Forget about market dynamics outside our control – here’s a plan for making sure what we can affect is done right from the start, and it’s all about good behaviours
As an industry, we spend lots of time discussing market dynamics and the many diverse influences on tender price inflation. And rightly so – to a point. However, while strategies can be put in place to help manage and combat rising construction costs, the eventual impact is largely outside of the client and project team’s control.
In contrast, the impact of setting up a project correctly (or not) and displaying the right behaviours through the course of the project (or not) receives a fraction of the air time, despite the fact that these issues are much more within the client and project team’s control. Furthermore, they are likely to have a far greater impact on the final cost of the project than tender prices moving by 1%, 2% or 3%. So, are we focusing on the right area?
We can create a process that creates a project environment and culture that encourages co-operation, teamwork and trust
Projects not set up to succeed are likely to have one or more of the following attributes: no emphasis at the outset on what project success or the client’s definition of value looks like; a lack of collaboration and transparency; the avoidance of BIM; unrealistic cost and programme targets; and a lack of strong leadership and decision making. What could exacerbate this is poor performance and bad behaviour, which would include things like substandard detailing of design, poor quality tender documentation, too much focus on lowest price, unequitable risk transfer through the supply chain and a lack of sign-offs at key gateways. I suspect by now that some of these points may resonate. So, what can be done to improve the process and, therefore, reduce the final cost of a project?
We can create a process that tackles these points head-on and creates a project environment and culture that encourages behaviours such as co-operation, teamwork and trust. Important considerations to be adopted – and which are all too often absent – would include (take a deep breath …): tendering to fewer contractors; a thorough review of the design as it develops; proper sign-offs at design gateways; insistence on the use of BIM; the capturing of lessons learned and then actually doing something with them; building adequate time into programmes and cost provision into budgets; the consideration of trade-contractor perspectives when setting design and procurement strategies; the avoidance of reinventing the wheel through adopting standardised components and consistent detailing where possible; and finally, creating a project “manifesto” of what and how things are to be done, with the commitment from each team member to report against it regularly and honestly.
The concept of the project team having a duty of care to each other can go a long way in terms of achieving success
In relation to this last point, there is a lot to be said for the display of a further good behaviour, which is accountability. When we say we are going to do something, we should. And that concept counts internally as well: the project team feeling that they have a duty of care to each other can go a long way.
It all sounds quite easy on paper – so why do so many projects come up short and incur cost and time overruns? Perhaps part of the reason is that it is actually quite difficult – in an era that continues to find it hard to attract people into property and construction – to find leaders in our industry with both the belief in the positive impact of exemplar behaviours and the right skills and qualities to pull it off.
Perhaps an inherent lack of trust means that there is always one side trying to win, rather than working to create an environment where everyone wins. Perhaps the modern day legal environment is such that first thoughts are to protect and pass risk, rather than to allocate it fairly and manage it effectively. Perhaps we are being distracted with sub-plots rather than doing the basic but crucial things really well. Perhaps, perhaps, perhaps …
Far be it from me to suggest that this is easy, or that anyone has all of the answers, but recent research carried out by our business with a cross-section of industry leaders from all disciplines does show that setting up a project correctly at the outset, along with creating an environment that promotes and displays the right behaviours, gives it a far greater chance of success, commercial or otherwise.
While it is almost impossible to measure the effect on cost of not doing this, it would not be unreasonable to estimate it to be in the region of a 10% swing on the bottom line.
So the question is: is it better to spend our time debating an arbitrary tender price inflation point of, say, +/- 2% which we can’t ultimately control, or devoting our energy to setting up the project correctly and adopting the right behaviours for a 10% swing, which we have a far greater level of control over?
Those who do take the time to get things right from the outset, and then follow through, show the sort of behaviours that we should all be celebrating.