Australia’s most expensive building, the new Royal Adelaide Hospital, has unsurprisingly fallen short of community expectations and become yet another example that today’s project management approaches are not adequate in dealing with contemporary complex issues that’s pervading the Construction industry nowadays.
More than a year over schedule and 25% over budget, of which I understand there’s still further claims to be assessed, is a major failing of planning, stakeholder engagement, interconnectedness and leadership. McKinsey and Co. recently released a report stating that large projects costing $1B+ are typically a year over schedule and run 30% over budget – the Adelaide Hospital falls right in line with this assessment. The real enormity of this problem bears itself when you factor this issue right across every project now and into the future. McKinsey states the lost value to tip around $5Trillion on currently planned projects alone! So, what’s the problem and what actions, if any, are in the pipeline to resolve it?
The problem comes in many guises and contexts but what is apparent is that time and time again, well intentioned organisations and relationships come together and bring the same cookie cutter from the previous job to the next. In an industry that relies on operating in other people’s ‘backyards’ such approaches restrict the project from understanding, and hence planning for, those unique interdependent relationships and issues that typically undermine construction projects – ultimately the project has already failed even before the cliched media hungry politician turns the first shovel of soil.
Any biologist will tell you that closed systems, which this scenario represents, are doomed to perish as it suffers from the absence of necessary energy (communication) that’s needed to sustain it. Add to the mix the issue of interconnectedness, or lack of, within Joint Ventures, which are the norm for our larger and more complex projects, that slippery slope becomes more acute and efforts to arrest risks through controls ultimately becomes a futile endeavour. In the end, we fail to roll over lessons learnt, we increase our contingencies on the next project, costs increase and we get substandard outcomes.
When it comes to Stakeholder Engagement, the disappointing factor is that most of the above is acknowledged and known in the industry, or as the Johari Window implies – ‘known knowns’. There are also a myriad of standards and guidelines that provide a framework to manage this process but ultimately fall short on providing the ‘soft skills’ advice to enable PM’s to conduct Stakeholder Engagement effectively. It would all work well if the required leadership behaviours existed to dove tail into them.
The culture in the industry is one of ‘it is what it is’. Absolute demolition rubbish – these things happen due to the reasons mentioned earlier. From a compliance or standards perspective that could enable the type of improvement and innovation sought, no defined quality framework exists and what innovation does exist appears to be restricted to Critical Path improvements through a Theory of Constraints lens. This alone would not have confronted or resolved the issues that plagued the Adelaide Hospital project and others it can be confidently assumed.
There is light at the end of the Construction tunnel however – the new Centre for Smart and Modern Construction at University of Western Sydney has these very issues in its cross hairs including leadership, empowerment, interconnectedness, collaboration and better behaviours; and the International Centre for Complex Project Management in Canberra is extending the field of systems thinking into the Construction industry where Systems Thinking and Capability Maturity techniques are deployed before any soil is turned.
Lighthouse Road is working collaboratively with these institutions and like-minded partners to forge new sustainable and prosperous project management methods where waste and poor leadership threatens to undermine the industry’s sustainability. Today’s increasingly complex operating environment is exposing latent flaws in business models that will inevitably perish the business and put isolated and marginalised workers into medium to long term unemployment.
Put simply, organisations must now execute their craft with systemic impacts in mind, acknowledge their social and environmental responsibilities and commit to the idea that business as usual will only continue to deliver expensive overruns that inevitably weakens economies and destroys communities. In that vein, it would not be a stretch at all to include the prosperity and health of our children’s children as our next project stakeholders.