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MoD Main Building

Category: Defence

"I think one of the ways in which Modus got things right was to work with us right from the start on how they could deliver the outcome we were looking for, an IT- enabled open-plan working environment. An intelligent PFI provider needs to understand the way the client does his business and wants to work. That was a pretty big challenge."

Ian Andrews, Second Permanent Under Secretary at the Ministry of Defence

June, 2005

In the mid 1990s the Ministry of Defence was operating from an inefficient group of London offices with its Grade 1 listed but ageing Main Building facing a bill of around £100 million pounds to bring it in line with current health and safety regulations.

The MoD needed to invest in its infrastructure but it also wanted to use the opportunity to change its traditional hierarchical working structure and to modernise its culture as well as its building.

Lindsay Grist, Director PPP Forum, spoke to Ian Andrews, Second Permanent Under Secretary at the Ministry of Defence.

Ian Andrews: We started out by being very clear that this wasn't just about providing a new building it was actually about delivering a whole new way of working and from what I've seen so far this has been very positively embraced by the people working here.

A concession company, Modus, now jointly owned by Innisfree and Equion was created on financial close in 2000 to undertake the necessary refurbishment and to provide serviced accommodation over a thirty year period. The construction contractor was Skanska and FM provider, Amey Westminster. A major part of the modernisation process was the introduction of a new IT system which was outside the scope of the PFI. This added to the complexities of delivering the project.

I think one of the ways in which Modus got things right was to work with us right from the start on how they could deliver the outcome we were looking for, an IT- enabled open-plan working environment. An intelligent PFI provider needs to understand the way the client does his business and wants to work. That was a pretty big challenge. Then on top of the normal risks there was the extra risk of having the IT project separate from the PFI and the need for the two projects to run to the same timetable. That depended on a huge level of trust between all the different participants and everyone did things that were not in the contract because they recognised that it was necessary if everyone was going to get what they were looking for out of the project.

There are just nine modular offices in the one million square feet of the Main Building which now houses around 3000 employees. The rest of the staff, including Ian Andrews, work in open plan areas.

It's amazing that in an environment like this, with all the concerns people could raise about why they need to have their own space, that the open plan environment has worked so well and it's extraordinary how this creates the right culture all the way from the top down.

During the construction phase it was necessary to "decant" the workforce into alternative accommodation. During the period leading up to reoccupation of the new building they received intense training and communication about the changes that were being planned.

It's very important in this situation to be an intelligent client and to make sure there is one senior figure who is identifiable and accountable throughout the whole of the project. Our project director was able to work with the PFI provider during the decant period to put together a programme of education, workshops and visits all aimed at getting senior managers to understand first of all the opportunity that the new building was going to provide and, secondly, to get them thinking about how they would be able to take advantage of it. Another masterstroke was that for the year ahead of occupancy we had part of the floor of this building to which we had access as a non hard hat area so we were able to mock up the open plan. Managers were able to bring in their teams and say this is what it's going to be like, let's think about what that's going to mean for the way we work. We had individuals across the department who were given the responsibility of mobilising their area to make it all happen. So again, we come back to this being more than a building but also a catalyst for getting people to think about new ways of working. Again this was done with the full cooperation of Modus. So right from the beginning it was a team effort to drive this project through. But we don't see the move back into the building as the end of the process. It's just the beginning and we'll keep on looking for new ways to modernise and improve the way we work.

The £746 million project was delivered on budget and ahead of schedule. In its 2002 report, the National Audit Office described the procurement as effective and praised the management of the contract. Ian Andrews is also happy with the way the building is being run.

There have been teething problems but because from the beginning we've created an atmosphere of partnership we've had a level of trust which has allowed us to sit down at the table with the PFI providers and talk through our problems and they have gone away and sorted them out. What we were creating was a whole new relationship with the construction and facility management industry based on partnering rather than the system where companies focused all their attention on registering potential claims or hope the client changed their mind to ensure that they could achieve an adequate return. We brought into this project a very, very rigorous change control mechanism. For example, at the point where we decided the number of people who would have their own office, we said right, the design is now frozen. We enforced this to the extent that when approached by one of those destined for a modular office about whether it would be helpful for him to go open plan and I said no! You need to bring discipline to the client side and make sure there are no unnecessary changes of mind. Of course there will always be occasions when for overwhelming operational reasons it's necessary to make the changes but all too often you get customers who think in input terms and spend their time worrying about where they'd like the fireplace rather than saying what they want is a working environment with an acceptable ambient temperature.

Part of the design of the new building includes the restoration of the original Pillared Hall which was designed in 1915 by Vincent Harris. The hall had lain unused for many years but has now been opened up as an informal meeting area.

I think the first impressions people get of this building are that it is really state of the art. It is 21st Century. If you look at the building you have a real sense of light, of space, of openness. The former Pillared Hall which now provides our village street, was a furniture store in the old building, you couldn't get through. You couldn't actually get from one end to the other without going around the outside. Now it's a really popular informal meeting space close to the coffee bar and is making a huge contribution to changing the culture.

Aside from the Main Building the MoD is committed to more than £3.5 billion of PFI investment including some of the most complicated PFI projects signed to date.

It's no good giving a complex PFI project to someone who's never done a PFI project in their life before. That's what I mean about making sure you are an intelligent customer. Back in the mid 90s when we set up the original Private Finance Unit there was a recognition that we needed to have in-house expertise to judge whether projects were appropriate for PFI and if they were, to bring deal-making credibility to the process. I think we unintentionally allowed that to erode over a period of time but now we've brought in Nick Prior to restore that intelligent customer capability when it comes to managing the PFIs. That's hugely important in terms of evidence of our commitment but also in terms of maintaining the confidence and credibility of the wider PFI community.