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The Scottish Parliament is a symbol for the UK democracy which is characterised by its wonderful architectural façade. The building won several local and international awards for its unique façade such as the Civic Trust award in 29 March 2006. The Secretary of State for Scotland announced, on 9 January 1998, that Holyrood would be the permanent home for the new Scottish Parliament building (Mccallum & Wakefield, 2003). The reasons behind the selection of Holyrood as Donald Dewar identified in January 1998 are its city centre location and its historical links (White and Sidhu, 2005).
Despite these facts, the Parliament is also considered as an example of a failed project in UK. For any project, failure is the inability to meet the project delivery targets which are set at the outset simply; time, cost and quality. In this case - the Parliament project- although more than the pre-set quality was achieved the project was excessively delayed (3 years late) and over budget (£391M over budget). There are several reasons behind the project failure and different parties contributed by a way or another to reach to this situation. This report explores and analysis the reasons behind the Holyrood project failure. It explores the relationship between these reasons and the role of the project management. It also identifies the strategic actions that could be taken to increase the chance for a successful delivery. Finally, a conclusion is set which identifies the key lessons that any project management can learn from the experience of this project.
Is the design appropriate for the initial budget?
A number of controversies and criticism was thrown to the project of constructing the new Scottish Parliament Building. To start with, using the public's money in order to create the said project already sparked controversies. Furthermore, as time passed by, the cost of the project increased dramatically. In fact, the cost increased almost 10 times its original estimated cost of £10 to £40 million in July 1997. By the end of the project, it was determined that the final cost of constructing the building almost reached £430 million.
The initial figure of £10 to £40 million is only based on the structure that would house the Members of the Scottish Parliament. The cost projections did not take into consideration other aspects of the project like the design or location of the building. (Fraser, 2004)
A year after, upon finding the winning design for the new building, the cost projection was adjusted to conform to the design drew by Miralles. At that time, the revised cost was £50 to £55 million (Fraser, 2004). This figure was derived by considering the use of sixteen thousand square feet of land in Holyrood or Leith, Haymarket. It assumed that the land is already cleared and ready for use. Furthermore, value added taxes and other costs attributable to the procurement of the land were not considered. In June 1999, Donald Dewar made further adjustments to the estimated cost of the project in order to give provisions for other costs like consultancy fees, demolition costs, value added taxes, cost of acquiring the site, and other provisions for risks and unforeseen events. After making the adjustments, the estimated cost reached £109 million. Further revision to the cost projections drove it much higher up to £195 million in April 2000 (Fraser, 2004)
Finally, in November of 2001, the official cost of the project is made known to the public. It reached £241 million after considering major changes. The design and the space needed for the project were changed. Furthermore, the project was pressured by rescheduling the completion of the project earlier to May 2003. In effect therefore, various difficulties were encountered. This gave led to more increases in the cost of the project. The project managers told the Scottish Parliament's Finance Committee that the changes made in the design and schedule made the costs even higher. At that time, the official cost of the project was £241 million.
The design development is the evolution of the design throughout the project. Design development might include small parts of the design such as functional aspects (Gray and Larson, 2008). In this project it included architectural, structural and building service issues. This caused disruptions to the trade contractors and time extensions were guaranteed. An example of the design development is the foyer roof. In 2001 the design of this part was completely changed from the original design and in early 2004 it was again completely changed (Auditor General, 2004).
The design growth had affected both the charge and the plan program. Around 10,000 changes had been approved by the project management throughout the life of the project with a total cost of £68 million (Audit General, 2004). The briefed gross area on which the £50 million budget had originally been based had increased from the initial 17,500 to 23,000 meters squared in the latest design proposals. This increase was to accommodate large numbers of staff in the light of better knowledge of the way the Parliament would operate. Furthermore, the need to incorporate an additional formal entrance to the building had been recognized and imposed additional space demands and therefore costs (White and Sidhu, 2005).
"Delays result in extension of project time, which leads to extra overheads that increase the cost" (Faridi & El-Sayegh, 2006, p.1167). In this project the delay in construction and time extensions given to the trade contractors was also a significant factor for cost increase. Time extension also led to extending the design services and the construction manager contract. The amount due to the construction delay amounted £73 million (Audit General, 2004).
"No construction project is risk free. Risks can be managed, minimized, shred, transferred or accepted. It cannot be ignored" (Latham, as cited in Hackett, 2007, p.47). The selected construction management procurement rout was associated with many risks. These risks were not identified by the project management and no allowance for accommodating them was included on the project budget. It is well known that risks should be taken by the best parties to manage them. Although, the client of this project has no experience on construction industry and it is not the best party to manage these risks by selecting this procurement route it accepted all the risks. It seems that the construction management was selected for procuring this project for one reason only which is speeding up the construction process to meet the specified target completion dated without any consideration to the risks associated with such route. It seems that the client was informed late of the risks and their effects on the project. This is an unjustified shortcoming from the project management which prevented the client to take its responsibility to realize and manage the risks as much as it can.
By using the construction management procurement for the project, the client held direct contracts with the trade contractors for individual work packages. The way in fact these packages were procured contributed to the cost increase of the project. Most of these packages were tendered without sufficient design information for bids preparation. This made the bidders reluctant to participate due to the high uncertainty. The client found itself with few bidders and higher prices than estimated. Some of the packages were tendered as two-stage tendering which means the bidder submits its offer based on the available design information and later in the second stage the offer will be revised based on the additional information. But unfortunately, due to the design complexity and the slow design information production the information available were also not enough which led to high prices and little chance for negotiation. The rush in awarding these tenders was to meet unachievable target completion date.
In most cases, construction management is inappropriate for construction projects in the public sector particularly for those are very complex. In a project with a complex and prestigious characteristics namely Scottish Permanent project, significant alterations are highly expected. Under the construction management approach the changing orders are more likely to happen. This due to the lack of adequate relationship between design team and contractors, which in turn results in producing designs that the contractor is not able to construct (billability problem). At the same time, the client alone bears the entire responsibilities for those changes
Before selecting the procurement route, the project management could evaluate the route precisely taking in consideration the complexity of the design and the client experience. The project management could for example evaluate the advantages and disadvantages of such a route from past executed projects delivered by the same way. The risks could be managed by implementing a good strategy which includes risk identification, risk assessment, risk response development and risk response control. Project management could explore other options such as design and build and management contracting which also could speed up the construction process and took away the risks from the client's side. PFI procurement route was politically discarded because it would not achieve the target completion date.
To conclude, there were many factors that have led to the delay and cost overrun in Scottish parliament project. Nevertheless the most significant reason is (i) the engagement in contracts before the detailed design and accurate specifications were completed, which resulted in continuous design alterations after the start of construction phase. Another important factors are (ii) the selection of construction management procurement despite the shortage of construction expertise and experiences of the PM team, (iii) unrealistic and very tight project plan, accordingly some work was out of sequence and not productive, and this added to the delays, and lastly but not least (iv) the delay in providing the drawings of the alterations to contractors. The very extensive delay and cost overrun should have been much minimised if several actions have been taken, particularly the following strategic actions; (i) arranging a procurement that does not lie all the risks on client side, and at the same time could deliver the project within the extraordinary quality (prim contracting or PFI seems the most appropriate), (ii) spending adequate time at the planning stage in order come out with a very clear and reliable planning and estimation, (iii) appointing PM team that is highly qualified and capable of controlling complex projects efficiently and effectively, and (iv) identifying a clear roles for the project parties and single point of leadership and control.