Large projects are vast, complex programmes of work spanning many years – sometimes a decade and longer. They deliver infrastructure such as power stations, transport systems and public buildings, and are vital for the smooth running of society.
With such large projects come equally extensive supply networks – often spanning thousands of contractors of differing size and from different industries.
In the wake of Brexit and ongoing geopolitical disruptions, using UK-based suppliers can help to avoid delays and instability. What's more, small- and medium-sized enterprises (SMEs) represent more than 99% of businesses in the UK economy.
But how can megaproject leadership teams ensure that their supply chains include as many local SMEs as possible?
Professor Jens Roehrich together with Professor Brian Squire – formerly School of Management) has been leading research to support large projects and their supply networks to deliver for local economies, focusing on EDF's Hinkley Point C (HPC) nuclear power station.
He says:
"Together with my team of PhDs, postdoctoral researchers and senior academics, we have worked closely with colleagues at HPC and its various stakeholders to better understand, analyse and guide efforts to include local SMEs in a vast network of suppliers. Integrating SMEs into such networks is crucial to deliver a range of economic and social value for the South West region of England.”
Scrutinising supply networks
Jens acted as Co-Director of the HPC Supply Chain Innovation Lab, a research centre examining how the science, practice and policy around setting up and managing supply chains can be improved.
The Lab was established in 2017 for a five-year period, and it represented a close partnership between the University of Bath School of Management and EDF’s HPC project.
The HPC Lab studied extensive datasets and interviewed a myriad of managers from HPC and its suppliers to dissect and analyse how best to:
- identify, engage and select the right local SMEs;
- develop governance arrangements and scale up operations for sustainable business growth; and
- persevere to reap the benefits and build a legacy.
A local project
Based near Bridgwater, Somerset, HPC will supply approximately 6 million UK homes with zero-carbon electricity from its two nuclear reactors.
Construction at the site is currently underway and the station is expected to become operational around 2030.
The power station is being coordinated by EDF and financed by EDF and CGN, with 22,000 people across the UK currently working on the project.
As of 2022, 64% of the value of Hinkley Point C's contracts had been awarded to UK-based companies – over 3,600 businesses in total. £4.2 billion had been spent with companies in the South West.
Catering services are a key example of the project's use of SMEs to provide services. HPC formed The Somerset Larder, a consortium of smaller, local firms working together to supply food and drinks provision to the site.
Working together
Jens and his team examined the inclusion of SMEs into HPC’s supply networks. They found that the process fell into three phases:
- recruiting network members;
- maintaining network stability; and
- managing network operations.
The process as a whole required substantial coordination – both formal and informal – across both HPC itself and the numerous smaller and larger companies it engaged.
Networks delivering routine services were, they found, governed on a shared basis among network members. Networks for more complex services, however, were coordinated by a larger 'lead' organisation. Jens explains:
"It is vital to first find the right local SMEs and possibly multinational firms to work together to delivery various products and services into a large project. Then, selecting the appropriate network structure (shared vs. lead) and ensuring the right level of coordination (between firms in the network structure) is key for the delivery of timely and high-quality products and services."
He continues:
"Getting any of these phases wrong will have a knock-on effect to subsequent phases, product and service delivery, and ultimately the functioning of the network."
