The central thesis of my recent papers and presentations¹, ² on major infrastructure projects is that since we are dealing with complex systems, they must be addressed on an integrated basis, not by a fragmented approach. Conceptually, this sounds simple and reasonable – but changing long-established systems is often problematic, for reasons which may be cultural, historical and economic.

Cultural reasons inhibiting change include:

  • Systems of cultural hierarchy – protocol and entitlement.
  • Fear of change – risks of the unknown.
  • Inability to grasp the value and viability of new concepts – paradigm effects.
  • Lack of capabilities to successfully implement the changes.

    • Historical reasons inhibiting change include:

  • Precedents, past ways of doing business, not admitting that past practices were not effective.

    • Economic reasons inhibiting change include:

  • Investments by owners, consultants and contractors in existing methods.
  • Threats to share of revenue under existing agreements and work-allocations.

    • Looking to the future – beneficial changes

    Advances in tunnelling methods were very well described by Alastair Biggart in his article “A quiet revolution” (T&T May 1999)³. There is no reason to think that technological advances will not continue, with productivity improvements through increased mechanisation, better compatibility and integration of materials and processes and improved safety. So, where should we look for other improvements?

    I would suggest significant value can be added through improvements in management systems in the areas of strategy, organisation, communications, working relationships, training, psychological considerations, better integration of work processes and use of support systems such as partnering, alliancing disputes resolution and risk mitigation.

    Setting the stage – the context for new managements systems

    An international survey, carried out by the Author and Richard Thompson of MJRS Research Services uncovered some fascinating implications. Of a total of 1,400 projects identified worldwide, a set of 160 of these projects was selected, of which 40 were targeted for detailed information.

    It was found that specific, relevant information was very difficult to obtain. Once projects are completed the records related to the projects are either archived or dispersed among the project participants. Little objective history is left available for research or review, including findings which would lead to recommendations for improvement. Owners are not generally reliable in this regard, and associations who might be interested and competent to interpret the data, do not always have the resources or contacts to collect it.

    Because the survey data was very limited, conclusions cannot reliably be drawn but some areas for further study were identified:

  • There are significant cost and schedule overruns, suggesting poor management in at least 30%, and possibly more than 50%, of the projects.
  • It appears that the two factors that most commonly influence the success or failure of projects are: 1) expertise and policies of the owners, and; 2) local procurement procedures and requirements.
  • The professional teams engaged were generally competent – leading to the consideration that problems in poorly performing projects may lie primarily with the ability of the owner to lead and manage the project process.
  • Data on key management issues and project characteristics should be summarised for review and research at the end of all major projects, on a uniform basis. This should be the owner’s responsibility, but guidelines must be available from National and International Associations.
  • No reasonably objective guidelines for project costs were found.
  • Risk mitigation is not well understood or applied, even in elemental ways. This is an area for development and implementation with promising potential.

    • Majority of management systems

    Current, and especially older management systems, tend to use hierarchical organisation and authoritarian structures, bureaucratic procedures with many ‘checks and balances’ and conservative approaches to risk. Many owners attempt to transfer a substantial proportion, if not all of the risk, to the construction contractor, who in many cases is not capable of controlling the risk but is forced by contractual terms and conditions to attempt to do so.

    We know that management, procurement and project ‘delivery systems’ for major and complex projects are subject to many variables and practices. Procedures vary greatly depending on the country, culture and experience of involved personnel. Additionally, many projects are ‘one-offs’ for owners and so their knowledge and expertise in this regard is often limited. The usual response is to delegate authority (some would say responsibility, but this is not possible) to others, generally consultants, but this may create an environment where ill-informed decisions can be made.

    New concepts & possibilities

    It is possible to consider the theoretical basis of organisational structures as related to our view of ‘how things work’. This means, for most engineers, a mechanistic, Newtonian view of events leading to structured two-dimensional hierarchies, work-element breakdown systems, and compartmentalised responsibilities. These systems can limit innovation, integration, beneficial changes and added value.

    A different theoretical basis has been proposed by Wheatley, in her book Leadership and the New Science8, and others, considering, for example, that projects are in a way similar to complex living systems. The approach would use a concept that the processes to be used are more effectively aligned with quantum mechanics and chaos theory than Newtonian mechanics. Chaotic systems are stable and predictable within larger boundaries but are unpredictable, except in terms of probability theory, at smaller scales.

    New management structures

    To consider how we might apply this analogy to management systems for complex projects we would need to define the specific boundaries of the project: starting point, necessary inputs, key goals and objectives, functional requirements, final deliverables and measures of performance.

    Then we would need to create organisational structures such that participants have responsibilities at both the local and the general level, are encouraged to work with flexibility and initiative, and are mindful of how their work and responsibilities fit into the larger picture, related to overall performance and final deliverables.

