PROJECT MANAGEMENT STRATEGIC ISSUES

Transcription

1 PROJECT MANAGEMENT STRATEGIC ISSUES THE SCOTTISH PARLIAMENT BUILDING PROJECT FAILURE A REPORT Prepared By: AHMAD LEBBE MUFEEZ; Regd. No: Semester 2, 2011

2 C O N T E N T S P A G E 1. Introduction 2 2. The Scottish Parliament Building an overview 3 3. Project Schedule Delay 4 4. Project Cost Over-run 5 5. Roles of Project Management 6 6. Strategic Project Management 8 7. Learning from Project Failure 9 8. Conclusion Bibliography 12 Page 1

3 1. I N T R O D U C T I O N Much government initiated massive constructions of public building projects have failed over past many years. For example, projects such as British Library, the Scottish Parliament, the Channel Tunnel and the New Wembley Stadium were highly criticized for its cost over-run and huge delay in final handing over which resulted in unfulfilled project objectives the stakeholder s expectation. Form the lessons learnt from the failed projects, application of project management techniques could have been successful to deliver the projects on time and within the budget. Even thought for the last 50 years, there have been lot of research and development (R&D) on the subject of Project Management to improve the performance of the construction industry together with the collective construction industry experience gained over years, the projects failure continues. The new Scottish Parliament Building project is an example. The project failed in terms of cost, time and stakeholders expectation however the finished project achieved a high quality criteria and the project on completion in 2004 was welcomed by the millions of Scottish and visitors. The project cost approximately 414 million against the initial cost of 50 when it was completed in August 2004 that is 42 months later than original completion date. There were many reasons inflicted to the cost overrun of the Scottish Parliament Building Project. First of all, none except one of the shortlisted architect adhered to the proposed budget and brief and all others failed and the one who adhered was not awarded the Project. Initially the cost estimates were prepared for an incomplete design. During the course of the project, the architect added another 4,000 m 2 to the initial scope of work which increased the cost. Therefore the original budget of 40 million was not realistic for the original scope at that time and that cannot be compared with the final project cost. The increased scope, the complexity of the design consumed a lot of time and the project delayed. Project Cost and Project Delays are always come together, This report analyses the main reasons for the new Scottish Parliament Building failure. Section 2 outlines overview of the project. The following two sections detail the numerous delays occurred in the project from inception to completion and associated cost overrun due to additional design development and prolongation. Section 5 and 6 describes the project management roles and strategic project management techniques that could have been adopted to have delivered the project with a success. The last sections brief about the lessons learnt from the project failure following a conclusion at the end. Page 2

4 2. T H E S C O T T I S H P A R L I A M E N T B U I L D I N G A N O V E R V I E W The Scottish Parliament Building was built in an area of 1.6 ha and located 1 km east of Edinburgh city centre on the edge of the Old Tow constructed from a mixture of steel, oak, and granite, the new Scottish Parliament is a striking and very complex building with high quality materials and some unusual design and construction features. The parliament was procured using Construction Management Procurement in which the most of the risks remains with the Client. The cost of the new parliament was originally estimated at 50 million back in July 1997 with gross area 20,740 m 2. Final cost of the project was 414 million and completed in August 2004 after 42 months delay. Total trade contracts awarded were 58 numbers. Fig 1. Site Plan Key Dates Commencement Date : June 1999 Date for Completion : March 2001 (Original Duration 21 months) Completion Date : August 2004 (42 months delay) Page 3

5 Main Buildings MSP Building Queensberry House Tower 1 and 2 Tower 3 and 4 Canongate Tower Debating chamber Lightwell/Public stair Key Project Team Client Project Architects Structural Engineers (Consulting Engineers) Planning Supervisor & Project Managers Quantity Surveyors & Cost Consultants Construction Manager Service Engineers : Scottish Parliament Corporate Body (SPCB) : EMBT & RMJM : Ove Arup & Partners : Turner & Townsend : Davis Langdon & Everest (DLE) : Bovis Lend Lease : EMJM Page 4

