Why do projects fail? Projects generally fail due to inadequacies in project definition, project structure, project communication and management competency. These are not new ideas and in response the industry has previously turned to alliance models aimed at avoiding the conflicts associated with accelerating delivery. Unfortunately, this has not been the panacea.
The other fundamental question associated with mega project success is, what level of confidence is there that they will meet forecast needs in 10-20 years, given their typical decade-long delivery programs and the paradigm shifts occurring in society due to the influence of megatrends?
We believe the key elements that set the foundations for project success are:
- Clear definition of the project vision and rigorous testing of the assumptions underlying the vision.
- Clear definition of the project scope, risk and opportunities.
- A project delivery plan that matches procurement to project definition and risk; provides clarity in the communication of the project definition; and establishes a framework for high performance outcomes.
A new formula for success
Test the project vision: the influence of megatrends
Megatrends are large-scale, sustained changes in society, technology, macroeconomics, environment or political landscapes that influence our culture, economy, business or personal lives and thereby define our future world.
The study of megatrends is important in long term forecasting as today’s project decisions affect project success on a 10-20 year horizon. The inter-relationship of megatrends is complex and trends rise and recede depending on the influence of other trends.
The distillation, analysis and adaptation of these trends within a given project context provides the opportunity to explore the opportunities and implications of a range of project scenarios and possible futures to ensure forecast needs are met.
Match information to procurement and risk project definition
With a clear project vision, the project now needs to be defined and decisions made on who will assume the delivery and performance risk.
We are finding there is a move away from alliance contracting back to ‘hard dollar’ contracting that shifts design responsibility back to the client group. The capacity of clients, management teams and design teams to handle this shift is yet to be tested.
We advise adopting a strategic approach to procurement analysis and risk management to identify the issues and provide solutions that deliver outcomes commensurate with the appetite for risk. We recommend adopting the following robust four-step approach to procurement analysis:
- Understand and define the key project objectives
- Identify the project complexities and constraints
- Identify the key project risks and risk tolerance
- Determine a procurement strategy that aligns risks and responsibilities
The risk analysis phase of the procurement study is the key to successful project definition. It also sets the framework for the delivery of risk management throughout the course of the project and as such remains a dynamic process. The key elements of risk analysis in the project definition phase include:
- Identifying risk sources
- Developing response strategies: making the intolerable tolerable
- Implementing mitigation options
- Continual review and control
Incorporating this understanding into the procurement strategy ensures the appropriate marriage of risk and responsibility.
People make projects
The best-defined and structured project relies on the efforts of a multi-disciplinary team of professionals and contractors to work together seamlessly to deliver unique outcomes in a high-pressure environment. These are made up of organisations of different cultures and competing economic frameworks with significant legal responsibilities and liabilities. This is, typically, not an environment that engenders trust, teamwork and co-operation.
An often forgotten key ingredient to major project success is investing in the creation of a high performance team environment. The essential characteristics of which are:
- Clarity: A clear understanding of the common purpose, goals and direction of the project.
- Culture: An embedded value system of integrity, trust, support, honesty and commitment.
- Alignment: The interests of all team members are aligned and focused.
The successful delivery of mega-projects is the exception and not the norm. Contemporary wisdom points to the systematic failure to adequately structure and define the project in the initiation phase leading to the manifestation of significant risk in the delivery phase.
We need to overcome our industry’s obsession with mobilising tangible physical delivery as early as possible at the expense of considered and structured project initiation. The failure rate of mega projects is certainly a compelling argument that something has to change.