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 • • 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 Governance Decommissioning Division Client / Contract Management Safety / Commercial Financial / Intelligent Customer DDP Board Decommissioning Programme Partner Sellafield Programmes DDP Lead Partners Independent Cost Scrutiny DDP Management Group Work Allocation Other Sellafield Alliances / Contracts DDP Delivery SL SelfPerform Best Athlete Approach DDP Umbrella Agreement Decommissioning Division (Client) DDP Board Sellafield Programmes DDP Lead Partners DDP Management Group Work Allocation Other Sellafield Alliances / Contracts DDP Delivery SL SelfPerform Work Allocation/Reallocation Need Identified Learning From Experience Master Plan Sentencing Master Plan Make Buy Assessment Delivery using SL in-house resources only Make Only SL Sanction Process Not Req’d Optioneering Against Criteria Buy Only or Make & Buy Delivery using one or more of: SL Sanction Process Required Business Case Acquisition Strategy Business Case Not Approved Business Case Approved Delivery partner Delivery Partner’s supply chain SL in-house resource SL Supply chain Delivering Improved Performance Effective Planning and Control SPI Phase 1 CPI CPI SPI SPI Phase 2 Phase 3 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 Annual Work Programmes Optimised Work Programme Other Activity Schedules Accelerations & Carry Over Annual Work Programme Incentives Through Work Current Risk Level Emergent Work Funding 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 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 Contractual Architecture Delivery partner access to / management of SL supply chain Existing Supply Chain Work packages Umbrella Agreement Delivery Partners Work packages Work packages Delivery partner access to / management of SL supply chain Sellafield Ltd. New Supply Chain Collaborative Management Plan Collaborative Management Plan (Operating Model) Programme Management EHSSQ Commercial People & Culture ICT Operations & Delivery Annual Work Allocation Plan Programme Governance Strategic Capability Plan Security Plan LFE & Knowledge Management Plan Audit Plan Programme Risk Mitigation Technical Management Design Management Plan Contract Management Plan Tactical Make v Buy & Allocation/ Reallocation Plan Document Control KPI Management Health and safety Plan Supply Chain Strategy Plan Training Management Plan Quality Management Plan Risk and Opportunity Plan Socio-Economic Plan Environmental Management Plan Benefits Realisation Plan Communications Plan Reporting Plan Works planning and execution Resource Management Plan Cultural Development Plan Commissioning Project controls Stakeholder Management Plan Dose Management Plan Information Communications and Technology Plan Construction management Plan Emergency Response Plan Handover Management Plan Business Continuity Plan 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