The Construction Project Management Construction Essay

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The U.K. Labour government elected in May 1997 promised to legislate for the devolution of Scotland. Counting on the results for the devolution of the referendum which would hold on September 1997, Scottish politicians led by Donald Dewar and pressures groups for devolutions set as one of their prime goals to provide the forthcoming Scottish Parliament with a permanent accommodation as soon as possible. In summary, the new parliament should provide exceptional quality, value for money, durability, accessibility by all people, enhancement of Scottish Parliamentarians and their staff performance by providing excellent working condition and advanced technology, sustainability and flexibility to accommodate changes in its life. The building should also be an important symbol for Scotland and should reflect the country's history and its future aspirations. The cost of establishing the Scottish Parliament building was stated initially as a range of between £10m and £40m since there was not a decision about the site and the funding methods.

Moving forward fast by the political intention for early completion, the next step was the site selection process. From a long list of alternatives sites four were selected for a feasibility study and on the 9th January 1998 Holyrood was announced as the selected site for the new parliament building.

Simultaneously with the site selection announcement, the Project Management of Holyrood project formally established. Although, the members of the project management changed remarkably during the project, the main structure of project management group stated firm and formed by the project team and the project owner. Project team comprised the Project Sponsor, the senior project management or project director, the project managers and a supportive team of civil servants and private sector advisers. The client was the Scottish Parliament Corporate Body on behalf of the Parliament.

The same month an international competition for the selection of the designers of the Scottish Parliament building was launched. Following a rather unstructured process suffering from unsystematic evaluation of the tendered architects, in July 1998, the panel which was formed for the designers' selection process announced the selection of the famous Spanish architect Enric Miralles. Under the public and political pressure to participate in the design team a Scottish architect the panel awarded the design to a joint venture of Enric Miralles and RMJM Limited (Scottish architects) under the title EMBT/RMJM Ltd.

In April 1998, the first draft of building users brief issued and Davis, Langdon and Everest was appointed as cost consultants.

The next few months after the designers' selection, the commencement of the design development and the initial project cost estimates, the client decided to adopt construction management as a fast-track procurement route. In January 1999, Bovis Lend Lease was appointed as construction manager.

Although, the project seemed to move forward within its objectives, from that period to its completion project's progress and cost suffered a number of undesirable delays and increases respectively. The project was delivered to the client 39 months later than planned, in the autumn 2004 and the initial budget of £108 million blew off to £413 million.

Project's delays and cost overruns

With the assurance of hindsight, project's delays and cost overruns were unavoidable.

They was the result of the coexistence and interaction of an inexperienced client of public sector which set unrealistic programme and cost objectives driven by its political intention for early completion, a rather poorly performed and reactive project management team dominated by inexperienced in construction civil servants, a very complex and demanding project in terms of size, programme, design and required quality which was poorly planned, monitored and controlled, an unsuitable procurement route in relation to client's characteristics and risk profile, and a bicultural design team unable to cooperate and perform in the limits of the project brief, the requirements of procurement route and the instructions of project management.

Reasons for delays

The main reasons of project delays were related with design delays sourcing mainly by the poor architects' performance, client's requests for changes and the knock on effect these delays induced to the construction schedule of the project under the construction management procurement route.

Architects' joint venture systematically failed to perform in compliance with project brief, budget and schedule constrains, project management instructions and construction management procurement route core requirement that is the development of the whole and detailed design in parallel with the tendering and construction progress of the project. At the early design stages architectural team faced difficulties to develop a buildable and approved design proposal partially because the initial notional single office block design replaced by a very complex concept of several smaller buildings and partially because of the changes was required by the client. During the design development phase, when the design progressed in parallel with the tendering process, appointment of contractors and works on site, the load of design variations seeking to improve buildability, utility and aesthetic of the building and their tardy detailed design development led to delayed supply of design information to contractors causing consequently prolongation, delays or disruptions to the construction process. Variations were sourced mainly by the design team since the client required a very small amount of variations after the approval of scheme design.

In respect to the objective of early completion, delays in design development led the construction manager to award a remarkable number of construction contracts with insufficient or minimal design details and information and to transfer design responsibility to trade contractors. The variations to these work packages and/or the weak performance of some individual trade contractors which submitted with delays parts of the design for which they was responsible and/or the late approval of these design elements by the design team or third parties resulted on a domino effect of delays or disruption to subsequent work packages in the critical path of the construction schedule.

The client's significant contribution to delays was limited to the first two years of the project. During outline and scheme design stages the client increased significantly the total area of the new building and changed the layout of the Debating Chamber. Specifically, the client altered its space requirement by 47.5%, from 21,000 m2 to 31,000 m2 approximately.

The selection of construction management (CM) procurement route for project's delivery maximized the consequences of the late delivery of design to project programme. The main advantages of CM to accelerated project delivery requires excellent coordination of design and construction process that means the detailed design drawings and information are delivered promptly to contractors. In the Holyrood project, the inability of design team to deliver the design information to the contractors promptly resulted to a knock on effect on the implementation and completion of awarded construction packages and consequently to the overall project's programme.

