Designing Project Success Strategies
Every construction project has a system of governance that exists to achieve the project’s aims, whether that system is explicitly designed or understood by the participants.
At its most basic, in a typical two-party construction contract, the governance system could be said to consist of the role of the Key Representatives for each party, the role of the Superintendent/Engineer and the issue resolution process in the contract.
The limitations of traditional contracting approaches to solving problems and achieving a project’s aims are well known.
Next, we can include the emerging use of DAABs (Dispute Avoidance and Adjudication Boards). From my perspective, DAABs are an evolution in governance of projects, through the use of independent expertise mandated with the task of dispute avoidance.
These approaches can be contrasted with the very explicit structures designed into an alliance/relational contract which are purposively designed to focus participants on the achievement of the project’s success. These structures include the way in which the party’s interests are aligned financially, the leadership team backed by its requirement for unanimous decision making and the no dispute regime.
In designing a governance model for a project’s success, the features that should be explicitly considered, include:
Alignment of Purpose and interests: the extent to which the structure aligns the participants around a common goal and values (the project attributes that will drive its success) and avoids conflicting interests.
Expertise: good decision making requires access to and deference to expertise. Does the structure involve subject matter experts or provide ready access to expert opinion?
Diversity: does the structure enable diversity of skills and perspectives?
Authority: does the governance structure enable the project to be stopped in the face of evidence of a critical issue (for example safety or quality)?
Access to Information: does the structure enable access to detailed project information to support timely and informed decision making?
Scope: which relationships involved in the project are subject to the governance model?
Focus on Problem Solving: to what extent does the system focus the parties to find and solve problems as early as possible?
If we apply these features to a typical D&C procurement model it rates very poorly. Interests and purpose have limited alignment, although the role of a neutral superintendent provides a degree of attention to project detail and operational activities and problem solving. With the adoption of a DAAB, the governance structure on your project increases its access to information, diversity and expertise and the focus on problem solving. DAABs can also operate across multiple contracts (e.g. in PPPs, DAABs are ideally operating across both the Concession Agreement, the 1 D&C Contract and the O&M Contract).
It is alliance models however where all of these features can be used to their fullest to drive a project's success.
There is a cost to project governance. The lowest cost approach to your project’s governance is to not explicitly include any governance systems or structures. Whilst that approach might be appropriate on a small straightforward project where the parties are of long standing and are well known to each other, experience tells us that this approach is not adequate in most situations to keep the parties focused on achieving a projects’ success. The cost of paying attention to how to make your project succeed is small by comparison to the cost of its failure.