the skills accord annual review report

The Skills Accord

Annual Review Report

May 2017

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© EU Skills Group May 2017

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A: Friars Gate, 1011 Stratford Road, Shirley, Solihull, B90 4BN

The Skills Accord

Annual Review Report

Executive Summary ............................................................................................................. 2

1. The Skills Accord Concept ............................................................................................. 5

2. The Annual Review ........................................................................................................ 9

3. Annual Review Outcomes .............................................................................................12

4. Summary and Recommendations for Future Roll-out ....................................................24

Glossary ...............................................................................................................................27

Skills Accord Annual Review Report – May 2017 © Energy & Utility Skills Group Page 2 of 31

Executive Summary This report presents the outcomes and achievements of the Annual Review accomplished by the

signatory companies.

The Challenge The Energy and Utilities Skills Partnership (formerly the Energy and Efficiency Industrial Partnership)

set the challenge: can procurement practices be leveraged to encourage investment in training and

development across the supply chain? The answer to the question was yes and the solution

developed was the Skills Accord.

The pressure on contractors to remain competitive often results in underinvestment in skills.

Procurement policies provide a means of delivering change at scale: introducing the same

requirements for all contractors, adopting a consistent approach to managing relationships and

measuring performance fairly and transparently. A working sub-group (Skills Accord Task and Finish

Group) has developed the Skills Accord as a vehicle for delivering this transformation.

The Skills Accord sets out five commitments designed to promote and lock-in sustained

investment in the technical and operational skills the sector needs most via procurement

practices. The aim is that it should become essential for signatories to accept the commitments within

the Skills Accord and, in turn, to cascade them down to their own suppliers. The resulting Skills Accord

has five robust and challenging commitments that require signatory companies to ensure that

responsible procurement practices are used to drive investment in skills through the delivery of

contracts.

Amey, National Grid, SSE, Thames Water and UK Power Networks have the led the

development of the concept and the piloting of the Skills Accord. They have been consulting on

this approach to procurement and investment in training with their strategic suppliers and have on-

boarded 19 of them. The 26 signatory companies, for the pilot year, are:

Key Outcomes and Recommendations In order for signatories to measure the impact of signing up to the Skills Accord, it is necessary for them

to complete an Annual Review, which is documented in Commitment 5. The table below summarises

the key outcomes of the Annual Review and key recommendations to consider for the subsequent roll-

out of the Skills Accord initiative.


Skills Accord Commitments

Summary of Outcomes Recommendations for subsequent roll out

Commitment 1

To address sector-wide

skills gaps

and shortages

Contribute to 5% sector

target, based on company’s

requirement determined

through analysis of sector

skills needs.

Measure of Success

Signatory companies will

support the sector to reach,

in addition to contribute to its

overarching target. This

target consists of 5% of the

technical or operational

headcount enrolled on

relevant skills development

programmes.

The training figures for signatories ranges from 2% to

33%.

In addition the majority of signatories used robust

processes or systems in their organisation to ensure

current and future resource requirements were

adequately met.

The recommendations for Commitment

1 are:

1. To set the percentage target at 10%

of the technical or operational

headcount enrolled on relevant skills

development programmes and use the

10% as a baseline figure to measure

future improvement.

2. In order to measure and review

impact of signatory companies’ skills

development on sector wide skills

shortages, the recommendation is to

request precise details of training

programmes in the roll-out year. In

addition the Training Eligibility Criteria

(TEC) will be further refined.

3. For the Skills Accord Steering Group

to recommend skills shortage areas to

target. For pilot companies to share

their best practice for workforce

planning.

Commitment 2

To promote signing up to

Accord through the

Supply Chain

Encourage suppliers to

become signatories

and agree training targets

with suppliers.

Measure of Success

The lead signatories will on-

board 4-5 of their strategic

suppliers to become

signatories and work

towards embedding the

commitments.

The 5 lead companies, Amey, National Grid, SSE,

Thames Water and UK Power Networks, all met this

requirement.

In the pilot year, Commitment 2 was not applicable for

the 19 signatories on-boarded by the lead companies.

This Commitment will apply to the 19 suppliers in the

roll-out year and all new signatories.


2 are:

1. For all signatories (lead and

suppliers, new and existing) to on-

board at least one supplier and agree

with Lead Companies the suppliers to

engage in future years, as well as re-

engage with existing suppliers and

ensure their commitment for roll-out.

2. Good practice was demonstrated by

Lead Companies in engaging and

leading their suppliers to embed the

commitments. This practice ought to be

shared with signatories at the best

practice workshop.

Commitment 3

To promote relevant skills

development

across the Supply Chain

through

procurement

Develop and deliver

responsible


3 are:

1. To review whether it is appropriate to

ask tier 2 and SME suppliers to on-

board suppliers (Commitment 2) and

embed Commitment 3.


procurement practices

through supply chain

on skills delivery.

Measure of Success

Signatories will embed

relevant skills development

in their procurement

process, evaluation criteria

and contracts, where

excellence is demonstrated,

by including a reference to

the Skills Accord and

necessitate suppliers to

report against their plans

and proposals.

Good practice was demonstrated in embedding skills

development into procurement processes. The annual

review identified that most companies were including

the Skills Accord and skills development in the pre-

qualification and tender technical evaluation in the

procurement process.

