Business Plan 2014
Transport for London
Transport for London’s plans into the next decade
Commercial Strategy
Our vision: To be the informed client of choice
Contents
02 Background – The Transport for London Story
04
Our Commercial vision
06
Our people
10
Our Commercial Strategy
12 Commercial principle: Focusing on value
13 Commercial principle: Proactive market engagement
14 Commercial principle: Managing whole life cost
15 Commercial principle: Allocating risk effectively
16 Commercial principle: Being easy to do business with
17 Our enablers
18
Commercial leadership commitment
Commercial Strategy
1
Background – The Transport for
London Story
TfL’s goal is to keep London working, growing and to make life in London better.
We will deliver a transport system that secures London’s position as a world-leading
city and the engine of the UK economy. Our services will ensure that those who live,
work in and visit London can access all the Capital has to
offer in terms of jobs, leisure, health and education.
To achieve our goal, TfL has devised a
four pillar strategy:
O
Figure 1
TfL’s four
pillars
underpin our
Commercial
Strategy
ur
n:
sio
vi
To
be
th
e
in
rm
fo
ed
cl
ie
nt
of
ch
ce
oi
Our customers
and users
We will demonstrate
that every journey
matters, putting
customers and users
at the centre of
everything we do.
We will be accountable,
actively seek solutions,
and work with other
people directly, fairly
and consistently.
Our organisation
TfL is an executive body of the Greater
London Authority (GLA). Our primary role is to
implement the Mayor of London’s Transport
Strategy. This sets out the Mayor’s vision for
transport in London over the next 20 years and
describes how we and our partners will deliver
that vision and manage transport services across
the Capital.
We are a single, fully integrated authority that
exists to serve London in which our people are
proud to represent. We work together as a team
to ensure that we deliver for, and listen to, our
customers, businesses, users and stakeholders
and that they find us easy to do business with.
2
Transport for London
Our delivery
Our people
Every day we will
provide a safe, reliable,
clean, sustainable
and accessible
transport system. We
will introduce new
assets without any
disruption to services
and we will deliver
our major investment
programmes efficiently,
getting them right first
time, every time.
Value for money
We will continually ask,
‘can we do this better,
simpler or cheaper?’
and we will deliver clear
value for fare and tax
payers’ money, helping
us to secure funding for
major improvements
to our transport
infrastructure.
TfL’s Business Plan
Our Business Plan is based around the four
pillars and sets out how we intend to deliver
our priorities through capital and operational
expenditure.
It highlights our commitment to provide value
for money for our customers and the need to
demonstrate responsible use of public funds.
Over two-thirds of our annual spend is with
our supply chains, so having a clear strategy
underpinning how this will happen is an essential
part of supporting TfL’s goal: to keep London
working, growing and to make life in
London better.
Highlights
of TfL’s UK
economic
impact
New buses
Staff uniforms
Made in Falkirk
Manufactured in Ayr
Timber
New Routemasters
Milled in Jarrow
Made in Ballymena
Cable
Concrete flooring
Made in County Durham
Based in Ruthin
Steel rails
Insulated tools
From Scunthorpe
Engineered in
Wednesbury
Design & planning
services
Bolts
Located in Great
Yarmouth
Forged in Oldbury
Vehicle flooring
Figure 2
Highlights of TfL’s current UK
economic impact
New trains
From Liskeard
Economic context
Our Business Plan is set against a backdrop
of unprecedented levels of investment in
the transport and infrastructure sectors. HM
Treasury recently outlined billions of pounds
worth of investment in infrastructure, with
around a third of this for transport.
Approximately half of the transport budget has
been allocated to the Capital. Global spending
on infrastructure currently stands at £1.75
trillion annually and is predicted to rise to
£5.84 trillion per annum by 20251. This means
there will be significant competition for the
people, materials and technology we need to
deliver the business plan. In this environment,
TfL must position itself as the client of choice
to secure the capacity and capability that we
need from the supply market.
From our research we know that the transport
industry is already facing skills shortages in
certain diciplines of up to 21 percent, with
an ageing workforce and fewer young people
entering the industry. People within the industry
are also increasingly mobile and willing to work
on global transport and infrastructure projects.