Secondarily, the settlement of convention issues and structural problems to the Queensberry House which had been underestimated during the initial investigation and evaluation of the building might cause delays indirectly. Although, the Queensberry House reconstruction was not in the critical path, the resources allocated to resolve the above unexpected issues might weaken the ability of the design team to perform in full capacity in other more critical design elements.

Similarly, the redesign of some elements of the buildings in order to improve site and buildings security measures which had been underestimated in the early stages of the project added to the project delays.

Finally, the death of the principal architect, Enric Miralles, the lack of resources and delays in receiving necessary materials has also contributed to project's delays.

Reasons for cost increases

Programme delays, mainly in terms of changes in design and delays in the delivery of detailed design and information fed cost increases.

In the early project's stages, the most obvious reason for project's cost increase was the additional space required by the client. However, a 47.5% increase in space resulted in increase of construction cost by 116%.

A significant portion of the above mention increase in the construction cost was attributed to the replacement of the initial design of a single office block building by several smaller buildings with exceptional architectural elements in the facades and the internal areas of the building demanding the use of high quality and high-cost materials and specialised and expensive construction methods for their implementation. The development of design revealed that the complex and unique design could not be implemented in the initial budget of scheme design. As the initial design was developing further to detailed design the construction cost was increasing steadily. As it stated to the Auditor General's 2004 Report "design development became a process of costing a developing design rather than developing the design within a cost".

Late delivery of critical design elements to the contractors, primarily by the design team and secondary by individual trade contractors, caused delays to the construction schedule and results to compensable delays by the client to contractors. Taking into consideration that under construction management procurement route design and construction overlapping, the domino effect that delayed design delivery caused to let work packages led to claims by contractors for extension of time or recovering their position because of prolongation, disruption or/and delays of works.

Another source of cost increase was the uncapped consultants' fees. Consultants' fees calculated as a percentage on the construction cost without an upper limit to have been set. As a result all the increases in construction cost drifted upwards the consultants' fees. Uncapped fees might indirectly contribute to the increase of other elements of construction cost since consultants had not any incentive to keep construction cost low since any increase in it consequently increased their fees.

Queensberry House reconstruction cost which had not been included in the initial construction budget of £50 million and the later increase of its initial reconstruction budget from £7 million to £14 million contribute to construction cost increases.

Site and buildings security measures had been underestimated in the early stages of the project. The improvement of the specification of security and anti-blast materials increased the project cost by £17.54 million.

Until the autumn 2000, cost plan was based on 1st quarter 1998 prices with no allowance for inflation. Adjustment for inflation added about 19 million to the construction cost estimates in November 2000 according the Auditor General's 2004 Report.

The procurement of trade contracts without the achievement of the required level of competition added a significant amount to construction cost increases. A remarkable number of work packages attracted fewer tenders than what was expected and failed to establish a strong competition. Competition impaired further because the delays in design development in conjunction with the dominated project's objectives for early completion and high quality forced construction manager to let design responsibility for some work packages to trade contractors by a two stage tendering process. In most cases the price for the construction was agreed by negotiation with the single trade contractor who had delivered the detailed design. Consequently, the advantage of a strong competition had lost.

Finally, an indirect influence in the attenuated competition of trade contracts might play the increasing demand for construction services in Edinburgh after 1999.

Project management contribution to delays and cost increase

Project management of Holyrood project was commissioned to deliver a very challenging project. It partially succeeded in achieving the objective of high quality and delivering a landmark building which expresses and connects the past and future aspirations of Scotland nation; however it did not achieve time and cost project objectives. Driven by the political intention of as early as possible completion, project management sought to deliver the project without investing the appropriate time to plan, audit and control the project.

Project Execution Plan (PEP), the most important document for the management of any project, through which all the necessary mechanisms and procedures for the execution, monitoring, reporting on progress and control of the project are established, it remained a draft paper in the case of Holyrood project.

Furthermore, project management proved incapable to establish a clearly defined and updated strategic and project brief. The strategic brief and project brief combined to a single Building Users Brief which was not reflecting accurately the strategic objectives of the project in the context of the client's value system and was remaining unupdated in crucial phases of the project. Unfortunately, the client was not consulted properly to understand the trade off among their main project objectives in terms of time, quality and cost and prioritise them accordingly.

Roles and responsibilities were never clearly defined and consequently a single point of leadership and control never established. The responsibility for management and leadership was confusingly allocated between several parties and there was no single point of leadership, control, decision making and accountability.

