, such as a lack of men or a shortage of materials, and it encouraged communication. "It commits all key contractors to saying what they are doing that week. If it is not completed, it allows us to ask why," explains Reynolds.

As the roll-out programme continued, Cannons sent the architects back to the clubs to ask the operators how well the centres were performing. Feedback from these revisits was then used to revise the brief.

Now, three years into the project, Cannons has drawn up formal partnership arrangements with more than 15 companies and partnering is being embraced in earnest. "We were not interested in the lowest priced contractors; what was important to us as operators was the ability to deliver," says technical director Redman. "The supply chain brings added value to the project – we don't talk about budget, time and quality any more. We have a group of people who understand our business operation."

Reynolds agrees: "By using the same team for each project, they develop an understanding with each other," he says.

"The knowledge is in the supply chain to enable quicker programmes, better quality and added value by forcing down the cost in other ways," explains Rachel Vincent, project manager at Mace. "We're now at the stage where key suppliers are on board from the start in design development meetings."

After three years of partnering with the same consultants and contractors, Cannons has been able to redefine the whole building process. Initially, there were eight main project stages from inception to completion. However, the stage for selecting contractors is no longer necessary and the employer's requirement document is also redundant. That document defined what is required in a health club – "but we know that", says Reynolds.

Now there are only four stages to the project and the entire process, from initial briefings to completion, has been cut from 52 weeks to 28. The client undertakes the feasibility study and an outline design to make sure the scheme is deliverable. Then the whole team is brought on board. "It's an open-book arrangement with the contractor – this is the budget, there is the team, you know the price, now go away and do it," says Paul Taylor, production leader at Cannons.

A more recent innovation by Mace, created to speed information flow, is a project extranet. This enables the team to collaborate and share information from any location. All drawings, specifications and generic information are contained on the site, as is costing information. And once the project is finished, the documentation forms the basis of Cannons' operation and maintenance manuals.

"In the early days, we had a very traditional relationship with the specialist contractors," says Reynolds. However, as relationships have developed, the key specialist contractors are brought on board at the outset. Their input is invaluable to ensure buildability and add value to the project. For example, it was a subcontractor that pointed out that if the plant room were accessible from the outside of the building, it would be more convenient for the contractor during construction and for maintenance staff once the building was completed.

Typically, 80% of the suppliers on a project are from the previous team, so they already know what needs to be done. This paid dividends at the Warwick centre, by allowing Mace to ensure that the gym was fitted out much earlier than usual to allow Cannons' sales team to set up shop and sell membership in advance of the centre's opening. Usually, the sales team would have to lease and fit-out a series of temporary sales cabins. "It saved our operations quite a bit of money," says Redman.

The biggest problem faced by the contractors has been the poor performance of a few suppliers, some of which have been dropped.

The group causing the most difficulty, says Reynolds, is painters and decorators, because they tend to be regionally based. The next step for Mace will be to assist the best suppliers and help them develop their supply chain.

"Since we've been partnering, every one of our new sites has been delivered ahead of schedule," says Redman. "In two years we've brought our construction time down from 24 weeks to 16, costs have been static and our partners are giving us more for the same money."

Colin Gray, head of construction management and engineering at the University of Reading

Cannons and its contractors have clearly reached the second level of partnering. In order to differentiate itself, Mace delved deep into the project systems and the processes of suppliers. This enabled it to understand them, and then work out how to improve them. Feedback on their conclusions is used by the designers to improve the product and by contractors to increase efficiency. Cannons has finally reached the stage at which it is willing to trust its contractors – but only just, as there are still three competing teams involved.

Martyn Jones, lecturer in construction management at the University of the West of England

This Benchmark provides a timely reminder of the significant number of prerequisites necessary for more collaborative approaches. Central to these is a client with the nous and purchasing power to pick the right design and construction teams – and to keep them together over a number of projects in an increasingly trusting business environment. But adopting this approach would be difficult in much of construction given the number of infrequent clients and their reliance on fixed-price competitive tendering.

Rodney Howes, chair of the Construction Industry Council’s innovation and research committee

The potential to deliver a series of projects justifies time and effort spent in creating a generic design. Such standardisation can reduce waste, increase quality and drive down cost. Mace has created a system that satisfies Cannons and releases it to concentrate on its core business. When clients require one-off facilities, it may be possible to use previously established partnering arrangements. Under such circumstances there is an increased need for project planning, co-ordination and monitoring of the supply chain for optimum results.