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Construction Procurement and Project Management in Japan’s Public Sector

“Win-Win-Win”

A case study in collaboration and change

By Ian Heptinstall

UK

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Overview

Since the mid 2000’s Japan has made a radical shift in how public sector construction procurement is managed.  This has resulted in faster and more efficient delivery, improved value for money, and higher profitability for contractors.  This report describes the changes they have made.

PMMS believe this must be one of the largest scale examples of collaborative procurement in action.  One of the world’s largest construction organisations made this change happen and reaped the benefits that traditional competition by itself was not delivering.  It came from a thorough understanding of what drove cost, managing risk and removing waste, and finding ways in which all parties could achieve more of their objectives.  Interestingly this change did not require the client to favour a handful of key suppliers, outsource its responsibilities, or to sign any long-term frameworks.  Competition was still used to select contractors, and SME’s could do as well as large contractors.

There are lessons and opportunities from this case which can be used by public and private sector organisations – both clients and main contractors – around the world.

Introduction

This report describes the significant changes made by the Japanese Government in the management of their public works capital programme.  It is based on a meeting in Tokyo which the author had in November 2011 with Yuji Kishira (now MD of Goldratt Consulting in Japan) and Masanori Seta, Senior Manager: Construction Procurement Policy & Strategy at the Ministry of Land Infrastructure and Transport (MLIT).

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To read entire paper (click here)

ABOUT THE AUTHOR

Ian Heptinstall BEng, CEng, MCIPS

Author

Ian Heptinstall  is a UK-based consultant whose procurement experience has seen him sitting in most of the seats around the buyer-supplier table.  He has in-depth expertise in indirect and CapEx procurement, and has led significant organisational change projects.  As a chartered engineer, working in the chemicals industry, early procurement experience was as a project manager in ICI and Zeneca, selecting and managing suppliers with little professional input.  It was in Zeneca that he moved into his first procurement role.  After 15 years with ICI and Zeneca, Ian then moved into the supplier’s seat working at the engineering consultancy Eutech. Ian and his team managed capital projects for clients in the process industry, and he also designed and delivered training and development assignments in project management and procurement.  One of his major projects used an innovative project alliance approach to its management and contract.  As well as winning an award for Supply Chain Excellence, the project brought significant benefit to the client Rohm and Haas.  He returned to procurement as Engineering Procurement Manager for Glaxo Welcome, leading teams at the four main production facilities in the UK and Singapore.  When Glaxo merged with Smithkline Beecham he moved to the central Capital Procurement team as Sourcing Group Manager.  From GSK he joined a small global management consultancy, initially working in the USA on a major procurement change programme with Sears.  Back in Europe Ian worked on a number of short analysis projects across several industries, before joining a 12 month assignment with steel manufacturer Arcelor.  Immediately prior to joining PMMS Ian was Supply Chain Director at NG Bailey, a leading UK construction company,  where he led the transformation of procurement from a distributed, inconsistent and transactional overhead, to a centrally-led, integrated, value-adding part of the business.  The training part of this work was recognised with a UK National Training Award in 2007.  Ian enjoys all aspects of procurement improvement, from strategic operational and organisation design, to training and coaching.  Particular interests include procurement of capital projects and commercial awareness training for non-procurement staff.  Ian can work in French as well as English.  He can be contacted at [email protected].