Moreover, project management failed to establish a robust procurement and contract strategy that would allocate the risk to the party that could best manage it. It did not support the client to make a well informed selection of procurement route by presenting to it an in depth assessment of all the alternatives and the consequences of their implication to the project. The client selected construction management as a fast tract procurement method without understanding in full its implicit risk and complexity and the exceptional construction knowledge and expertise the construction management procurement route demands by the client. The issue became worsen by a contract strategy that did not establish a mechanism to control the cost by responding effectivle to risk issues and setting up a cap to consultants fees or a Guaranty Maximum Price or a share gain share pain mechanism to contractors or any other payment incentives mechanism to project supply chain.

Risk and value management was performed poorly and not in compliance with good practice. The unstructured and occasional value management workshops were rather a cost-cutting exercise without adding any value to the project. Risk management meeting was an exercise of identifying possible risks, quantifying their impact to the project and adding it to the cost estimates as risk allowances. When the risks were materialized, their cost transferred from risk allowances to the construction cost. No action was taken to minimize or eliminate the impact of identified risks to project's cost.

Finally, project management did not provide an effective cost management, control and report system. From the outset of the project, a realistic budget which would serve as cost monitoring and control baseline was not established. After a decision by parliament in June 2001 to remove the previous project's cost target, surprisingly project management did not provide an alternative budget in order to manage properly the project's cost. In the absence of a well defined and reliable cost plan compromising by base cost estimates and risk allowances, project management failed to control effectively project's cost. Even, cost reporting were unstructured, unsystematic and in some cases misleading.

How project management should have performed

Project management should have adopted a more proactive role from the outset of the project. Problems and dysfunctions caused not only by actions but also by inactions or reaction of project management.

First of all, project management should have invested sufficient time to plan the project. Managing a better planned and informed project, it might had prevented many of the issues arose during the implementation phase of the project.

Briefing process should have been divided in strategic brief and a project brief. The strategic brief would support project management to identify and assess the feasibility, trade off and prioritisation of key client's objectives and the project brief should plan the project that could meet these objectives.

Project Execution Plan should have been prepared and finalised in the very early stages of the project as formal document which would have been approved and signed by the client. In the context of the development of PEP many of the issues that caused problems in the subsequent stages of the project would have been addressed.

Even in the absence of the above, project management should have performed corrective actions during the subsequent phases of the project.

First of all, the project management should have secured that the procurement route selection was based on a robust procurement strategy and had been made by a fully informed client.

Second, it should have given greater attention and taken a proactive role to risk management issues. Its risk assessments should have provided appropriate responses for reducing or eliminating their impact to the project. Supporting its effort to respond promptly to potential risks, it should have established a configuration management framework through which changes and their impact to the programme and the cost of the project could have controlled effectively.

Project management should have established an efficient process for project's cost control and reporting and secured that both was performed on a comprehensive and systematic basis. Project costs should have reviewed and reported regularly. Cost reporting should have included all the direct and indirect construction costs.

Furthermore, it should have formally informed the client about the lack of collaboration and communication between the members of the design team and between the design team and project management and taken action to eliminate or reduce the impact of these issues to the project. Project management should have adopted a conflict solving approach to design team communication and collaboration issues and not a rather hostile one.

Payment arrangements with the contractors and the consultants should have upper limits and intensives for compliance with the cost, programme and quality objectives. Although, consultants' fees capped, this took place very late in the production of the project and did not offer substantial cost savings. Trade contactors payment arrangements should have made under a Guaranty Maximum Price or a share gain / share pain mechanism.

The programme might have been better controlled if the whole project had been divided to smaller manageable packages with agreed performance targets against which each package performance could be judged.

Finally, project management should have established a well-structured reporting system with clear and as sort as possible lines of communication.

Lessons learnt

Although the delivery of Scottish Parliament project could considered as another missing opportunity for the project management discipline to prove that can deliver successfully a project by achieving all the pre-agreed objectives, the lessons learnt can be valuable to prevent future project failures.

Adequate time for planning the project management process and the project should be invested in the early stages of any project. Especially in political projects, project objectives in terms of cost, time and quality should be realistic and should not be dominated by political intentions.

Roles and responsibilities should be allocated properly and a single point of responsibility in terms of authority, decision making, leadership and control should be established from the outset of project

Procurement and contract strategy should be established seeking to allocate the risk to the party that can best manage it and providing payment limits and performance incentives to the supply chain in order to perform within the budget and schedule limits and quality requirements.

Project management teams should be formed not only based to the skills, expertise and knowledge of each one their members but also to the effectiveness with which the combination of these characteristics can respond to projects' requirements.

Key Performance Indicators reflecting the critical success factors of a project should be established and used as the baseline against which project's performance will be measured during its life.

Value and Risk management should be used proactively in construction projects. Risks managements should seek to identify potential risks, assess their nature and their impact to the project and prepare a plan to manage them. Value management should ensure that unnecessary costs is defined and eliminated.

Project progress should be examined at key stages in order to be assured that the project is needed and can proceed to the next phase successfully.

Project management process should be advised by the well established and informed techniques, tools, frameworks, documents and guides provided by the literature, OGC, HM Treasury and other relevant organizations and institutions.