A core feature of Commitment 3 was for signatories to

consider whether it is appropriate to require its

suppliers to put forward plans and proposals for

relevant skills development and to necessitate

suppliers to report against these plans and proposals.

The annual review found this was embedded primarily

at contract negotiation stage or delivery stage of the

contract.

2. To further develop tools to help

signatories to embed this commitment.

In addition, to review compliance

criteria and weighting for this

commitment.

3. Embedding requirements into

contracts was the most difficult and

challenging part of this Commitment

and, moving forward, this is an area to

review.

4. For signatory companies, the

recommendation is to embed more

explicitly current and future workforce

development into their evaluation

criteria and contracts, referencing the

Skills Accord where applicable.

5. In terms of criterion 3.2, further

exploratory work is required on how

signatories can embed and evidence

this commitment.

6. Pilot companies to share ways in

which skills development can be

embedded into the procurement

process.

Commitment 4

To continuously improve

performance

Continuous improvement of

signatories’

sustainable work practices.

Measure of Success

Signatory companies will

demonstrate continuous

improvement in their own

sustainable workforce

practices and that of their

suppliers.

In the analysis it was noted that the compliance

criterion for this Commitment had been interpreted

quite differently by the signatory companies.


are 4:

1. To modify the compliance question

and criteria and provide examples to

guide signatories on what is required.

Commitment 5

To monitor and report

Annual review and reporting

of company

and sector performance

Measure of Success

All signatory companies will

complete the annual review

reporting their compliance

with commitments.


5 are:

1. For most signatories to improve from

good to excellent, the focus needs to

be on improving their workforce

development strategies and plans.


1. The Skills Accord Concept

Introduction This report presents the outcomes and achievements of the Annual Review accomplished by the

signatory companies. There are four sections to the report:

i. Section 1 provides the background of the Skills Accord initiative and the development of the

concept, outlining the contractor and supplier skills issues that are being addressed and why

the procurement lever was used.

ii. Section 2 describes the Annual Review process and how it fits into the Skills Accord Initiative.

iii. Section 3 is the core of the report and presents the outcomes of the Annual Review.

iv. Section 4 summarises the outcomes and achievements and presents the recommendations to

consider for future roll-out.

The Challenge: Can procurement practices be leveraged

to enhance training through the supply chain? This was the challenge set by the Energy and Utilities Skills Partnership (formerly the Energy

Efficiency Industrial Partnership). The answer to the questions was yes and the solution developed

was the Skills Accord.

The issues the Energy and Utilities Skills Partnership is trying to address with the Skills Accord

initiative include:

Encouraging investment in skills and training throughout the supply chain: working

across the supply chain and helping them collaborate for mutual benefit on skills investment is

essential. This ensures sustainable supply chains as well as providing opportunities to

develop new talent. It is proven that investment in skills training brings a high level of return

yet there is still an underinvestment in skills.1

Encouraging investment in workforce training: The supply chain predicts it will fill 83% of

its future vacancies by going to the marketplace compared to 26% for asset owners, who have

a much heavier reliance on internal moves, growing talent and promoting from within.2 This

initiative will help to shift the balance so that suppliers move towards greater investment in

internal workforce development.

Addressing technical and operational skills shortages: The energy and utility sector faces

a particularly high proportion of hard to fill vacancies, which are higher than other UK sectors.

In addition, most of the vacancies are in the skilled and technical trades. Due to the nature of

the role, there is a longer lead time to competence and also this sector faces greater

competition for skills from other sectors.3

Achieving parity across the supply chain: Building on the experience of Crossrail, TfL and

the UK Government’s Commercial Executive, a new way of incentivising supply chains is

1 Department for Business, Innovation & Skills (2015), ‘Measuring the Net Present Value of Further Education in England’ 2 EUSG (2016) Workforce Planning Research Results 3 HM Treasury, (2015) National Infrastructure Plan for Skills, HMT


required to generate the necessary capacity and capability the sector needs by retraining the

current workforce and creating new additional apprenticeships and traineeships.4 To truly

succeed, the sectors need parity across their entire supply chain.

Why a Procurement centred Skills Accord?

Aligning with the UK Government’s Procurement and

Skills Agenda

Aligning with the Apprenticeship Reforms

The apprenticeship reforms and levy which went live on the 6th April 2017 will have an impact on

companies’ training and workforce strategies. The Skills Accord seeks to address technical skills gaps

and shortages and one of the training pathways will be apprenticeships. Addressing the technical skills

issue and encouraging suppliers to develop their workforce aligns with the aims of the reforms. In

particular, the distribution of unspent levy funds to suppliers in the sector and support for SMEs will be

key enablers in the Skills Accord. This Skills Accord initiative also demonstrates how the funds could

be distributed to suppliers in the other infrastructure sectors.