Our Skills and Employment Strategy2 sets out
our intention to work with our supply chains and
the wider industry to ensure we have sufficient
and sustainable capability to meet demands
now and in the future. We will make this happen
through our commercial practice.
Made in Derby
Sustainable funding
Our investment programme and operational
contracts will promote regeneration and social
inclusion, while generating access to thousands
of job opportunities.
Our supply chains already include businesses
from all regions of the UK. Spend with our
suppliers will help fuel UK economic growth. We
are a major purchaser and have a responsibility
to ensure our buying activities are sustainable
to support London and UK growth. By adopting
a responsible approach to procurement we
will promote access to direct and sub-contract
opportunities, ensuring that the investment in
TfL continues to benefit the UK economy.
We know that through our supply chains we
support more than 60,000 jobs across the UK,
of which 41,000 are outside of London.
The commercial environment presents a clear
challenge to the delivery of our Business Plan.
TfL will need to deliver even more services
in the face of a growing population using our
network. We will continue to seek alternative
funding sources which will include commercial
development and property development
opportunities.
o
1. Source: Turner & Townsend, Global Infrastructure Focus, 360 View
2. http://content.tfl.gov.uk/skills-and-employment-strategy.pdf
Commercial Strategy
3
Our Commercial vision
To be the informed client of choice
Our Commercial Strategy
This strategy covers all of TfL’s commercial activities, ranging across
engineering, capital programmes, information technology solutions,
facilities and services through to commercial finance. The principles
and strategic aims underpin all commercial activity throughout TfL.
Our Commercial vision
This sets out our combined statement of intent
and commitment to focus on a more consistent
approach across TfL’s commercial activity. We
intend to make it easier for suppliers to do
business with us and reduce the variability of
commercial outcomes.
Key commercial theme
To deliver great commercial outcomes, it
is important that we focus our time on the
areas of the commercial lifecycle that can add
most value. We have mapped our commercial
lifecycle stages to the Crown Commercial
Service Procurement Lifecycle model
(see Figure 3).
Vision
To be the
informed client
of choice
Our existing commercial processes are heavily
focused on the ‘procure and contract’ phase
(Phrase 4) when considering commercial activity.
Our Commercial Strategy is centered on
changing the focus to spend more valueadding time at the early and later phases of
TfL’s Commercial Lifecyle. We will engage our
stakeholders at each phase to obtain a clear
understanding of the requirements and focus on
contract management and supplier relationship
management.
Through operating in this way, Commercial can
better influence outcomes to deliver
business benefits.
Before
Goal
High
Time spent
on value
added
activity
Before going to
market
Procurement
Process
Contract and supplier
management
Developing
requirements that
shape markets and the
supply base to TfL
Simplifying
process and reducing
turnaround times and
supplier bid costs
Improving
contract and supplier
management capability
through application of
new standards
Low
Phase 1
Define
business
needs
Phase 2
Develop
business
case
Phase 3
Set strategy
and agree
specification
Phase 4
Procure and
contract
Phase 5
Implement
Phase 6
Operate and
contract
manage
Figure 3
TfL’s Commercial Lifecycle model aligned to the Crown Commercial Service Procurement Lifecycle model
4
Transport for London
Phase 7
Review
and/or exit
Our Commercial Strategy is
centered on changing the
focus to spend more valueadding time at the early
and later phases of TfL’s
Commercial Lifecyle.
Commercial Strategy
5
Our people
Our aim
We will focus on four key people areas to create a great place to work.
High performing
culture
Growing potential
Leadership and
people management
Figure 4
TfL’s
Commercial
foundations of
a great place
to work
Building capability
A great place
to work
Vision
To be the
informed client
of choice
Telling our story
Sense of belonging
What this means to TfL
Our commercial technical skills framework,
together with the TfL competency framework,
sets out and defines what our people must have
or acquire to perform effectively in their job.
Understanding and living the TfL behaviours is
also an essential part of what we expect from
our people, ensuring effective performance in
everything we do.
