The simple answer is, of course, because the numbers no longer stack up, but this would ignore that at one point the numbers did work. So, what changed…?
At Auxilium a lot of projects cross our desks. Those that succeed share a common factor: a project sponsor who has absolute clarity about the project goal(s) and their role in achieving them.
So it’s simple, maintain clarity on your goals and role and the job’s a good one? Unfortunately, not quite. You can have clear project goals and understand implicitly what your role is in delivering those goals, but these must then be supported by honesty, experience and procurement which enables delivery.
Honesty
If you work towards a number during Front End Engineering Design and Final Investment Decision, rather than allowing an honest analysis to provide the answer, then chances are problems lie ahead. Demand all you want but the market is the market, costs are costs and risks are real.
Opportunity is a favourable time, occasion, or set of circumstances that makes it possible to do, achieve, or experience something. Risk is the chance of something bad, dangerous or harmful happening, typically evaluated in terms of likelihood and impact.
An event which is going to occur regardless of all management attempts to avoid it is not a risk, it’s a certainty. Similarly, an opportunity should not be dependent on luck but rather a set of circumstances which can be arrived at given proper risk management and planning.
Placing items in the risk register which are definitely going to happen and, conversely, placing items in the opportunities register which will require an act of God to occur is neither clever nor honest, it’s budget manipulation. At best it might be blue sky thinking, at worst it’s misrepresentation. Either way at some point during project delivery reality shall prevail and it shall be all the more painful if you’ve wasted your time praying for an act of God or ‘managing’ a risk over which you have absolutely no control.
Experience
Absolutely nothing beats direct experience of delivering projects of a similar nature and scale completed in the same area, or at least the same country, when assessing project viability and challenges to delivery.
You’ve completed projects with 10x the budget and complexity of the one under consideration but in a different country and for different technology? That experience is valuable, but it doesn’t transfer automatically to bring benefits to the project under consideration.
Understanding the regulatory framework, local working conditions, logistics limitations and the impacts of the dominant construction practices in the area of delivery are all crucial in assessing project viability. If you are working up a modular system, because that’s what you always do, but the site access will prevent the modules being delivered to site, or the preferred by water UK transport policy blows a £600k hole in your logistics budget because you didn’t know it existed, then painful times are likely ahead.
The experience must also be suited to the assessment to be undertaken, and age is not always the correct metric of suitability. The semi-retired management consultant who spent the last 10 years of their full-time career as a business unit manager or company director may not be the person best placed to provide construction management advice, especially if they’ve barely set foot on a construction site in years and every job they have visited smells of new paint.
Procurement
“Procurement is dealing with that.” The most common phrase heard during project start-up meetings. If I had a pound for every time I had heard it, I wouldn’t have to be writing this article.
Of course, if no one has told procurement that they have to ‘deal with it’, explained what ‘it’ is, or if the procurement team lack the experience, leadership or knowledge which would allow them to enact the procurement strategy then procurement is most certainly not ‘deal(ing) with it’. Even worse, no one knows that procurement has not in fact ‘deal(t) with it’ until it becomes apparent that the entire delivery philosophy is falling apart because no one spoke with procurement at all, and they just did whatever they thought was best.
If you don’t think the foregoing could be accurate then some reading on HS2 procurement is highly recommended; the leaders of the land let agreements where it was in the contractors’ vested interest to spend more money. I think we all know what happened next: they could spend money better than my wife, and they did.
Construction is a serious business, with real risks. It is not for nothing that the construction industry bears the brunt of company administrations year on year. Developing an interfaced procurement strategy which the entire delivery team understands and buys into, and, most importantly, understands their role within it, so they can manage their risks, is fundamental for successful project delivery.
The procurement strategy should exist to deliver the project goals and clearly define the roles of those involved in delivering those goals, not in a vacuum that exists to bear blame when things start going wrong.
So why do projects fail?
Jargon vs Auxilium
- Loss of objectives and the role each party has to maintain in achieving them [Clarity of vision doesn’t always come from Specsavers];
- They were never actually viable in the first place [Having ‘big balls’ isn’t a risk management process];
- The wrong people resulting in the wrong decisions [Just because someone says it’s done doesn’t mean it is; opinions are not facts];
- Failure to understand the procurement waterfall [Numpties who think they know what they are doing because it worked on the last job].