6 3. P R O J E C T S C H E D U L E D E L AY The main cause of the project schedule delay were delays in completing the detailed design required for this challenging project that needed to be delivered against a unrealistic target dates using an unusual construction management (procurement) route and the interrupted supply of information throughout the construction process. In addition to the above, the other reasons for the delay are communication problems with the involved project teams and political intervention on the project also disrupted the progress of the progress. The client requirement for additional net usable area of 4,000 m 2 in August 1999 required an extended design period. This caused the Architect to issue almost 2,000 design changes and also for the original incomplete design. The Architect was also facing a pressure in progressing against unrealistic target dates assigned by the Client. Effective communication in construction project is very important skill required for a delivery of projects on schedule. This was not the case in the Scottish Parliament Building. The both Project Architects, EMBT from Spain and RMJM from Scotland from two different cultures and working from their own locations added problems in communication to resolve the issues arising at the Holyrood Site. The problem became much more when the Client changed from the Scottish Office to Scottish Parliamentary Corporate Body (SPCB) in 1 June 1999 and introduction of Presiding Officer and Architectural Advisor. Another major reason was the selection of construction management as a procurement route. This was considered as unusual in the Scottish Construction Industry. None of the advantages and disadvantages was reviewed by the Client before adopting it to deliver this complicated project. The following are some of the disadvantages of Construction Management that contributed to the schedule delay; Since there is no main contractor present, the client must carry all the risk of the activities of almost 58 individual trade contractors deployed at site at a peak time thus delaying or disrupting each other s activities. The construction management primarily doing a coordination roles between trade contractors, the Client and the Architects and never assume risks other than his negligence and again he put the risk on the client. Page 5

7 The Client was responsible for design coordination and bears the risk of delays and disruption caused by the trade contractors. It was not possible to conclude the final project cost until the last work package was awarded. The political interventions time to time throughout the project put pressure on the Architects and other trade contractors delaying the project even worse. Page 6

8 4. P R O J E C T C O S T O V E R - R U N The main reasons for cost increases are prolongation due to delays, disruption and design development, inflation, and client management to brief. Time was of essence. The delays for the project discussed above prolonged the completion till August This cost a lot of money to be spent on site general requirements (site preliminaries). After 9/11 attack, the security of public buildings became paramount so as to implement mandatory security measures which contribute a part of the cost over-un. Another reason for the increased cost was that the addition of variations for high level design development in September 2000 which added 80 million and delay and complexity in the construction process. The increase in the scale of the building, increase in construction costs and other dependent costs, increased fees to advisors and site organisation costs are the some other reasons for cost overrun. In most of the trade contracts the estimated final cost greatly exceeds the original cost plan allowance due to uncompetitive procurement of trade contracts with scope uncertainty. The remaining fit out works, additional landscaping, and site acquisition and programme contingency costs accounted for some smaller increase of the project cost. The following is a tabulation of project cost during the duration of the project. Date Project Cost in million Date Project Cost in million Jul Mar Apr Oct Jun Jan Apr Jun Aug Sep Nov Aug Page 7

9 5. R O L E S O F P R O J E C T M A N A G E M E N T Project management is an application of knowledge, skills, tools, and techniques to project activities to meet the project requirements (PMBOK Guide). A project success is always linked to time, cost, quality, scope and risk parameters. As discussed above the Scottish Parliament failed in terms of Time and Cost. The project cost increased by more than 350 million and delayed by 42 months due to failure of managing the scope and risk. But the quality was achieved. Selection of construction management procurement route without a proper understanding of the risks involved was adversely affected the complete construction process later on since all the risks were transferred to the Client. This is a procurement management failure of project management roles. Construction Management was not suitable for the project since it does not take full responsibility of huge risks involved, complexity of the project and managements of tens of subcontractors. The overall role was just a management and coordination only. The more the Construction Manager stay in the project, the more he earned his fees. And also Bovis was rejected and excluded in the shortlist but appointed later for the Construction Management role with political influence. It was clear that key stakeholders such as Members of the Scottish Parliament, Scottish Executive civil servants and Scottish Parliament official were not involved in procurement selection, and approval of revise budget and scope changes. This affected the lack of monitoring and controlling of the complete construction process Communication management was failed due to lack communication between the key players such as Project Architects EMBT and RMRJ. The Lead Architect was working outside the country where the project was located. Value Engineering (VE) exercise is a process during any stage of a project s design development cycle that gives all stakeholders the opportunity to be involved in the decision-making process and seeks to achieve the essential functions of a project at the lowest total cost, consistent with required levels of performance and quality. It constitutes an examination of all relevant options for the design and construction of the project, leading to a refinement of the design brief and identification of any budget constraints. The VE exercise carried out in the Scottish Parliament Building project suggested many recommendations that could have saved at least 25 million but it was failed because of successive new design variations. Page 8

