MSc in Major Programme Management
The Oxford Major Programme Management Conference was held on 11 November 2016 at Saïd Business School, University of Oxford. Featuring an array of distinguished speakers and a varied agenda, the theme of the conference was: 'Legacy of Major Programmes: Making Good on our Promises’.
Building a lasting legacy
Brendan Bechtel, Chief Executive Officer, Bechtel Group, Inc.
At the age of 118 and currently under the fifth generation of family leadership, Bechtel Group is one of the world’s older and larger construction firms, and therefore might be expected to know something about building a legacy.
Bechtel argued that construction projects can leave a physical legacy that inspires or ‘enraptures’, ‘But the real legacy that lasts across five generations is less about what we create than how.’ He said that legacies are not just defined by successes, but also ‘solidified’ by your mistakes, how you learn from them and adapt, and move on to other challenges.
The questions that Bechtel asks to define success are: did we deliver what we promised? Did we deliver it safely, and as sustainably as possible? Did we leave with both our own and our client’s reputation enhanced? Did we deliver something of real benefit to people? And did the Bechtel team stay true to their values? If the answer to these questions is not an unequivocal ‘yes’, then the project cannot be thought of as a success.
The issue of delivering on promises is complex, he suggested. When a project fails to deliver, is it because the estimate and the deal were wrong in the first place, or was it a problem of delivery? Bechtel believes that the industry needs to address five major issues in order to improve project success and create a lasting legacy.
Trust comes when you deliver as promised over and over again, he said. This can be difficult because public sector requirements can lead to unrealistic expectations. The people commissioning projects are as influenced by hope and optimism as they are by expectation and evidence, especially when they are publicly funded, so sometimes bids are accepted that are too low.
Efficiency and productivity
Manufacturing productivity has doubled over the past 10 years; construction productivity in the same period has been flat or even declined. The industry must innovate or die, said Bechtel, both in terms of technology but also in terms of improving projects and strengthening basic project management. This is why Bechtel itself has invested $60m in an Intrapreneurship Centre.
The important thing about risk, according to Bechtel, was that accountability and authority were always aligned. The firm goes through a ‘painful’ approval procedure when preparing bids to weigh up costs, benefits, and risk, seeking an outside view in order to make ‘calculated bets’.
This care and rigour is partly to do with being privately held: ‘Every time we put forward a fixed price bid, we are putting the firm’s financial future on the line … We are literally betting the farm. This sharpens the mind and tightens the belly.’
Bechtel was clear that sustainability should be a core value of the construction industry, much as safety is now. It is, he said, ‘already a compelling opportunity for competitive differentiation’, but in the future he hopes it will be a standard element of technical qualifications and tender evaluation.
Skills retention and retooling
The problem with big, once-in-a-generation megaprojects is that they do not allow for the development of hands-on skills on a local basis: it is why international cooperation is essential.
One thing: ‘Only the realistic will thrive’
Construction productivity: the elephant in the room
Professor Bent Flyvbjerg, BT Chair in Major Programme Management, Saïd Business School, University of Oxford
‘The construction industry lives in the past,’ claimed Flyvbjerg, adding that he had tried to be polite and avoid saying that it was living in the Stone Age, although you would have to look as far back as prehistory to see an equivalent level of productivity. One major project after another is not performing and not contributing to the economy – indeed, is detrimental to the economy – conforming to what he calls ‘the Iron Law of Megaproject Management’: over time, over budget, under-delivering on benefits.
This lack of productivity growth was the construction industry’s ‘elephant in the room,’ he said. It compares badly with all other non-farming activity – and indeed even with farming, which is increasing productivity.
‘The gap is leadership,’ he said. ‘Where is the Steve Jobs of construction?... Where are the disruptors?’ If you Google ‘disruption’ and ‘construction’, he pointed out, you encounter stories of bad weather and delays due to hitting an archaeological site. Who will provide the sort of disruption that will transform the market? And what do they need to do?