People
Creating a great place to work means building
a culture of engagement, collaboration and
high performance. The continued motivation
of our people to deliver is essential to our
success. We are highly committed to creating
a culture that enables people to excel. We will
maximise the potential of all, identifying future
leaders and valuable specialists. We will support
the development of procurement, contract
As a business TfL will look to become
management and commercial skills across the
the informed client of choice by creating
organisation to enable TfL to become an even
commercial leaders of the future, benefitting the more intelligent and informed client.
business, the industry and the wider economy as
a whole. This means our leaders and managers
will continue to engage our people by being
even more open and honest, communicating
effectively and providing regular and constructive
feedback on performance.
6
Transport for London
As the economy and infrastructure market
continues to grow, we will continue to attract
and retain good people. New commercial
apprenticeships, combined with year-in-industry
and work placements, are some of the initiatives
we are investing in to acquire and retain people.
The success of our Commercial Strategy will be
dependent not only on having the right people
with the right skills at the right time but also the
right suppliers. We have put people at the centre
of our strategy and that also means working in
partnership with our suppliers to allow them to
excel.
Critical success factors to developing
our people
• Understand the technical skills, competencies
and behaviours needed to ensure we meet the
demands of the business
• Embed a consistent, transparent and robust
methodology for assessing capability and
developing our people
• Equip leaders and managers to inspire,
motivate and develop our people
• Attract and retain our best people through
development and talent management
programmes
• Communicate a strong vision for a great place
to work and enable the culture change that is
required to achieve it
• Drive engagement through collaboration,
involvement and effective communications
TfL’s behaviours
Our behaviours influence our work, our
development, our progress and our success.
While good standards of behaviour are
expected from all of our people, our aim is to
demonstrate high and ultimately ‘role model’
standards of behaviour in everything we do.
TfL’s behaviours are:
Accountable
Taking personal responsibility for our
actions and not making excuses about why
something isn’t possible. Telling others what
they can expect from us
Active
Stepping up, not waiting for others. Making
things happen, making things better and
finding solutions
Collaborative
Sharing our knowledge with others outside
our immediate teams so everyone can
make better decisions. Not wasting time by
excluding others
Direct
Getting each task done as quickly as
possible, by communicating clearly and not
wasting time
Fair and consistent
Being open and honest about our decisions
and considering other people’s viewpoints
and needs
Commercial Strategy
7
Creating a great place to work
means building a culture of
engagement, collaboration
and high performance. The
continued motivation of our
people to deliver is essential
to our success. We are highly
committed to creating a culture
that enables people to excel.
8
Transport for London
Commercial Strategy
9
Our Commercial Strategy
To be the informed
client of choice
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Be
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Our Commercial vision sets out where we will
be through to 2020.
Our people are at the core of our Commercial
Strategy. We will create an environment which
allows our people, our commercial approach
and our business to excel.
Vis
St
10
Transport for London
To be
informe
of ch
k
ris
ting
Alloca ctively
effe
Our enablers support the delivery of the
commercial principles and ultimately our
vision for Commercial.
Training
Commercial principles underpin our
commercial vision and provide a framework for
how a commercially astute organisational needs
to operate.
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e
Our Pe
M an a
whole li
gy
Our Commercial
principles
Sy
st e
m
s
Proactive market engagement: Developing
our relationship with the market to build
awareness of our plans going forward and
understand the appetite for our proposed
commercial solutions. This will create the
right conditions of engagement.
on
Foc
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va sing
l ue
Focusing on value: Clearly and consistently
articulating what value means to TfL and
selecting the right commercial approach to
achieve this.
Pro
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age arket
ment
e the
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hoice
People
aging
ife cost
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Processes
sion
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Managing whole life cost: Understanding
the cost drivers in our commercial activity
and designing the most efficient commercial
solutions across the lifecycle of an asset or
service.
Allocating risk effectively: Understanding
our risk appetite and determining both the
allocation of risks between TfL and the
market, and the costs of doing so. Risk
allocation decisions will be based upon who
is best placed to manage the risk to protect
and maximise value during the commercial
lifecycle.
Being easy to do business with: In
accordance with TfL behaviours we aim to
be fair, consistent and drive the right level of
consistency across TfL Commercial, reducing
the cost and time of procurement activity and
making TfL easier to do business with.