    &#8220Since the ancients …. made great account of the science of mechanics in the investigation of natural things; and the moderns …. have endeavoured to subject the phenomena of nature to the laws of mathematics, I have in this treatise cultivated mathematics so far as it regards philosophy.”

    Isaac Newton, Introduction to Philosophie Naturalis Principia Mathematica Cambridge, Trinity College May 8, 1686

    For further information the reader is referred to Wheatley’s book and others referenced therein, which discuss change, complex systems open-participative work environments, the potential for improved results with less conflict and stress, and the characteristics of ‘learning organisations’.

    Such an approach for complex infrastructure projects would suggest a more strategic, integrated, participatory and comprehensive process, directed to project goals and objectives, functional requirements, final deliverables and using defined measures of performance. We know that this is not easy to achieve, particularly since many of the necessary skills lie outside the normal training regime of traditional engineers and construction managers. Additionally, implementation requires vision and strong, consistent and resolute leadership.

    Re-engineering the project delivery process

    There are precedents in related industries where re-engineering is used. This process has led to significant improvements in efficiency, cost and quality. For example, six-sigma quality (equivalent to 3.4 defects per million) has been achieved in large corporate management environments, including at Motorola and General Electric, where these management systems have also achieved substantial productivity improvements.

    There are several key questions:

  • How to best implement such systems for complex, infrastructure programmes?
  • How to demonstrate objectively that these systems improve performance
  • How to transfer this knowledge to owners, engineers, contractors and suppliers

    • Key management tools – common themes

    Partnering, Alliancing and Project-Alignment processes all have characteristics that fit better with the open, more flexible and interactive management systems suggested above. These processes seek to define, confirm and communicate a project’s fundamental mission, to focus project participants on key goals, objectives and performance requirements and to recognise individual and shared values in order to build mutual trust and respect between participants. The processes are geared to build teamwork, commitment and discipline, to create improved productivity in order to:

  • reduce costs, improve schedule and performance, increase quality and efficiency and,
  • avoid or reduce conflict, disputes, claims and litigation.

    The roots of these processes lie in quality principles, developed by Deming and others, adapted to facilities design and construction.

    Partnering

    The initial US partnering initiative was created between Fluor Daniel and DuPont. It was a long-term strategic agreement to help each firm achieve key business and functional objectives over many projects.

    Since then partnering is now quite widely used, with many positive results. There have been some problems, usually caused by lack of commitment or understanding by one of the partners. In general, however, partnering has produced increased value at low cost. Larson11 has reported a 90% improvement in total performance (cost, schedule, quality, litigation avoidance, customer satisfaction, and overall results) for fully partnered projects compared with those with an adverse contractual environment. See also Biggart (The win-win solution, T&TI April 2000)4.

    Alliancing

    The Alliancing Process requires that clients, designers, contractors and suppliers work together as a single team, with contractually defined risk-reward (pain-gain) provisions. In one case reported by Hendeson12, the owner is actually part of the contractually defined team as one of the joint venture partners.

    Alliancing is a relatively new technique for infrastructure projects but the initial results are favourable (see Henderson12, Ross13, Arnold & Myers14).

    The Alliancing Process began in the off-shore oil industry and has reportedly saved up to 30% of target cost15. The impetus for adopting a new approach, which led to the alliancing process, was the large cost incurred for the off-shore facilities in the 1980s, with the corresponding impact to profitability when oil extraction costs were compared with other locations, such as Saudi Arabia. It would seem that the same conditions are applicable to infrastructure and underground projects.

    Of note is the high level of satisfaction, to date, by the owners, relative to the performance of the alliancing team in control of costs, resolution of problems, improved relationships with adjacent communities and many of the areas of concern noted above. While cost-savings statistics are yet not well established for infrastructure contracts (there are few of them) dramatic savings have been achieved for the off-shore oil exploration programmes, as noted in the NCE reference15.

    Other support systems

    There are other management support systems, including continuous performance improvement strategies (CPI), work analysis processes, statistical analysis tools, workplace intervention and facilitation assistance, dispute review/resolution, mediation and arbitration systems, and risk identification and mitigation systems.

    Space does not allow a discussion of these beneficial tools but it is noted that they are management resources which should be used in conjunction with basic management processes. All are essentially low-cost/high cost-benefit prevention and improvement processes that are under utilised by the infrastructure and underground construction industry.

    Viewpoint of article

    The ideas expressed in this article are meant to stimulate thinking and elicit comment. Papers presented over the past two years have been well received, with only one negative comment related to the difficulty of implementation. It is time to test how to implement these concepts, to evaluate if they are viable and, if so, how they can be practically applied to the planning design and construction of infrastructure projects. Your feedback would be much appreciated.