Delivering on Procurement

The initiative aligns with the UK Government’s commitment to skills outlined in the Treasury’s National

Infrastructure Plan for Skills. From 1 April 2015, companies bidding for large public infrastructure

projects are required to demonstrate their commitment to skills, by ensuring and incentivising skills

investment through procurement processes.5

Use of procurement process as a lever for skills investment has been reinforced in the Government’s

‘Building our Industrial Strategy: Green Paper’. The strategy sets out the proposed approach to the

Government’s long-term policy framework for investment decisions. Improving procurement is one of

the 10 pillars of the strategy “we must use strategic government procurement to drive innovation and

enable the development of UK supply chains. Used strategically, government procurement can

encourage innovation, competition, and investment in skills”.6

To meet this requirement, the UK Government is planning to roll out of a “balanced scorecard”, an

approach recently developed by the Cabinet Office. The balanced scorecard will be utilised across all

major construction, infrastructure and capital investment projects over £10 million, including those in

the recently published National Infrastructure and Construction Pipeline. The scorecard aims to ensure

that the impact of procurement on the growth of small businesses and UK supply chains is accounted

for. Skills and apprenticeships will be reviewed when considering the overall value for money

represented by different bids.7

Driving the skills step change through procurement

In 2015 the Energy and Utilities Skills Partnership Council established a Contractors’ Forum of senior

executives to review procurement practices and identify the changes necessary to address these skills

issues. Currently, the pressure on contractors to remain competitive often results in underinvestment

4 HM Treasury, (2015) National Infrastructure Plan for Skills, HMT 5 ibid 6 Department for Business, Energy and Industrial Strategy (2017) Building our Industrial Strategy: Green Paper 7 ibid


in skills. Procurement policies provide a means of delivering change at scale: introducing the same

requirements for all contractors, adopting a consistent approach to managing relationships and

measuring performance fairly and transparently. A working sub-group of procurement specialists

(Skills Accord Task and Finish Group) and their legal advisers have developed the Skills Accord as a

vehicle for delivering this transformation.

The Skills Accord Commitments The Skills Accord sets out five commitments designed to promote and lock in sustained investment in

the technical and operational skills the sector needs most via procurement practices. The aim is that it

should become essential for signatories to accept the commitments within the Skills Accord and, in

turn, to cascade them down to their own suppliers. The resulting Skills Accord has five robust and

challenging commitments that require signatory companies to ensure that responsible procurement

practices are used to drive investment in skills through the delivery of contracts. The commitments are

outlined below in Figure 1 and more detail is presented in section 3.

Figure 1: The Skills Accord Commitments

Skills Accord Commitment

Outline of the Commitment

To address sector-wide skills gaps and shortages

Contribute to 5% sector target, based on company’s requirement determined through analysis of sector skills needs.

To promote signing up to Accord through the Supply Chain

Encourage suppliers to become signatories and agree training targets with suppliers.

To promote relevant skills development across the Supply Chain through procurement

Develop and deliver responsible procurement practices through supply chain on skills delivery

To continuously improve performance

Continuous improvement of signatories’ sustainable work practices

- To monitor and report

Annual review and reporting of company and sector performance

The Pilot 2017 The Skills Accord was a 12 month pilot launched in April 2016, led by five lead companies: Amey,

National Grid, SSE, Thames Water and UK Power Networks, who have been consulting on this

approach to procurement and investment in training with their strategic suppliers (26 companies have

been consulted) over the pilot period. The three objectives of the pilot year were to:

Engage and support pilot companies to embed the Commitments

Test the processes and procedures of the Skills Accord

Evaluate the long-term delivery

2

21

1

3

21 4

21 5

21


The 19 suppliers on-boarded by the Lead Companies were made-up of both Tier 1 and Tier 2

suppliers, see Figure 2 for the 26 signatory companies involved in the pilot.

Figure 2: The signatory companies

The official company signing of the Skills Accord by the 26 pilot companies took place at the launch

event on 11 October 2016 at the House of Lords. By signing the Skills Accord, companies committed

to embedding the five commitments and participating in the annual review.


2. The Annual Review

What is the Annual Review? In order for signatories to measure the impact of signing up to the Skills Accord, it is necessary for

them to complete an Annual Review, which is documented in Commitment 5. For this Commitment all

signatories to the Skills Accord agree that monitoring compliance is a key determining factor in

successfully achieving the overarching aims of the Skills Accord. Therefore, each year, signatories to

the Skills Accord commit to:

reporting the percentage (an average for the year) of technical and operational headcount

involved in the energy and utilities sector, undertaking relevant skills development within their

organisation

reporting on their company’s compliance with the commitments of the Skills Accord.

Signatories to the Skills Accord were required to carry out an annual review of their performance

against the commitments. This involved two processes:

Quantitative Assessment – Measuring the sector target for compliance of Commitment 1:

to address sector wide skills gaps and shortages.

Qualitative Assessment – Evaluation questionnaire – to measure compliance against

Commitments 1 to 4.

In December 2016, the pilot year annual review was initiated and the review process was completed

by the end of March 2017. 26 companies tested their achievements against the commitments over the

pilot year.

In the pilot year the mandatory requirements were for all companies to meet Commitments 1, 4 and 5;

and Commitment 3 for Asset Owners and Tier 1 contractors with more than 50 employees.

Commitment 2 was not applicable for 19 suppliers as only the five leading companies were committed

to on-boarding suppliers during the pilot year.

A compliance criterion was developed which outlined the requirements signatories needed to meet for

the five individual commitments. There was a total of seven compliance criteria and each one was

scored out of 3, where 3 was excellent compliance and 0 was compliance not addressed (Figure 3

outlines the agreed scoring matrix). Therefore, the maximum score achievable was 21. However:

for the 19 suppliers the total score achievable in the pilot year was 18, as Commitment 2 was

not a requirement for them;

Commitment 3 was not applicable to all of the suppliers, as some do not procure or have a

supply chain (or have had no live procurements in this period). Therefore, the maximum score

achievable for these suppliers was 12.

