Success Drivers In Project Management Construction Essay

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Executive Summary

A project is a collection of related workstreams that are coordinated and managed in such a way that the best benefits and control are achieved. Following a structured project management method enables companies to keep ahead of their competitors via effective risk mitigation, better costs management and delivery of utmost quality results that satisfy clients.

Delivering projects on time and on budget is a minimum requirement for achieving long-term success. Companies that adhere to strong project management methods, including detailed evaluation of scope and budget, on-going risk management and measurement of project results, are consistently more successful than those that do not.

Yet, with that said, a number of companies fail to meet their project goals or measure project success. This inconsistency stems largely from a failure to implement and follow well-defined project management practices, despite on-going efforts to improve processes with the goal of delivering better, faster, and cheaper results.

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This report will present what is involved in project management and demonstrate how an inability to assess project specifics results in gaps between a perceived value of a project strategy and its consistent application on a job (Sydney Opera House, 1959-1973). Further to that it will discuss how an absence of communication during project execution and failure to recognise implications to future strategic forecasts turns a short-term success into a long-term project failure (Channel Tunnel, 1988-1994). Notwithstanding the above, the report will also comment on how failure to meet all project objectives may be translated into an overall project success (Sydney Olympic Games, 2000).

Contents

Executive Summary 1

I. Introduction 3

II. Identifying Project failures 3

i. Sydney Opera House project 3

ii. Channel Tunnel 5

III. Defining Project Success 6

IV. Summary 6

V. References 6

Introduction

Without question, the value of delivering projects on time has been universally recognised, along with the 'on budget' and 'to the customer's expectations' objectives. However, these transpire simultaneously on rare occasions and what happens in reality is that companies do not consistently deliver quality projects within the timeframe and/or scope allotted to them.

The constantly fluctuating economy creates further difficulties. Budgets shrink and project managers are under increasing pressure to cut costs and deliver projects that are of a higher quality and completed more quickly than ever before. But without the necessary structure, resources and tools, these goals are difficult to meet. Thus, project management practices always strive for improvement to prevent such failures. In times of economic crisis they are particularly important to give companies strategies to mitigate risk, define budgets and scope more effectively, and track a project's progress.

Nevertheless, even in tough economic times there continues to be a gap between project management philosophy and execution. Although most projects commence with strong management strategy in place it often happens that somewhere along the Client-Contractor-Supplier chain, failure to adhere to set procedures poses a real threat to achieving 'project success". Therefore, until that gap is closed, project success will continue to be a daunting task.

Identifying Project failures

Initially the procurement of civil engineering projects used legally tried and tested conditions of contractual agreements and project processes (1940's) [1] that have proven successful over the years in terms of certainty of cost and time of design. However, the relative inflexibility of this form started to make itself felt with the increasing demands of more complicated, innovative and sustainable projects (late 1980's) [1]. Thus, towards the end of the twentieth century a reduction and redefinition of the latest procurement system had to be made to allow for reduction of unjustified claims and disputes, improvement of construction efficiency and increase of project delivery success rate. A good example for a project that experienced revision of management delivery approach and suffered great setbacks in terms of cost and time throughout its delivery period is the Sydney Opera House project from the late 1950s.

Sydney Opera House project

In 1956 the Australian New South Wales (NSW) Government called an open-ended international design competition for an opera house. The competition brief provided broad specifications to attract the best design talent in the world although it failed to specify design parameters or set a cost limit. The Sydney Opera House turned into an iconic architectural wonder and an international symbol of Australia. Yet, from project management perspective the project is perceived as a spectacular failure due to a number of unaccounted for design aspects, overlooked framework agreements and underestimated project scale and complexity. Thus, Sydney Opera House originally scheduled for 4 years at an estimated budget of AUS $7 million in 1957 took 14 years and a staggering AUS $ 102 million for project completion (1973) [2].

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During the design process and implementation of the building there were significant changes to the original plans. The design was never finalized by the architect, John Utzon, and remained open 'to change' throughout the construction phase of the Sydney Opera House. Had the government allowed enough time for the opera design to be thoroughly thought through and endorsed by all parties involved, the Sydney Opera House would have had the chance to be successfully delivered.

Notwithstanding the aforementioned, another major mistake that led the whole project into an organizational chaos was the lack of an experienced project manager. Instead, John Utzon, a brilliant architect and equally poor project manager, took on the project lead. Driven by his architecture instinct, Utzon focused too much on seeking solutions to ideas in principle, rather than aiming to realize them. It was this attitude coupled with his inexperience which resulted in bad project management judgment, rushed design and underestimated project complexity. Furthermore, the chance of achieving the set goals within the time and cost restraints grew slimmer.