Essentially, said Flyvbjerg, the construction industry needs to learn how ‘to do things twice as fast at half the cost.’ It needs to stop doing the bespoke and slow ‘dumb’ projects such as Hinkley Point, and do more ‘smart’ projects that are modular and fast, such as the Tesla Gigafactory.
He said he envisaged incremental rather than sudden change, but people would have to start now. ‘Break projects down into modular units; do the same things over and over again so that you are able to learn and get better at it,’ he said. The problem with bespoke projects is that you never get to learn or apply what you have learnt from your mistakes.
Panel discussion: women and leadership
Moderator: Professor Mari Sako, Professor of Management Studies, Saïd Business School, University of Oxford
Allie MacAdam, Rail Sector Lead, Bechtel Infrastructure
Chris Dering, Prime Contract and Commercial Manager, Bechtel Infrastructure
Julie Taylor, Director General, Head Office and Commissioned Services at UK Ministry of Defence
Marcia Favale-Tarter, Founder and CEO, M. Favale-Tarter LLP
Why is diversity important?
The way we deliver major projects today is very different from the way it was done 10 or even five years ago. The project environment is much closer to all the stakeholders, including the end-users. There is more negotiation, more collaboration. This requires a diversity of thought and a new kind of leader; part of the diversity needed is gender diversity.
Why is it difficult?
The system is simply not geared up for some people to succeed. Humans learn through stories, and the people who tell the stories well succeed, while those with a track record of delivery are not necessarily as interesting to listen to.
If you look at a standard project organisation chart, the role descriptions have not changed for 50 years. They were developed when project management was an all-male industry; how much male bias does it include? ‘Are we trying to squeeze women into roles designed for men?’
What advice would you give to individual women?
- Stay authentic; resist the temptation to conform to others around you. Diversity of thought is important
- Engage women and men in the conversation. The business case for diversity is becoming clearer and clearer, so keep communicating it, and communicate with everyone
What advice would you give to organisations?
- Awareness training is necessary to get rid of unconscious bias
- Creating a true meritocracy needs complete transparency and an inclusive culture
- Increasing the number of women in senior positions need visible leadership from male sponsors
- Sponsorship, as distinct from mentoring, focuses individual leaders on developing individual candidates
- There is no silver bullet, but many small improvements across the board can have a powerful cumulative effect
How should we think about diversity and inclusion?
Diversity and inclusion are usually tied together, but they are different. ‘Diversity’ can be seen as an ‘initiative’: organisations have a lot of choice and control over what they want to do about diversity. Inclusion, however, is about how people are treated and how they feel about each other. It is the difference between being invited to the dance (diversity) and actually being asked to dance (inclusion)
How important is culture?
In the civil service, for example, there are fairly even numbers of men and women until the senior grades, then the number of women falls. There is something about the culture at the top of the civil service – it is competitive and uncollaborative – that makes it unattractive to women, and indeed to many men.
But culture starts young; we need to educate little girls and help them be competitive. Coaching girls in sport can teach them to tackle something, love risk, and cope with failing.
You need to be realistic about what you expect of an industry. You many never get a 50/50 split; but if 30% of the workforce is female, then 30% of the leadership team should also be female.
Leadership and accountability in public sector projects
Rt Hon. Dame Margaret Hodge MP, UK Parliament
From multi-billion-pound contracts approved before there was money in the budget, to projects that had been cancelled, delayed, paused, or changed, Dame Margaret Hodge deplored the ‘unconscionable waste in the way we use taxpayers’ money’ that she saw as Chair of the Public Accounts Committee between 2010 and 2015.
She told hair-raising tales of budgets that were doubled, tripled and quadrupled; of advice that went unchallenged or unheeded; and of activities that were either fraudulent or incompetent, such as the security company that claimed to be tagging offenders who had completed their sentences, been sent back to prison, or who were dead.
How, she asked, could this be improved?
A complete culture-change in how the Civil Service sees itself and what it values
The Civil Service is generally thought of as a policy-making machine, she said. People go into the Civil Service because they are ‘policy wonks’, not because they want to deliver a service. ‘Of course we still need policy but the focus is all wrong,’ she said. ‘Delivery skills are still not valued in the Civil Service in the way that policy skills are.’