Figure 3: Agreed scoring matrix Type of Signatory Maximum Score for Pilot Year Exempt Criteria

Lead company 21 None

Supplier with supply chain 18

Commitment 2 (only applicable in the

pilot year)

Supplier without procurements 12 Commitments 2 and 3


To achieve the Skills Accord recognition, signatories must score 2 or above across all seven

applicable criteria, as illustrated in green in Figure 4. The two outcomes that were proposed for award

achievement were:

Met the commitments – the signatory company has achieved a score of 2 or more for each

applicable commitment.

Working towards the commitments - the signatory company has achieved an average score of

less than 2 for each applicable commitment.

It was agreed by the Task and Finish Group that no awards would take place in the pilot year.

Figure 4: Scoring Matrix

Compliance Criteria Scoring

Commitment Criteria No. 0-Not

addressed

1-Some

compliance

2-Good

compliance

3-Excellent

compliance

1. To address sector wide skills gaps and

shortages

1.1

1. To address sector wide skills gaps and

shortages

1.2

2. To promote signing up to the accord through the

supply chain

2.1

3.To promote relevant skills development across

the supply chain through procurement

3.1

3.To promote relevant skills development across

the supply chain through procurement

3.2

4.To continuously improve performance 4.1

5.To monitor and report 5.1

Annual Review Results 24 of the 26 signatory companies completed the Annual Review. Figure 5 presents a breakdown of

signatory companies’ sector representation: most signatories represented more than one industry,

ensuring that an adequate spread was achieved for the Skills Accord pilot year.

Figure 5: Business and industry areas

0 2 4 6 8 10 12 14 16 18

Power - transmission/ distribution

Water treatment/ sewerage

Gas distribution

Power - generation (including renewables)

Smart meters

Other (please specify)

Waste management

What part of the business or industry areas does this Skills Accord submission cover?


While the average total score is just 12, the figure is skewed by two low scoring companies. Figure 6

presents a breakdown of the average signatory score by type of signatory. The five Lead Companies

performed very well with an average total score of 17 out of 21. The signatories that have no suppliers

also performed well with an average score of 9 out of 12. Whereas suppliers with supply chains

averaged a very respectful 11 out of 18, some suppliers provided over and above what was required

in the pilot year. Overall, a good set of evidence documents was provided to support compliance.

Figure 6: Breakdown of signatory scores

Type of Signatory Maximum Score for Pilot Year Average Score

Lead company 21 17

Supplier with supply chain 18 11

Supplier without procurements 12 9

As illustrated in Figure 7 below, achievement of Commitments 1, 4 and 5 was good among the

signatures. Commitment 2 was achieved by the lead companies, but was not applicable to supplier

companies. Commitment 3 was the most challenging for the majority of signatories to achieve, due to

the requirements of the Commitment: signatories were required to make changes to their procurement

policies and practices, as well as have live tendering and contracting happening in the year, in order to

embed the commitment. Nevertheless, good results have been achieved by many of the signatories.

The next sections provide further details on these outcomes.

Figure 7: Overall compliance of pilot companies by criteria

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Criteria1.1

Criteria1.2

Criteria2.1

Criteria3.1

Criteria3.2

Criteria4.1

Criteria5.1

0 0

19

6 7

1 01

7

0

5

10

7

13

10

1

12

7

11

14

20

74

1 0

57

Rating 3 - excellent

Rating 2 - good

Rating 1 - some

Rating 0 - not addressed


3. Annual Review Outcomes

About the Commitment Commitment Requirement

The organisation commits to supporting the energy and utilities sector in reaching its target

of 5% of the technical or operational headcount enrolled on relevant skills development

programmes each year.

Compliance Criteria for signatories to achieve

Criteria 1.1 – Signatory companies must complete the quantitative assessment. For this,

they will need to supply their training figures broken down by percentage of operational/

technical head count on eligible training, forecast of training requirements as a percentage

and training broken down by levels.

Criteria 1.2 - The signatory must demonstrate that they use robust processes or systems to

ensure current and future resource requirements, for staff involved in technical and/or

operational activities, can be met.

Commitment 1: To address sector wide skills gaps and

shortages requires signatory companies. Signatories must contribute and support the energy and utilities sector to reach, its target of 5% of the

technical or operational headcount enrolled on relevant skills development programmes. To achieve

this commitment, signatories were required to supply a detailed breakdown of their training figures for

the year and also demonstrate that they use robust processes or systems to ensure that current and

future resource requirements can be met.

Compliance Achievement The 5% Target 23 (of 24) of the companies achieved Criterion 1.1 to supply training figures broken down by the

percentage of operational/ technical head count on eligible training, as well as to supply a forecast of

training requirements up to Year 3. The majority, 75% (18 signatories), achieved a rating of 3 – which

represents an excellent level of compliance. Thus, a full set of training figures was produced, which

included forecasting figures and current training broken down by level.

COMMITMENT 1: TO ADDRESS SECTOR WIDE

SKILLS GAPS AND SHORTAGES


17 (71%) signatory companies met criterion 1.2, demonstrating that they use robust processes or

systems to ensure that current and future resource requirements are met. The remaining 7 companies

were working towards criterion 1.2.

The signatories were able to demonstrate that all of the training included in their figures met the

Technical Eligibility Criteria (TEC) developed for the Skills Accord. Please see Figure 8 for the TEC.

