April 28, 2015 posted in Construction, Design and Engineering
A recent study by KPMG, reported in Building Design & Construction, indicated that more than half of the Owners who contracted for projects last year suffered underperforming projects – defined as being more than 10% over budget or 10% over schedule. Many attributed this more to a shortage of talent, rather than poor planning.
KPMG International offered five steps for owners to improve the performance of their projects:
All good recommendations, but if there is any order to the list, it’s not in the right order. Here is my take on it …
First, invest in relationships with contractors (A/Es, GCs, Design-Builders, etc.) to create an integrated project team. I do like the word “invest” here, as it suggests a commitment and recognition of value offered by the contractors. This is in contrast to the perception by some that look at the contracting community as a commodity. Some may remember about ten to twelve years ago when some high-volume buyers of contracting services were experimenting with online reverse auctions for professional services. Fortunately, that approach never really caught on.
There are many different types of Owners, just as there are many different types of contractors. The differentiators are more than the people. The culture, values and people all need to mesh within the Project Team to achieve optimal results. Fundamental to this is a mutual respect for each other’s businesses. In the end, we need to respect and agree that there are financial reasons Owners and Contractors are in business together. To disregard those reasons can be catastrophic to the success of the relationship – and the project.
Second, demand practical targets from contractors based on realistic expectations of what can go wrong. Capital projects are complex events and the saying, “Hope is not a strategy”, applies. Profitable projects are more successful than unprofitable ones. And even the best Contractors have problem projects. If the targets are practical, understood and accepted as realistic by all parties, then the basis for success is understood by all parties. It’s okay to have stretch goals, but achieving a stretch goal should be rewarded and understood that what was achieved is not the new baseline, unless a sustainable and repeatable innovation was applied to achieve that goal. If so, then the Contractor now has a competitive advantage.
Third, use contingency planning to control costs rather than excuse overruns. If you have a Project Team invested in each other and the project, and realistic targets are set, then you have the foundation for greater transparency and an understanding of the inherent risks involved in the project. The burden of risk should be carried by those that have the best ability to control the risk. Risk and reward need to be commensurate; however, with the immense variables that impact a project, contingencies need to be in place.
Fourth, take a fresh approach to talent management through more effective recruitment, development and retention strategies. This, of course, assumes you need a fresh approach. But there is no question that without talented and dedicated people, the chance of a project achieving its goals is greatly diminished. This holds true for both Owners and Contractors. We have had a few very important Owners recruit some of our talent away. It is somewhat awkward, but we have been able to make it a positive event through effective and open communications.
And finally, once you have all the pieces in place, the right relationships, realistic expectations, appropriate contingency planning and the right people …
Fifth, execute a fully integrated Project Management Information System for swift coordination and real-time reporting. While this may seem logical and pragmatic, it is a challenging objective. If your team is comprised of different companies, this system will likely be different from what they use, how they use it, and how it looks. Make sure it is easily adaptable.
In the end, it’s about people and the processes they use to facilitate and control how they work together. Building a team, leading a team and achieving as a team, is a far more rewarding experience than doing it on your own. In the movie Cast Away, even Tom Hanks’ character needed Wilson to celebrate his accomplishments.
“In a football game and in the corporate workplace, there is a huge difference between teams that achieve great success and teams that become dismal failures. The answer is effective communication – teams that can openly share ideas, focus on the task, and communicate proactively should not be surprised by their achievements.”
“The team architecture means setting up an organization that helps people produce that great work in teams.”
“The other teams could make trouble for us if they win.”