Tag Archives: Construction

Scope for improvement 4

Scope-for-Improvement-2014A couple of interesting things happened on the 1st July,  the first was being invited to a wonderfully old-fashioned business lunch by Ashurst Lawyers with Champaign and fine wines – a far too frequent event in these days of OH&S liabilities……  The second was attending the preview of the Bell Shakespeare’s interpretation of Henry V.  You may wonder what the connection is.

Henry V has a number of memorable speeches focused around battling insurmountable odds to overcome adversity…… ‘Once more dear friends unto the breach let us block the gap with [engineering] dead’‘We few, we happy few, we band of brothers. For he to-day that sheds his blood with me shall be my brother …..’.  Stirring stuff given the character assassination most of the Plantagenet Kings suffer at the hands of the Bard. Which brings me back to the lunch.

Ashurst were launching the fourth report in the ‘Scope for Improvement’ series looking at the management and delivery of mega projects in Australia.  And unfortunately it really was a case of ‘once more dear friends……’  The title of the original 2006 report was derived from its major finding that scope was routinely omitted from tender documentation for mega projects.  The second report 2008 identified the consequences from scoping inadequacies. Survey participants attributed cost overruns (61%), delayed completion (58%) and disputes (30%) to scoping inadequacies. Further, scoping inadequacies had resulted in 26% of the $1 billion+ projects surveyed being more than $200 million over budget.  In 2006 and 2008 there was definitely ‘scope for improvement’; in 2014 the situation remains fundamentally unaltered.

The research for the 2014 report used a qualitative approach starting with discussions over lunch with some 130 executives (primarily from the organisations involved in the Australian Contractors Association), the discussions were documented and the emerging hypotheses tested in focused one-on-one interviews. This methodology has undoubtedly generated some interesting and important insights to the challenges faced by the major projects industry; but unfortunately the methodology prevents a precise trend analysis on this major area of concern. All we know for sure is it remains a major area of concern.

Probably the most telling insight in explaining the reason for the continuing omission of scope is the imposition of unreasonable time pressures to complete the work.  This pressure comes in part from the lack of any overall strategy on the part of the clients that defines the need for the project, meaning there is no ‘master plan’ to provide a framework for developing the project’s scope in a sensible timeframe.  This is a fundamental governance failure – very few mega-projects need to undertaken in ‘panic mode’.

The second insight is the effect of perceived ‘political imperatives’ that push governments and/or organisational executives to simply demand the work be accomplished in an unreasonably short timeframe. For some reason a completely unnecessary need for speed seems to have come to dominate executive decision making.  This demand for excessive speed will always drive up cost, increase risk and reduce quality.  This is equally true of a small $50,000 IT project as it is of a $multi-billion infrastructure project such as the National Broadband Network.

The only option to achieve excessive speed without compromising quality too much is to employ highly skilled people with direct experience of the work.  But as another section of the ‘Scope for Improvement’ report highlights, skills are in very short supply and only half the people in any group can be ‘above average’ – you simply cannot achieve ‘above average performance’ all of the time.

Certainly there will always be a limited number of projects where speed is an imperative, for most a combination of better strategic planning so the work is started at the right time and/or simply allowing adequate time will produce far better quality outcomes at a significantly reduces cost. Getting this balance right, and requiring management to have the right systems in place to avoid unnecessary ‘time pressures’ is a key governance imperative.

Simply having an immovable deadline is not an excuse. The London Olympics infrastructure was started ‘early’, properly resourced from the beginning, used appropriate procurement systems and finished a year ahead of the opening ceremony with no fatalities. Contrast the success of this project to similar ones in New Delhi and Rio de Janeiro where strategic decisions were not made at the right times, pressures to ‘increase speed’ developed and cost, quality and safety all suffered (or in the case of Brazil, are suffering).