Figure 8: Technical Eligibility Criteria (TEC) training rules

1. Related to the Power, Gas or Water utilities businesses

2. For technical, design or operational roles related to work on or associated with the asset. This will

include design, planning, construction, operations, maintenance and decommissioning roles - i.e. the full

life-cycle of the asset

3. A significant training intervention (>3 months) that includes assessment of competence and / or

knowledge and leads to a qualification or award (internally or externally verified), for example

apprenticeship, traineeship, HNC/HND, graduate programme, internal programme etc.

4. A significant training intervention also includes internal training programmes which consist of on and off

the job training for specific job role. This could be up-skilling into a new job role or a new recruit receiving

training for the role.

5. The course of study or training can be shown to directly contribute to the development of skills or

capability to perform an operational or technical role

6. For job-role levels 1 to 6 (and Scottish equivalent) where there is a skills need in the business or sector

Outcomes The signatory companies that completed the annual review reported that in the pilot year circa 10% of

the workforce was enrolled on relevant skills development programmes. The technical and operational

headcount for the 24 signatory companies equalled 32,144. This equates to approximately 3,057 of

the 32,144 workforce reported on technical and operational training. The training figures for individual

companies ranged from 2% to 33%. The reported forecasting figures indicate that there will be peaks

in figures for some companies due to smart metering training requirements, the new AMP cycle for

water, SMEs picking up new technologies and signatories included in the pilot being high performers.

These factors tend to drive up skills development in the short-term. As Figure 9 below demonstrates,

next year the percentage enrolled on relevant skills development programmes is higher but over a

three year period it averages out to 10%.

Figure 9: Percentage on Eligible Training

No on eligible training

Head count % on eligible training

Pilot year 3,057 32,144 10%

2017/18 Forecast

4,098 31,633 13%

3 year Forecasting average 3,252 33,003 10%

Of the 3,057 on eligible training over a third of employees are enrolled on relevant skills development

programmes at Level 2 (34%), with only 14% at Level 1 and the remaining, which is over half (52%) at

Level 3 and above. As a proportion of the workforce at each level, 16% of those in Level 2 job roles

are on technical and operational training programmes and 25% at Level 3 and above. This compares


to only 5% in Level 1 job roles, as illustrated in Figure 10. This demonstrates a prevalence of, and

requirement for, technical and operational training to be at Level 2 and above.

Figure 10: Training by level (to include)

Workforce planning The majority of signatories used robust processes or systems in their organisation to ensure current

and future resource requirements were adequately met. The training courses or interventions used

included Apprenticeships, NVQs, Internal Training Programmes, Foundation Degrees, Graduate

programmes, Diplomas and Management and Supervisory courses.

In addition, 7 companies conducted very comprehensive workforce planning, at least on an annual

basis, with some succession planning and Training Needs Analysis (TNA). These companies provided

robust evidence in terms of strategy documents, to illustrate compliance of the company.

05

1015

20

Level 1 - Operative

Level 2 - Crafts person

Level 3 - Technician

Level 4-6 - Engineer or specialist

Level 1 - Operative Level 2 - Crafts person Level 3 - TechnicianLevel 4-6 - Engineer

or specialist

Training % by level 5 16 13 12

Training % by level



Encourage suppliers to become signatories and agree training targets


Criteria 2: The signatory company must encourage, where applicable, their supply chain

partners to become signatories to the Skills Accord.

Commitment 2: to promote the signing up to the Accord

through the supply chain For the pilot year, the requirement for lead signatories was to on-board 4-5 of their strategic suppliers

to become signatories and work towards embedding the commitments in their respective

organisations. There was also a condition for the Lead Companies to agree training targets with their

suppliers for the pilot year. This Commitment was not applicable to 19 suppliers in the pilot year.

Compliance Achievement & Outcomes The 5 lead companies, Amey, National Grid, SSE, Thames Water and UK Power Networks, all met

this requirement. They encouraged, where applicable, their supply chain partners to become

signatories to the Skills Accord, and they have worked with them to set achievable skills development

targets for their companies, Figure 6 presents the the suppliers each lead company engaged.

In the pilot year, Commitment 2 was not applicable for the 19 signatories on-boarded by lead

companies. Therefore, they were not expected to bring on any of their suppliers. This Commitment will

apply to the 19 suppliers in Year 1. In readiness for this, a number have prepared an engagement

strategy for next year and some have selected suppliers and started discussions with them.

Figure 11: Lead Companies and their strategic suppliers on-boarded

Lead Companies

Suppliers On-boarded

T&K Gallagher Ltd

IWJS

Sapphire Utility Solutions

Peter Duffy Ltd

Complete Asset Life Mgt

COMMITMENT 2: TO PROMOTE SIGNING UP TO THE

ACCORD THROUGH THE SUPPLY CHAIN


Balfour Beatty

Siemens

GE/Alstom

Amey

RJ McLeod

Kier Utilities

Lanes group

Costain

Balfour Beatty

NWH Treatment

Amec Foster Wheeler

McNicholas

The Clancy Group

Morrison Utility Services

Morgan Sindall

ABB

Skanska

Laing O’Rourke

Murphy



Develop and deliver responsible procurement practices through the supply chain on skills

delivery.


Criteria 3.1: The signatory company must use, where applicable, responsible procurement

practices to promote relevant skills development through the supply chain.