Figure 5
TfL’s Commercial Strategy model
Commercial Strategy
11
Commercial principle:
•Ensuring that the market understands that a
major part of delivering value to TfL includes
operating to the highest safety standards and
that there is a clear requirement to monitor
and improve safety
Be
bu in
s
ac
eng tive ma
rket
age
ment
on
•Setting a consistent approach to defining
value, evaluating bids and measuring
performance
Foc Focu
u v si n
va sinaluge g
l ue
on
Critical success factors to achieving our aim
•Developing strong relationships with our
internal clients and understanding business
priorities to inform the right commercial
approach
Sy
ste
m
s
St
ra t
Pro
risk
ing
Allocat tively
effec
What this means to TfL
We will endeavour to ensure that the
market and our stakeholders (internal
and external) have a clear understanding
that value must be delivered at all stages
of the Commercial Lifecycle, while
demonstrating continued improvement
and providing a safe working environment.
We will constructively challenge situations
to ensure the best value outcome.
y
do
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a
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Training
Our aim
To work with our internal clients
to define and articulate to the
market what value means to TfL.
c
Poli
ce/
Processes
Focusing on
value
n
rna
ve
Go
egy
Managing
whole life cost
rm
Info
on
ati
•Using Category Management3 to consider the
full range of commercial options available,
allowing the business to leverage our
position and implement the best value-driven
commercial options that we have available
•Using Supplier Relationship Management
(SRM) techniques to create added value
•Encouraging innovation from the supply
chains and rewarding it where it offers
tangible value against our business priorities
What this means to the market
•We expect the market to understand what
value means to TfL and focus on solutions to
deliver our expectations
•We expect our suppliers to create an
environment where innovation is allowed
to flow through the supply chains to
demonstrate and deliver value to TfL
• We expect our suppliers to demonstrate
improvement and reflect on lessons learnt,
leading to greater value
3. Category Management is the practice of segmenting goods, works and services into discrete groups according to their function and to mirror how
their market places are organised. Within each category, it defines an end to end process for buying goods and services that aligns business goals and
customer requirements with supplier capability.
12
Transport for London
Commercial principle:
•Providing accessible and easy to understand
information on how we procure
•Providing transparent information on who is
winning our contracts and encouraging our
suppliers to improve the visibility of
sub-contracts
Be
bu in
s
Fo
cu
va sing
lu
e
Pr
oa
ePnroactive m
g ctive arket
engag
market
ageem
menet nt
on
•Maintaining an open and two-way dialogue
with key business groups, trade associations,
suppliers and peers. Using this feedback
to inform TfL Commercial and develop
consistent best practice in the market
Sy
ste
m
s
risk
ing
Allocat tively
effec
Training
Critical success factors to achieving our aim
•Communicating our future work pipeline and
business challenges to the market
y
do
to
sy with
a
e s
g nes
i
Our aim
To work with the market to create
the best buying conditions, aligned to
the supply chains’ appetite to deliver
and attracting value-added innovation.
What this means to TfL
Undertaking proactive and on-going
engagement with the market to articulate
our ways of working and future plans.
Obtaining feedback on our overall
commercial approach and individual
procurement strategies to ensure they
create the optimum level of appetite in
the market and adapting as appropriate. It
is vital that we have a good understanding
of the market before developing
or committing to a category, asset
management or procurement strategy.
c
Poli
ce/
St
ra t
egy
Managing
whole life cost
rm
Info
Processes
Proactive market
engagement
n
rna
ve
Go
on
ati
•Maximising the benefits of collaboration
through increasing dialogue with the market
and developing the supply chains’ capability
•Understanding the market’s appetite for our
proposed commercial approach
•Engaging with a wider market and enabling
new suppliers to work with us
What this means to the market
•We will provide opportunities for the market
to input on our proposed strategies and
forward plans and how we can improve our
processes and ways of working
•Our engagement with the supply chain will
increase and innovation will be allowed to
flow through the supply chain tiers
•We will support the market in understanding
our long term work pipeline
•We expect the market to invest in the skills
and capability to bid for and win business
with us
•We expect the market to understand our
business priorities and be proactive in
innovating to help us deliver our vision
•We expect our direct suppliers to make subcontract opportunities visible and accessible
Commercial Strategy
13
Commercial principle:
y
Sy
ste
m
s
do
to
sy with
a
e s
g nes
i
ac
eng tive ma
rket
age
ment
on
Be
bu in
s
Fo
cu
va sing
lu
e
St
ra t
Pro
risk
ing
Allocat tively
effec
Training
Our aim
To base our commercial decisions
on whole life cost principles, from
specification, through procurement to
delivery, operations, maintenance
and end of life.