The current ‘Scope for Improvement’ report identifies a range of solutions to this problem:

  • Clearly identify the project objectives.
  • Education on the importance of scoping.
  • Allow sufficient time allowed to prepare the scope
  • Employ sufficient personnel of the right quality to prepare the scope. Including providing adequate training for the personnel involved in preparing the scope.
  • Choose the right delivery model and the right method of describing the scope (performance based where appropriate).
  • Get the right people involved, with a collaborative process to obtain input from key stakeholders (including the end users).

Another area of the report that will be discussed in a later post is the interlinked topics of productivity, innovation and training. In the meantime, the Scope for Improvement reports can be downloaded from: http://www.ashurst.com/publication-item.aspx?id_Content=10561&langId=1

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Getting value from an investment led policy

EU_FlagIf the Abbott/Hockey government is serious about an investment led recovery, they should take a leaf out of the EU’s book!  The European Union has approved regulations that increase the importance of applied project management skills as criteria for successful recipients of EU cohesion and structural funds. The new regulation describes the need for “building the capacity of local actors to develop and implement operations including fostering their project management capabilities.

The regulations see projects, program and portfolio management skills as part of the solution to the challenge of authorities getting projects completed successfully.

The new rules, will govern the next round of EU cohesion policy investment for 2014–2020. The purpose of the cohesion policy is to reduce disparities among the levels of development of the EU’s various regions by promoting economic growth, job creation and competitiveness and will make available up to €366.8 billion to invest in Europe’s regions, cities and real economy (the part that produces goods and services).

The intent of the EU policy is very similar to the 15% asset recycling bonus included in the Australian budget, designed to encourage Sates to sell assets and reinvest the money, plus 15% from the Federal government in new projects.  The question is will the Abbott/Hockey government also include a requirement for a commitment to fostering effective project management in the scheme?  We think it would be a great idea to adopt!

The BANANAs slip up

A UK Government Minster recently commented that the world was shifting from a bunch of NIMBYs to BANANAs!

HS2-banana

NIMBY = Not In My Back Yard (potentially selfish but understandable)

BANANA = Build Absolute Nothing Anywhere Now and Always

In the UK the journey from London to the Midlands is fraught – traffic is overcrowded for most of the 24 hours – one accident can cause hours of traffic chaos, conventional rail is overloaded and the distance is too short for effective air travel. The solution to this problem has been rolled out throughout the rest of Europe for several decades – high speed rail. Using the existing high speed rail you can get to Paris or Brussels easier than Birmingham or Leeds from the centre of London.

To fix the problem, the UK is planning its second high speed rail link from London to Birmingham and then on to Leeds and Manchester, called HS2. Since its announcement the BANANAs have been out in force – apparently it is better from the BANANA viewpoint to have highly inefficient, high pollution traffic jambs and build nothing rather than a clean and efficient alternative. The fact that the North of England is significantly disadvantaged compared to the better connected South is irrelevant. The emotional arguments about ‘damage’ caused by the development are immediate and compelling, the benefits arising from the operation of HS2 are in the future and so BANANAs can ignore them.

HS2-Map

Fortunately the UK High Court operates in a more pragmatic space. In its judgement earlier this month, the government won nine out of 10 points being challenged, which effectively gave the “green light” to the high-speed rail project. The judge agreed it was lawful for the Government to choose to rule out upgrading the existing network as a credible alternative to HS2. He noted that a patch and mend approach failed to meet the Government’s objectives of providing a long term boost to capacity and economic growth. He also found that the Government’s approach to consultation on the HS2 Phase One route, environmental assessment and consideration of the impact on habitats and protected species, had all been carried out fairly and lawfully.

The one point the judge upheld was a challenge concerning the way the property compensation consultation had been carried out. The Government has decided that instead of appealing this decision it will re-run this consultation in line with the judge’s finding to fairly compensate the public who are impacted by the scheme.

Contrast the problems in the UK and the Republican Party blocking a similar initiative in the overcrowded NE of the USA with China where current plans are for 16,000km of high speed rail to be operating by 2020, including the 9676km already built, in a determined effort to overcome congestion and pollution.

To quote the Boston Consulting Group: ‘China’s big infrastructure networks are platforms upon which new industries are layered greatly multiplying the economic value of the projects themselves’.