Criteria 3.1: The signatory company must give proper consideration as to whether it is

appropriate to require its suppliers to put forward plans and proposals for relevant skills

development and to require suppliers to report against these plans and proposals.

Commitment 3: To promote relevant skills development

across the supply chain through procurement. This is the core or the heart of the Skills Accord. To achieve this Commitment signatory companies

are required to develop and deliver responsible procurement practices through the supply chain on

skills delivery. To meet this commitment, signatories must embed relevant skills development in the

procurement process, evaluation criteria and contracts, where excellence is demonstrated by including

a reference to the Skills Accord (the requirement is classed as Criterion 3.1). In addition, (classed as

Criterion 3.2) signatories must consider whether it is appropriate to require its suppliers to put forward

plans and proposals for relevant skills development and to necessitate suppliers to report against

these plans and proposals.

Compliance Achievement 13 (54%) signatories have embedded the criteria and 11 (46%) are working towards this Commitment

(see Figure 11) which is almost an even split of signatories. All five Lead Companies achieved good

levels of compliance against this criterion. This Commitment is not applicable to 5 out of the 11 of

those companies that were classed as working towards this Commitment as they do not procure or

have a supply chain in this sector. It was found this was the case for all of the Tier 2 suppliers involved

in the pilot.

COMMITMENT 3: TO PROMOTE REVEVANT SKILLS DEVELOPMENT

ACROSS THE SUPPLY CHAIN THROUGH PROCUREMENT


Figure 12: Compliance for Commitment 3

In terms of Criterion 3.2 (the organisation gives proper consideration to whether it is appropriate to

require its suppliers to put forward plans and proposals for relevant skills development and require

suppliers to report against these plans), 7 signatory companies demonstrated good compliance for this

Criterion and a further 9 signatories demonstrated some compliance. 4 of the Lead Companies

demonstrated good compliance. Some suppliers also presented good practice in this area. In the roll-

out year, further work is required to embed and evidence this commitment.

Outcomes 13 signatory companies demonstrated good practice in embedding skills development into

procurement processes and the evaluation criteria. However, it was difficult to determine in some of

the cases whether this was existing practice or influenced by this Skills Accord commitment. This is an

area to review and monitor in Year 1.

Figure 13, below, outlines where in the procurement process the Skills Accord could be embedded

along with recommendations of how this could be done. The Annual Review identified that most

signatories included the Skills Accord and skills development in the pre-qualification and tender-

technical evaluation stage in the procurement process, either by referencing skills development in the

procurement policy and/or adding a question in the pre-qualification and tender technical evaluation.

However, in a number of cases, the actual mention of Skills Accord commitments is not explicitly

referenced or mentioned.

0

2

4

6

8

10

12

Rating 0 - notaddressed

Rating 1 -some

Rating 2 -good

Rating 3 -excellent

Criteria 3.1 6 5 12 1

Commitment 3


Figure 13: Embedding the Skills Accord principles into Procurement Process

1 Pre-Qualification (PQQ)

Quantitative pre-

qualification

through sourcing

platforms such as

Achilles

2a Tender -Technical Evaluation

Detailed qualitative

and technical

analysis of

potential suppliers

2b Tender - Commercial Evaluation

Detailed

commercial

analysis of

potential suppliers

2c Tender - Due Diligence

Hands on

assessment of

potential suppliers,

including:

- site visits

- behavioural

assessment

3 Final Offer

Best and Final

Offers (BAFO)

including both

technical and

commercial

submissions

2a.“Demonstrate and evidence as an engaged business how you ensure continuity of skills across key areas of your business specifically around attract, recruit retain cycle, please reference national accords and ongoing work such as EU Skills Accord activities and outputs in your response.”

1. “How many directly employed resources does your organisation have within [insert] role / skill set?” Questions such as this can be used to down-select suppliers based on their capacity and capability to deliver the services required under the proposed contract.

2b. We do not envisage any direct application of the principles of the Accord within the Commercial Evaluation process.

2c. Alongside site visits and behavioural assessments, it may be prudent for sourcing organisations to undertake further due diligence by interviewing existing clients of their proposed suppliers.

3. Final opportunity for suppliers to demonstrate their commitment to the Accord and the wider industry skills agenda


A key requirement for Commitment 3 is locking in skills development into contracts. Nearly all of the

signatory companies outlined that they were in the process of embedding skills development into live

contracts. This part of the Commitment was the most difficult and challenging to embed and moving

forward this is an area for improvement. Four signatories demonstrated that skills development was

included in live contracts this year.

Figure 14: Skills development embedded into procurement

Embedded into procurement process

Embedded into tender evaluation

Embedded into contracts

Put in plans and proposals and reported against it

No of signatories which has achieved this

13

13

4

7

Another core feature of Commitment 3 was for signatories to consider whether it is appropriate to

require its suppliers to put forward plans and proposals for relevant skills development and to

necessitate suppliers to report against these plans and proposals. The annual review found two types

of practices were in place. These are:

1. Contract negotiation stage – signatories develop plans and proposals for skills development at

contract stage which are then reviewed at contract review meetings which take place on a

monthly or annual basis.

2. Delivering the contract stage - the other practice in place is to only incorporate and track skills

development at monthly meetings or annual review meetings.



Continuous improvement of signatories sustainable skills and training interventions


Signatory company demonstrates its Commitment to continuous improvement in its own

sustainable workforce practices and that of its suppliers.