What this means to TfL
TfL this
is not
just ato
client
What
means
TfL to industry; it is an
owner and operator of assets. In many
cases the assets we acquire, maintain and
refurbish will be in operational use for
decades. The decisions we make up front
on the specification, design and contract
model lock in costs for the long term. We
need to develop a deep understanding of
our cost drivers before making decisions
on our commercial approach.
c
Poli
ce/
Processes
Managing whole
life cost
n
rna
ve
Go
egy
Managing whole
liM
feanacgoinsgotst
wh
ol
e life c
rm
Info
on
ati
•Installing a more structured approach to
building and harvesting our knowledge
base, with data and intelligence driving our
commercial models and decisions
What this means to the market
•We need our suppliers to understand the
whole life cost of the assets and services and
be proactive in working with us to reduce
them
•We need our suppliers to be able to
demonstrate to us the reliability performance
of assets and services and justify the whole
life cost performance
Critical success factors to achieving our aim
•We want the market to innovate to help drive
•Focusing on and incentivising the reduction of
reductions in our operating costs across TfL
whole life cost and considering how we can
influence supply and demand to achieve this •We wish to see reduced handover costs
between the supply chains and TfL during
•Having a closer focus on the cost drivers
asset/product transfer
and ‘should cost’ of commercial activities;
building our estimating and benchmarking
capability
•Focusing on specifying and incentivising
reliability, recognising it has a strong
connection with costs over the life of an
asset or service
14
Transport for London
Commercial principle:
c
Poli
ce/
y
Sy
ste
m
s
do
to
sy with
a
e s
g nes
i
St
ra t
egy
Pro
ac
eng tive ma
rket
age
ment
isk
ng r
Allocatitiinvgerilsyk
eAflfleoefcfcaetctively
Training
Our aim
To adopt an open approach to risk,
by determining the allocation of risks
and which party (TfL or supply
chain) is best placed to manage them.
on
Be
bu in
s
Fo
cu
va sing
lu
e
Processes
Allocating risk
effectively
n
rna
ve
Go
Managing
whole life cost
rm
Info
on
ati
What this means to the market
What this means to TfL
We will work with our clients to
understand the commercial, technical,
delivery and operational risks associated
with what we are buying. We will form
a view on which of these risks can be
allocated and the market’s appetite for
taking them.
•Our suppliers will have an opportunity to help
TfL ascertain who is best placed to manage
risk and how risk allocation may impact the
commercial offer and outcome
•We will encourage open and honest
discussions to allow us and our suppliers
to have a clear understanding about the
commercial risks
•We will support the market in being more
open to controlling risk and delivering value
Critical success factors to achieving our aim
•The business has a clear knowledge and
understanding of the market’s and its own
risk appetite
•Commercial risk identification and
management is undertaken at contract,
programme and portfolio level throughout all
stages of TFL’s Commercial Lifecycle
•Having a clear understanding of who is
best placed to manage commercial risk and
appropriate allocation mechanisms
•Opportunities for the business are identified,
understood and harnessed appropriately
•The business continuously improves risk
management mechanisms through regular
reviews and lessons learned
Al
ef lo
risk
g
tin ely
ca ctiv
fe
Commercial Strategy
15
Commercial principle:
Critical success factors to achieving our aim
•Adopting standard templates across
Commercial to reduce the variability of
processes and outcomes
•Maintaining a standardised approach to
contract and performance management,
embedded in the way our people undertake
commercial activity
•Consistent adoption and use of commercial
tools and systems to improve the
management of the commercial lifecycle
Fo
cu
va sing
lu
e
St
ra t
Pro
Processes
ac
eng tive ma
rket
age
ment
Be B
e
bu inbusin
g nes
si
Sy
ste
m
s
risk
ing
Allocat tively
effec
What this means to TfL
Ensuring we are an organisation that the
market finds easy to do business with by
having the best technology, processes
and governance in place to drive
consistency across Commercial, along
with applying the TfL behaviours.