10 6. S T R A T E G I C P R O J E C T M A N A G E M E N T ( S P M ) Strategic project management actions could have been applied to have minimised or avoided completely the disastrous results. Strategic project management is defined as the project perspective, direction, and guidelines on what to do and how to do it, to achieve the highest competitive advantage and the best project results and it equips the project team members with powerful tools to deliver the project with a success. Strategic Project Management (SPM) has been defined by Callahan & Brooks (2004) as the use of the appropriate project management knowledge, skills, tools and techniques in the context of the companies goals and objectives so that the project deliverables will contribute to company value in a way that can be measured (Callahan & Brooks, 2004, p. 23). The following five Strategic Project Management frame works could have been considered at the beginning of the project which in turn could have reduced the cost overrun and project delay making the project a success. 1. Strategic Alignment of Projects This means that the project objectives should align with the goals of the Client organization. This is only possible when the leadership is well defined and they should involve from the beginning in defining the project and selection of the other teams. 2. Cultivate a Project Management Culture The knowledge of Project Management techniques could have increased by training the team involved in the projects. It would definitely have helped to create a responsibility, understanding within various teams and accountability for what they are performing within their organization. 4. Track and Measure Projects and Outcomes Tracking and measuring system in the Scottish Parliament Project was apparently poor. Due to the increase and numerous design variations, it was not carried out. 5. Create Open Channels of Communication There was always a problem when it comes to communication between the various teams. Effective communication is a project management tool to control and use the time effectively eliminating unwanted issues. If some or all of the listed SPM techniques could have been practiced from the beginning of the project, a lot of time and money could have been saved and thus making the project a success. Page 9

11 7. L E A R N I N G F R O M P R O J E C T F A I L U R E Identifying whether a project is a success or a failure can change with time. The new Scottish Parliament Building was clearly a failure on the criteria of cost and time, yet the building later became the amazing postmodern architectural achievement. In its first six months after opening in 2004, it attracted over a quarter of a million visitors. Within a year, it had become Scotland s number one tourist attraction. With the project is complete, the financial bleeding is over, the memory of disaster will fade, but it is important that we remember the causes of project failures and apply the lessons learned. The following items listed needs more consideration; Procurement Route: The selected procurement route must be able to allow those who can manage the risks involved. It must be not a criterion to allocate or transfer risk from one party to another. Construction Management route allocate the complete risks on the Client and where the Client lacks construction experience, this become e a worse case. Milestones: To measure the progress of the project, it is important that milestones are introduced throughout the project duration which will help to find out the area where there is a problem and to take corrective action in a timely manner. Communication and Leadership: The change of the Client, project sponsors, project directors and appointment of Project Managers and their resignation showed a lack in leadership roles. Due to multi-headed clients, and their different perspective idea, they could not control the project. Therefore single point of leadership will benefit the lack of leadership role and help control the project flow. Budget: The initial budget was not adequate since it was planned for extending of an existing building but later decided to for new building. The cost estimates was not complete and realistic since the design was incomplete and design brief was not clear. It is so important first to make the scope defined and do the costs estimate. And design to costing should be adopted. Project planning: It is very important that at the beginning of the project, a realistic planning is prepared particularly in projects where there is significant complexity or technical risk, or when there is a tight schedule for completion. Due to the political intervention and urgency for a parliament building, the schedule was tight and unrealistic and not revised as per the revised and additional scope of work. Proper planning and monitoring Page 10

12 of construction projects is a key to success and all the stakeholders should be informed about inadequacy of project planning. In addition to the above, it is advisable to avoid politician involvement in the construction process and decision making, and secure the project funding and resources. Page 11

13 8. C O N C L U S I O N S The above report examined the most likely reasons for the failure of Scottish Parliament Building Project in terms of time and cost even though it was successful in quality issues. Anyway the project was criticised by many people and it was a real failure. Political intervention, not clear design brief, multi-headed clients, not having experience in construction management procurement route, wrong appointment of project team, lack of clarity in project objectives at the initial stage are some many reasons discussed. The following project management techniques could have been exercised to have completed the project on time and within the budget. With the proper procurement route suitable to allocate the risks involved in such complex project, assigning the roles and responsibilities to the right project team, preparing a realistic project budget, defined leadership and communication skills would have been adopted. Page 12

14 9. B I B I L I O G R A P H Y 1. Fraser of Carmyllie Q.C., Rt Hon Lord (2004) The Holyrood Inquiry, Scottish Parliament Corporate Body, September 2. Auditor General (2004) Management of the Holyrood building project: prepared for the Auditor General for Scotland: Audit Scotland, June 3. Auditor General (2000) The new Scottish Parliament Building: An examination of the management of the Holyrood project, Audit Scotland, September 4. Morris, P. W. G. Research at Oxford into the preconditions of success and failure in major projects. Proc. Project Management Institute Seminars/Symp. On Measuring Success, Montreal, 1986, Project Management Institute, Drexel Hill, PA, William G. Ramroth, JR., AIA. (2007) Planning for Disaster, How Natural and Manmade Disasters Shape the Built Environment, 6. Morris, P W G. The Management of Projects, Thomas Telford Ltd. 1994, ISBN: X 7. (last accessed on 20 March 2011) 8. Major Project Association (MPA, 2003), 9. A Guide to the Project Management Body of Knowledge, (PMBOK Guide) 10. Callahan, K., & Brooks, L. (2004). Essentials of strategic project management. Hoboken, NJ: John Wiley & Sons (last accessed on 16 April 2011) Page 13