Commitment 4: To continuously improve performance The signatories to this Accord commit to driving continuous improvement in their own sustainable

workforce practices and those of their suppliers, in relation to their ability to maintain and enhance the

technical and operational skills within the workforce.

Compliance Achievement & Outcomes More than two-thirds (67%) 16 companies, either achieved good or excellent compliance, see Figure

14 below, thus demonstrating a commitment to continuous improvement in their company’s

sustainable workforce practices and that of their suppliers.

Figure 15: Continuous Improvement Measures

0

2

4

6

8

10

12

Rating 0 - notaddressed

Rating 1 - some Rating 2 - good Rating 3 -excellent

Commitment 4 1 7 11 5

SIG

NA

TOR

Y A

CH

IEV

EMEN

T

Commitment 4

COMMITMENT 4: TO CONTINUOUSLY IMPROVE

PERFORMANCE


In the analysis it was noted that the compliance criteria for this Commitment had been interpreted

quite differently by the signatory companies. Therefore, a range of measures has been included such

as workforce strategies, training provision, quality of training, internal annual reviews and review

meetings with suppliers. Consequently this criterion will need to be clarified further for the Annual

Review process in in the roll-out year. The actual requirement for signatory companies was for them to

have a sustainable workforce strategy in place with continuous improvement measures included for

the company (and for their suppliers); as well as including measures to improve the implementation of

the Skills Accord commitments.



Annual review and reporting of company and sector performance


The signatory company must complete and provide an annual report against the training

eligibility target. In addition, it must report on their compliance with the commitments of the

Skills Accord.

Commitment 5 All signatories to the Skills Accord agree that monitoring compliance is a key determining factor in

successfully achieving the overarching aims of the Skills Accord. Therefore each year signatories to

the Skills Accord commit to reporting the percentage (on average over the year) of operational

headcount involved in the energy and utility sector undertaking relevant skills development within their

organisation and their compliance with the commitments of the Skills Accord.

Compliance Achievement & Outcomes Nearly all (21) signatory companies achieved good or excellent for this Commitment and thus met the

criteria. These companies’ quantitative assessments and qualitative questionnaires were fully

completed, with relevant and comprehensive evidence provided. In addition a thorough Improvement

Plan was included.

Those that achieved good compliance all achieved excellent compliance in the quantitative

assessment; but only received good compliance in the qualitative component or the workforce

planning (criteria 1.2) requirement was not fully met.

COMMITMENT 5: TO MONITOR AND REPORT


4. Summary and Recommendations for

Future Roll-out

The table below, summarises the key outcomes of the Annual Review and key recommendations to

consider for the Skills Accord initiative roll-out.

Commitment Summary of

Outcomes

Recommendations for

roll-out 1. To address sector wide

skills gaps and shortages

requires signatory companies to

contribute and support the

energy and utilities sector to

reach its target of 5% of the

technical or operational

headcount enrolled on relevant

skills development programmes.

The signatory companies

reported that in the pilot year

10% of their workforce was

enrolled on relevant skills

development programmes.

The training figures for

signatories range from 2% to

33%.

In addition, the majority of

signatories used robust

processes or systems in their

organisation to ensure current

and future resource

requirements were adequately

met.


1 are:

1. To set the percentage target at

10% of the technical or operational

headcount enrolled on relevant skills

development programmes and use the

10% as a baseline figure to measure

future improvement.

2. To measure and review impact of

signatory companies’ skills

development, on sector wide skills

shortages. The recommendation is to

request precise details of training

programmes in the roll-out year. In

addition, to further refine the TEC.

3. For the Skills Accord Task and Finish

Group to recommend skills shortage

areas to target.

4. Pilot companies to share their

good workforce planning at the best

practice workshop.

2. To promote signing up to

the Skills Accord through the

supply chain. In the pilot year

the requirement was for lead

signatories to on-board 4-5 of

their strategic suppliers to

become signatories and work

towards embedding the

commitments in their respective

organisations.

100% of Lead Companies

achieved this Commitment

and on-boarded 19 of their

suppliers to the Skills Accord.

The 5 lead companies, Amey,

National Grid, SSE, Thames

Water and UK Power Networks,

all met this requirement.

In the pilot year Commitment 2

was not applicable for the 19

signatories on-boarded by the

lead companies. This

Commitment will apply to the 19

suppliers in the roll-out year and

all new signatories.


2 are:

1. For all signatories (lead and

suppliers, new and existing) to on-

board at least one supplier and agree

with Lead Companies the suppliers to

engage in future years, as well as to re-

engage with existing suppliers and

ensure their commitment for roll-out.

2. Good practice was demonstrated by

Lead Companies in engaging and

leading their suppliers to embed the

Commitments. This practice ought to

be shared with signatories at the

best practice workshop.


3 To promote relevant skills

development across the

supply chain through

procurement. This is the core

or the heart of the Skills Accord.

To achieve this Commitment

signatory companies are

required to develop and deliver

responsible procurement

practices through the supply

chain on skills delivery.

Signatories must embed

relevant skills development in

the procurement process,

evaluation criteria and contracts,

where excellence is

demonstrated by including a

reference to the Skills Accord

and must necessitate suppliers

to report against their plans and

proposals (Criteria 3.2).

54% of signatories have

achieved this through

embedding skills

development into

procurement processes,

evaluation criteria and

contracts.

