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Graham Dalton, chief executive, Highways Agency

Interview: Graham Dalton - Why Lean stays core to the Agency’s efficiency toolkit.

As the Highways Agency prepares to roll out its new Collaborative Delivery Framework’s, worth some £5bn over the next five years, the use of Lean construction remains at the heart of chief executive Graham Dalton’s efficiency tool kit. 

Chief executive of the Highways Agency, Graham Dalton told last week’s Lean Construction Institute conference that his focus remained firmly on boosting efficiency and getting as much value from every public pound spent on the highways. 

Lean, he pointed out, was at the heart of meeting this challenge and, he added, had already delivered £90M of auditable savings since introduced in 2009.

However, given that the Agency is currently responsible for spending around £3bn a year maintaining and enhancing the nation’s motorways and trunk roads, a figure that is set to rise as the Agency morphs in to a new government owned strategic highways company, there is clearly much opportunity to increase this saving.

And with 90-95% of this money outsourced and so spent down the supply chain, he was clear that the private sector had a major role to play in driving change across the industry.

“We have got a long way to go” he said, pointing out that productivity was still too low in this fragmented industry,  and too little was  invested in skills and innovation. 

“We need to do something to change this industry,” he said.

The Agency has been using Lean construction, the management philosophy which aims to maximise customer value while minimising waste, since 2009. 

And while it has saved money, it also, he said, provided the “tool of choice” to manage risk, boost output and get the Agency through difficult situations such as the emergency project to repair the Boston Manor viaduct on the M4 just ahead of the 2012 Olympics.

Interview by Antony Oliver

What savings are you targeting using Lean?

I am not targeted any specific savings using lean – Lean is a tool to enable me to meet my businesses objectives. I’m not going to tell you what the efficiency savings are yet because I haven’t agreed them with the government. But like any large infrastructure business we have just got to take cost out a little bit each year.

What changes do you see the industry having to make to boost efficiency?

What characteristically happens in this industry is that people get into the mindset of “what do I have to do to win a job” – no matter if they are designing it, building it of even getting the funding for it.  So they get a figure in their head and they work to that. Lean is a way of increasing your margin – you have a job, you have a price for it -  and if you can take out a small percentage of the cost then you will boost your margin – the client is happy, you are happy and you boost your profit. But too often we don’t do that. We just work to a price.

Does the rising market give more incentive to change and embrace Lean?

I don’t think it matters. If it is a falling market they are competing very hard on price and so are working hard to meet it. If it a rising market then costs go up so they have to work to hit the price so the constraints are the same.

Why do you say that industry productivity is going down?

If you go on any decent sized, say £100M , construction site you will find that there are more people sat in an office wearing ties than there are on site doing stuff. We have probably improved productivity of the site but we have transferred people to go and sit behind desk, not producing more output but at higher remunerated positions to produce the same output.

When you talk about skills and innovation and the need to change you are therefore talking about the design side as well as the construction?

It is the whole of the infrastructure process. It is about defining what you want in the first place, it is about designing it, it is about building, operating and maintaining it.

You have big changes coming up at the Agency. Is the move towards customer focus the big challenge?

It is just one of three big challenges – first the move to long term asset and network planning is the most fundamental one. The focus on a better customer service will also allow us to eke more out of the system and this will require a big cultural change, and then finally there are changes in how we actually run the business - plenty for us to worry about and others to experience.