Australia has its fare share of BANANAs – there are 100s of tones of radioactive medical waste stored in expensive hospital buildings as well as radioactive industrial waste scattered throughout metropolitan areas because no government has had the courage to develop a safe storage facility. Every time one is proposed the BANANAs start screaming, but they also do not want to let cancer patients die or fly in unchecked aircraft (radio isotopes are used in the non-destructive testing of welds).

What the BANANAs forget is living is a compromise – every decision not to do something has a consequence and every decision to do something has a consequence. Careful consideration of the options and a balanced decision is needed based on the overall good for the environment and society (with proper compensation to those disadvantaged).

Doing nothing simply condemns everyone to progressively lower standards of living that will eventually lead to mass degradation of the environment because there is no money to look after it!

The advent of BANANAs supported by social media opens up a whole new set of stakeholder management challenges. NIMBYs were identifiable and had reasonable ground to expect consultation. BANANAs are far more widespread and work on emotions rather than common sense – for more on the tools for stakeholder management see: http://www.stakeholdermapping.com/

Construction CPM 2013

Tennessee Williams once said “America has only three cities: New York, San Francisco, and New Orleans. Everywhere else is Cleveland.”  Having now been to all four places I can understand the sentiment.

As I write this, the Construction CPM 2013 conference is in full swing and is proving as dynamic as its host city of New Orleans. A strong line-up of speakers focusing on the tools, techniques, art and science of critical path management is supported by an equally diverse and interesting social program.

Many of the interesting concepts and ideas we have encountered will undoubtedly be finding their way into our thinking and writing over the next few months, whilst the papers we have presented so far have been well received with one to go tomorrow. Our presentations are available from:

It’s not all hard work! The networking and social program are always a highlight of Construction CPM and when you overlay the excitement of the French Quarter of New Orleans and you start to really challenge the stamina. The final event last night was a ‘Bourbon on Bourbon Street’ tonight its jazz in ‘Fred’s Nightclub’, both finishing at midnight!

If you are involved in project controls start planning for 2014! If the USA is too far to travel, we have a local Governance and Controls Symposium coming up in Canberra in the 10th April.

The world’s best CPM Conference!

There is only a few days left to secure an ‘early bird’ registration to this year’s Construction CPM conference in New Orleans from January 27 to 30th. Early bird registrations close October 15th.

This event is a unique opportunity to meet most of the world’s CPM though leaders and system developers in the one place and if you fit enough, to party till you drop with the Mardi Gras in full swing at the start of the conference and the Super Bowl following, plus a packed social program for delegates and partners in between.

‘Construction’ in the title is more historical than factual, most of the key conference supporters work across all industries and most of the papers have a very wide application.  We certainly think the conference is worth a 23 hour flight each way…… The question is can you afford to miss this opportunity to hear first hand where Oracle/Primavera, Deltek/Open Plan, ASTA Powerproject, Acumen, NetPoint, Synchro and a host of other thinkers and developers are taking the ‘project controls’ industry over the next few years??

This is not just an opportunity to listen to an excellent range of presentations; you have plenty of opportunity to talk to industry leaders during the conference, during the networking events and at a range of pre and post conference workshops and user meetings.  There’s even the opportunity to present your viewpoint as a speaker!

We are certainly looking forward to starting 2013 with a bang in New Orleans and catching up with friends, colleagues and acquaintances from around the world – if you want to be a part of the action register at: http://www.constructioncpm.com

 

Scheduling Conference – Sydney

We are participating in the Project Management for Major Projects Symposium, in Sydney from 30th July to 1st August 2012.

My workshop on the morning of 1st August is focused on How to use project scheduling to drive project success. In this intensive workshop focuses on the key elements involved in effectively managing the use of time on major projects. Understanding how your scheduling tools work is only half the battle – this workshop will show you how to use your tools to proactively manage time to achieve success!