Good practice was

demonstrated in embedding

skills development into

procurement processes. The

annual review identified that

most companies were including

the Skills Accord and skills

development in the pre-

qualification and tender

technical evaluation in the

procurement process.

A core feature of Commitment 3

was for signatories to consider

whether it is appropriate to

require its suppliers to put

forward plans and proposals for

relevant skills development and

to necessitate suppliers to report

against these plans and

proposals. The annual review

found this was embedded

primarily at contract negotiation

stage or delivery stage of the

contract.


3 are:

1.To review whether it is appropriate

to ask tier 2 and SME suppliers to on-

board suppliers (Commitment 2) and

embed Commitment 3.

2. To further develop tools to help

signatories to embed this commitment.

In addition, to review compliance

criteria and weighting for this

commitment.

3. Embedding into contracts was the

most difficult and challenging part of this

Commitment and moving forward this is

an area to review.

4. For signatory companies the

recommendation is to embed more

explicitly current and future

workforce development into their

evaluation criteria and contracts;

referencing where applicable the Skills

Accord.

5. In terms of criterion 3.2, further

exploratory work is required on how

signatories can embed and evidence

this commitment.

6. Pilot companies to share ways in

which skills development can be

embedded into the procurement

process.

4. To continuously improve

performance. The signatories

to this Accord commit to driving

continuous improvement in their

own sustainable workforce

practices and those of their

suppliers, in relation to their

ability to maintain and enhance

the technical and operational

skills within the workforce.

67% of signatories achieved

this and demonstrated a

Commitment to continuous

improvement in their own

sustainable workforce

practices and that of their

suppliers.

In the analysis, it was noted that

the compliance criteria for this

Commitment had been

interpreted quite widely by the

signatory companies.


4 is to modify the compliance

question and criteria and provide

examples to guide signatories on what

is required.

5 Annual review and reporting

of company and sector

performance. All signatories to

the Accord agree that monitoring

compliance is a key determining

92% of the signatories

completed the Annual Review.

Nearly all 88% (21) signatory

companies either achieved good

or excellent and thus met the

criteria.


5 is for most signatories to improve

from good to excellent the focus needs

to be on improving their workforce

development strategies and plans.


factor in successfully achieving

the overarching aim.


Glossary Energy & utilities sector

Includes: Power Generation, transmission, distribution, metering and supply; Gas transmission,

distribution, metering and supply; Water (Clean and Dirty) treatment, transportation, metering and

supply; Waste Management (later).

Operational headcount

For the purposes of this Skills Accord, Operational Headcount shall be defined as those UK-based

employees of the organisation who are directly involved in delivering technical, STEM (Science,

Technology, Engineering or Maths) based activities in the energy and utility sector. Employees full or

part-time in operational roles in the organisation. Some organisations do not have their full-time

trainees on headcount but should be included for the purpose of this reporting.

Lead Companies

These are the companies that have lead on the development of the Skills Accord Initiative and the

piloting of it.

Pilot companies

This refers to all the companies involved in the Skills Accord initiative and includes lead and supplier

companies.

Relevant Skills Development

This refers to meeting the Eligible Training Criteria (TEC) outlined in Annex 2. The eligible criteria

includes the roles, skills areas and corresponding courses that are operational or technical in nature

i.e. back office non-technical, support or administrative functions and health and safety are not

included.

Responsible procurement practices

For the Skills Accord it refers to embedding procurement practices appropriately to encourage

investment in skills development.

Sector skills gaps

These are skills that are lacking in the existing workforce of an employer. They might be technical or

soft skills.

Sector skills shortage

These are skills that employers are having difficulty recruiting from the labour market (e.g. overhead

linesperson)

Signatories

Companies formally signed-up to the Skills Accord commitments, either working towards or having

achieved the commitments in the Accord.

Social Value

The Social Value Act requires people who commission, or buy, public services to consider securing

added economic, social or environmental benefits for their local area.

Sustainable workforce practices


Maintainable workforce planning and strategies for the short, medium and long term, accounting for

the various internal and external factors.

Suppliers

In the context of this initiative the supplier companies refer to the suppliers of the lead companies.

Tier 1 and Tier 2 suppliers

Tiers outline where in the supply chain the contractors is in relation to the lead company.

The Annual Review

For the purposes of this Skills Accord, the Annual Review is defined as the process by where

individual companies Commitment to the Accord is evaluated, as per Commitment 5.

Workforce planning

The systematic identification and analysis of what a company is going to need, in terms of the number

and skills of employees, to achieve its objectives. It is a process used to generate business

intelligence to inform the organisation of the current, transition and future impact of the external and

internal environment on the organisation, enabling it to be resilient to known or predicted changes.

Training definitions:

Apprenticeship

Apprenticeships are programmes that combine practical training in a job with study.

Employer sponsored course of study

The employer funds and/or resources the programme of study.

Traineeship

Traineeship is an education and training programme with work experience that unlocks the great

potential of young people and prepares them for their future careers by helping them to become ‘work

ready’.

Graduate programme

In-house or external training programmes for graduates.

Significant Programme of Learning

For the Skills Accord it refers to a 3 or 6 month plus technical, design or operational programme of

learning.

Skills Accord Annual Review Report– May 2017 © Energy & Utility Skills Group Page 29 of 31

Energy & Utility Skills W: www.euskills.co.uk

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the skills accord annual review report

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