Halfway through the project Utzon was forced to resign due to increasing pressure from the newly appointed government and the gradual decrease in project funding. After Utzon's resignation from the project in 1966, a group of Australian architects led by Peter Hall took over and yet more major design alterations took place. The latter allowed for project completion for the sake of Utzon's undermined optimal acoustically perfect building [2].

To sum up, the major issues that led to the project failure of the Sydney Opera House were:

Utzons inability to identify stakeholders, and discover how their influence can affect the outcome of the processes of the project.

Utzons egotistic attitude and inexperience on a large scale project.

Change of government

Project definition

Not well defined and observed contractual agreement and sharing of responsibilities between all parties involved

To further explore project failure and be able to identify where project management success lies, another project considered as failure will be discussed - Channel Tunnel (1988 - 1994).

Channel Tunnel

The Channel Tunnel is notorious for the poor organisation it faced during construction, and more importantly, the financial difficulties it has caused for its investors. The Channel Tunnel is one of the largest privately financed projects, carried out by two separate partnerships, the British Channel Tunnel Group and their French counterparts, France-Manche. These two groups joined to form Eurotunnel. A group of 10 construction companies formed Transmanche Link (TML), who were contracted by Eurotunnel to carry out the project under a cost plus contract.

The reason that this project is seen as a major failure, despite the great engineering achievement, was due to the debts that amounted during construction, and the inability of the completed project to fulfil its intended purpose of creating revenue for the parent company. When the project was completed, it had overrun by 20% (1 year) and came in at 80% over budget (£2 billion) [3]. Although construction was completed in 1994, Eurotunnel posted losses until 2007. The concession period in which the company must pay off debts and make a return on its investment expires in 45 years. With current debts of £3.3 billion [4], and a net profit of just £11 million in 2011 [5], the chance of making a return on the investment is very slim.

The original tender value of £2.6 billion was most likely a best case, and a wildly optimistic prediction, used to attract financers who would otherwise have avoided the project due to the high costs and low payback. Projected incomes were also vastly overestimated, creating an expectation with investors that they would receive an acceptable payback period. Changes in competition from Ferries and cheap air travel were not considered, and as a result, income from services was less than a third of that expected [6].

Had scope been fully defined prior to procurement, it would have been possible to limit scope creep and avoid further cost increases. Instead, it was revised throughout the course of the project execution by the Intergovernmental Commission (IGC) which resulted in additional uncosted scope. Furthermore, poor communication between the IGC and other parties had further implication on the project's health which resulted in significant time delays [7].

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To sum up, the vast scale of the project caused substantial communicational challenges. Interaction between the governments of each country, governmental bodies, financers, construction companies and suppliers was difficult, and no method of transferring information to relevant parties was derived. Further to that, objective prioritization between the parties made timely addressing of issues difficult thus allowing costs and delays to rise significantly. Notwithstanding the above, the lack of a thorough feasibility study during the inception stage and formal consolidation and endorsement of all divergent points and management approaches meant project failure before the project has even commenced.

Defining Project Success

A good example of project management success may be considered the Sydney Olympic Games 2000 with its accurate estimates of costs, carefully phased evaluation processes for tracking of progress and expenses, resolving issues, and staying within the set timeframe [8]. Further to that, developing a well-thought out and decisive plan while paying close attention to detail were key in achieving the right strategy for the successful delivery of the Sydney Olympic Games.

Following Sydney's successful bid to host the 2000 Olympic Games an Australia Stadium 2000 consortium was formed early in 1994 led by Multiplex Construction and Hambros Australia Limited, along with key members from the design teams - Being Bligh Lobb Sports Architecture, Modus Consulting Engineers and Sinclair Knight Merz. The consortium's bid for the centrepiece venue of the Olympic Games was packaged as a design, build, own, operate and transfer (BOOT) [9]. This procurement strategy ensured full presence in the design brief of both the Olympic Coordinating Authority's requirements for staging the Games and those stemming from the business plan to ensure continuous flow of project funding. After a tender submission made in September 1995, the consortium was nominated as preferred programme lead status in February 1996. The contract agreement was duly signed in August 1996, with construction commencing one month later in September 1996. A fast-track set of sub-programmes were agreed and endorsed for all design and construction teams who working collaboratively together [10] led the project towards operationally responsive and ground breaking engineering-designed Olympic village.

Stadium Australia has met and overcome many unique and remarkable analysis and design challenges to deliver one of the most advanced, in both design and operational terms, new generation stadia in the world.

Summary

By enabling greater strategic investment in capacity, promoting a more co-operative ethos, and balancing core project components - cost, time and quality would allow for improving and better integration of the various stages of the construction management process would be possible, and thus achieving overall project success.