y
o
do
to itho d
t th
sy y
w
a
s
i
e ss
g nea
ie
sw
Training
Our aim
To have commercial processes
which are transparent, consistent,
simple, clear and efficient for TfL
and the market, while utilising the
best technology.
c
Poli
ce/
on
Being easy to do
business with
n
rna
ve
Go
egy
Managing
whole life cost
rm
Info
on
ati
•Having clear, mature governance which is
easily understood, followed and used for
decision making
•Improving the quality of our Commercial
service offer and changing how customers
interact with us
What this means to the market
•The market will see the cost of bidding for
our work reduce
•The market is encouraged to feed back to us
on how we can improve
•The market will see increased transparency
and the publishing of information into the
public domain, allowing the supply chains’
lower tiers to see who is winning contracts
and what drives commercial value and
success from TfL’s perspective
•Our suppliers will continue to be paid fairly
and efficiently and will be expected to adopt
fair payment approaches with the supply
chain
•Having an efficient, fair and effective payment
process across TfL
•We will provide support and guidance to our
suppliers on our systems to enable effective
working
16
Transport for London
Our enablers
licy
/Po
Sy
st e
do
to h
sy wit
a
e ss
e
in
Foc
u
va sing
l ue o
CCP helps us deliver the Commercial Stategy
and is made up of a number of workstreams
designed to build our capability.
Our enablers will drive enhanced capability
under each commercial principle, ultimately
delivering our Commercial vision.
St
rat
e
Our People
Managing
whole life cost
gy
Our
enablers
ati
rm
I nf o
Processes
Pro
a
engctive m
age arket
ment
Vision
To be the
informed client
of choice
k
ris
ting
Alloca ctively
effe
What this means to TfL
Our enablers will form the basis of our
commercial improvement work, the
Commercial Capability Programme (CCP).
Training
The building blocks for our
commercial activities.
They are the elements that any
business function needs to
have in place to allow the effective
delivery of successful business
outcomes.
m
s
n
Be
bu ing
s
G
nce
rna
e
ov
on
Systems
Processes
Information
Strategy
Training
Governance/Policy
Commercial Strategy
17
Commercial leadership commitment
Providing direction to the development of commercial activity across TfL
The Commercial Leadership Group (CLG) was
established in November 2014 and brings
together senior leaders from all parts of our
organisation that include commercial functions.
Its objective is to provide co-ordinated direction
for the development of commercial activity
throughout TfL.
The CLG has a broad remit, and in addition to
shaping, leading and owning the creation of this
Commercial Strategy, it includes:
• Agreeing and implementing a commercial
capability improvement framework
• Creating and implementing a talent
management process to develop TfL
Commercial leaders
• Creating a ‘TfL Commercial family’ culture
across the Commercial delivery units
• Promoting a culture of consistency and
explicable differences in terms of market
approach
• Steering the Commercial Capability
Programme
• Reviewing key supplier performance issues
• Defining and agreeing the scope of a
Commercial technology platform and
leading the implementation of a new
technology platform
Ian Nunn (Chair)
Managing Director, Finance
(Interim)
Sarah Atkins
Commercial Director, Rail
& Underground
Andrew Quincey
Director of Commercial
Graeme Craig
Director of Commercial
Development
Nick Fairholme
Director, Projects &
Programmes, Surface Transport
Dana Skelley
Director of Asset Management,
Surface Transport
Shashi Verma
Director of Customer
Experience
Mike Weston
Director of Buses
Commercial Leadership
Group members
18
Transport for London
Commercial Strategy
19
do
to h
sy wit
a
e ss
e
in
Vision
To be the
informed client
of choice
Our People
Managing
whole life cost
Pro
a
engctive m
age arket
ment
Vision
k
ris
ting
Alloca ctively
effe
To be the
informed client
of choice
n
Be
bu ing
s
Foc
u
va sing
l ue o
Our
enablers
Systems
Processes
Information
Strategy
Training
Governance/Policy
Our Commercial Capability
Programme helps us deliver
the Commercial Stategy and
is made up of a number of
workstreams designed to build
our capability.
If you have any questions about the
Commercial Strategy, please email:
[email protected]
©Transport for London
Windsor House
42-50 Victoria Street
London SW1H 0TL
January 2016
tfl.gov.uk