Five years of research by the CIOB is leading a paradigm shift in the way projects are managed with innovative techniques and new forms of contract focused on the proactive and realistic achievement of scheduled deadlines! I am heavily involved in this on-going work by the CIOB and this workshop will be the first time the full package of innovations is presented as an integrated solution in Australia. The workshop will cover:

  • Project scheduling – what works, what does not
  • The difference between planning & scheduling, the importance of both processes
  • Schedule density – the art of keeping the schedule realistic and achievable
  • An introduction to the ‘Guide to the Management of Time in Complex Projects
  • An introduction to the new CIOB form of contract for projects
  • A suggested framework for successfully managing time on your projects.

For more information you can download the workshop brochure from: http://www.mosaicprojects.com.au/PDF/Sydney_Aug_Project_Management.pdf

If you decide to attend, we may even be able to arrange a small discount for you – drop me an email and I will see what can be done.

New CIOB Contract for Complex Projects

The Chartered Institute Of Building (CIOB) has launched a new contract for construction and engineering projects. The CIOB Contract for Complex Projects has been written for the 21st Century. It is designed to permit the CIOB’s Guide to Good Practice in the Management of Time in Complex Projects to be put into practice.

The contract can be used for collaborative design with a building information model (BIM) and anticipates and encourages competence in the use of computerised transmission of data. It requires collaborative working in the management of risks and transparency of data used in such management.

The contract has been drafted to be used in any country and legal jurisdiction around the world to provide a means of managing the causes and consequences of delay (the single most common cause of uncontrolled loss and cost escalation in complex building and engineering projects) where the design is produced by the employer, the contractor with or without a building information model.

The key principles embedded in the contract design include:

  • It is written in plain English, suitable for both building and engineering projects and may be adopted for other types of work. It can be used for turnkey, design and build, for construction only, or for part contractor’s design, both in the UK and internationally.
  • It permits a variety of contract documents including BIM (building information model) and requires electronic communications either via a file transfer protocol or a common data environment for collaborative working.
  • The contract contains new roles for the Project Time Manager, Design Coordination Manager and Auditor, as well as the Contract Administrator and the design team.
  • It requires complete transparency in planned and as-built information in compliance with the CIOB’s Guide to Good Practice in the Management of Time in Complex Projects. It is currently the only standard form of contract available which requires a resourced critical path network, a planning method statement and progress records to a specified, quality assured standard, with significant redress for a failure to comply with the contract requirements.
  • The contractor’s schedule (or programme as it is called in other contracts) is to be a dynamic critical path network in varying densities, described and justified in a planning method statement. It is to be designed in different densities compatible with the information available, reviewed and revised in the light of better information as it becomes available, updated with progress and productivity achieved and resources used and impacted contemporaneously to calculate the effect of intervening events on time and cost (see more on Schedule Density).
  • The contractor’s schedule is not only the time control tool but also the cost control tool against which interim valuations are made and the predicted cost of the works is calculated contemporaneously permitting out-turn cost and total time prediction on a daily basis though the updated working schedule.
  • The contract contains detailed requirements for the identification and use of time and cost contingencies, defines float and concurrency and sets down rules for their use. It provides the power for the contractor to keep the benefit of any time it saves by improved progress as its own contingency, which cannot be taken away.
  • It contains a procedure for contemporaneous expert resolution of issues arising during construction. In the absence of reference to experts specified issues concerning submittal rejections and conditional approvals are deemed to be agreed, helping to avoid doubt about responsibilities and escalation of disputes. The experts used during the course of the works can be called as a witness by either party in any subsequent adjudication and/or arbitration proceedings and, in order to help to give transparency to the way dispute resolvers deal with the contract and help to make sure it functions in the way it is supposed to, the adjudicator’s decision and/or arbitrator’s award is to be a public document, unless the parties agree otherwise.

The Chartered Institute of Building would like to receive your comments and criticism on the Review Edition of the CIOB Contract by Monday, 30 July 2012. All comments will be acknowledged and taken into consideration in future review and revision of the form and its constituent standard form documents. To review the contract see: http://www.ciob.org.uk/CPC