Last week Ashley Pigott used the Holyrood fiasco to take a pop at construction management – but easy targets don’t help us understand complex problems
“The selection of Construction Management was the single factor to which most of the misfortunes that have befallen the project can be attributed,” was the quote from the Holyrood inquiry which hit the headlines. It was picked up by Ashley Pigott in his crusade against CM (8 October, page 56): “It is evident from Holyrood and Portcullis House and all the other CM disasters of recent years that nobody is ever accountable under CM. The cost escalation should not come as a surprise.”
How convenient. All problems can be blamed on the failure of a particular procurement route. No one of right mind, least of all anyone in the public sector, could possibly think that CM was an appropriate way of procuring a construction project.
But is that the message of Lord Fraser’s report? Not so, if you delve into the detail. The principal conclusions make it clear that the emphasis on early completion – which led to the rejection of a PFI/PPP route – inexorably led to the adoption of a “fast-track” procurement method. But the decision to “fast track” was taken without an adequate evaluation or understanding of the extent of risk involved and, indeed, without reference to ministers. Quite simply, Lord Fraser concludes, the implications of the choice of CM were not understood by the officials responsible for the project and therefore no risk-mitigation measures were put in place. Rather the reverse by the sound of things. Quality and programme were emphasised, cost took a back seat. The project sponsor understood the political environment, but not necessarily the construction process. Speed led to insufficient time being spent on planning and design phases. As the project sponsor succinctly put it, Enric Miralles, the architect, “did not work in straight lines”. Unforeseen demands for more space (some 17%) occurred; Historic Scotland’s intervention in Queensbury House led to delays and additional cost. Tighter security measures following 9/11 were imposed and so on.
Is anyone suggesting that any other procurement route would have resulted in price and programme certainty in these circumstances? Mr Pigott himself seems to be a fan of design-and-build contracting. Leaving aside arguments about design quality, is he suggesting that design and build accommodates this magnitude of change after “the employer’s requirements” are set? The conventional wisdom is that design and build is the least flexible of the various procurement routes in accommodating change.
The decision to ‘fast track’ was taken without adequate evaluation or understanding of the extent of risk involved
The inquiry itself notes that the possibility of moving to a guaranteed maximum price contract was considered at one stage and was quite properly dismissed – “the transfer of risk inherent in such a change, with the design of the east end of the site still at a relatively early stage, was likely to add several tens of millions of pounds to the overall cost.”
As to whether or not CM was the appropriate procurement route in the circumstances, Lord Fraser states that if the project’s objectives had been reviewed “I cannot speculate whether the requirement for an early completion date would have been revisited, enabling a less risky procurement method to be adopted”. Plainly the political pressure for a new building as soon as possible was intense. In those circumstances, no other route would assuredly have offered a better solution. Assuming speed remained the priority, most of us would conclude that construction management was the proper choice of procurement route and no other route would predictably have offered a better solution. But the client should be alive to the risks and manage the project accordingly.
The lessons, inevitably, are far more subtle and complicated than the headlines would suggest: do a proper appraisal of the procurement options before making a decision and, having made a decision, put in place the appropriate risk management measures. As Lord Fraser says in his introduction, “There is no single villain of the piece. Rather there has been a series of systemic failures …”. Construction projects are complex. So are the keys to success.
Ann Minogue is a partner in solicitor Linklaters