Hodge also felt that there should be a change in Civil Service careers. Traditionally, the way you progress in the Civil Service is by changing jobs every two years. This means that there is almost no institutional memory, and many long-term projects have no real continuity of staff.
A transformation of Civil Service leadership
Hodge described the current senior Civil Service as ‘a sort of masonic lodge’: all bar one of the permanent secretaries have been to Oxford or Cambridge; anyone who comes in from ‘outside’ is very quickly rejected by the culture. There is also no real accountability: ‘people can oversee absolute disasters and be rewarded with a knighthood,’ she said.
Civil servants are accountable to ministers, who are accountable to Parliament, but this means that no civil servant is openly accountable for what he or she does. And while ministers are accountable for what civil servants do, they can’t hire or fire them.
A stronger centre in government
The three senior departments – the Home Office, the Treasury and Number 10 – spend all their time arguing with each other, said Hodge. There is no sense of direction and no sharing of experience. People work in silos and don’t even exploit the potential of bulk purchasing. Apparently police uniform shirts cannot be bought in bulk because the different forces cannot agree on where the pockets should go.
‘Proper markets and proper competition’
The philosophy behind privatising many parts of the public sector was that competitive markets would ensure better service and better value for money. However, Hodge argued, privatisation did not create markets but oligopolies, in which many of the smaller providers were killed off.
She did not think that private sector companies undertaking public sector contracts should be able to ‘hide behind commercial confidentiality’. If you companies do not want to enter that market they do not have to, she said. But if they do, they have to be open, accountable, and transparent.
How to ensure the good stuff happens
Andrew Wolstenholme, OBE, FrEng, CEO, Crossrail
Following neatly on from the preceding presentation, Andrew Wolstenholme opened by describing his own first appearance in front of the Public Accounts Committee on behalf of the Crossrail project. He explained that the ‘good marks’ that the Committee gave the project came from how they had spent their time early on, in organising the project, understanding risk, putting in place the governance systems to manage that risk, and, most of all, in ‘understanding the great “why” of Crossrail, and the outputs and outcomes that could be expected.’
80% of the way through a project might be an unusual point at which to be talking about ‘legacy’, but Wolstenholme was clear that it was not a sign of complacency. ‘We will be judged on whether we deliver what we said we would by December 2018,’ he said. But what he thought of as Crossrail’s legacy was both longer-term and wider-reaching.
Crossrail was commissioned as a ‘solution’ to the fact that London is growing. The business case and investment decision was based on spending £14.8 billion in order to get back a minimum of £40 billion of economic value; and to connect 1.5 million people with where they are going to work within 45 minutes. There will be 200 million extra journeys taken on 24 trains each hour. The impact will not just be felt on the economy of London, but in the lives of individual people and communities. New stations, offices, and houses will create direct and indirect employment.
In fact, Crossrail and its vision of ‘Moving London forward’ is much more than just a railway; and a key part of its legacy will be what people feel about the investment, and whether they think the long-term benefits are worth all the trade-offs.
So when Wolstenholme talked about ‘how to make the good things happen’, most of what he talked about was to do with people and relationships. The design and construction pictures were fascinating, particularly to those of an engineering bent and to those who get excited by physical scale. But in order to ‘keep on winning the licence to build Crossrail’, he and his CEOs had to manage relationships with politicians and other stakeholders, including the media and local communities.
A challenge that might have come as a surprise to some in the audience was the problem of skills. At first, said Wolstenholme, they simply did not have enough people to build Crossrail. Even now, between 30 and 40% of the workforce come from overseas, but they have invested in a training college in Newham, East London, and currently have 600 apprentices. And while Crossrail itself is unavoidably a project for the South East, the supply chain stretches further. Investment in manufacturing rolling stock, parts, and all other aspects of the project is going to small and medium-sized businesses all around the country.
Key to the eventual success of Crossrail will be the extent to which it is a ‘learning project’. With two open innovation programmes designed to help people collaborate and share ideas across contract and company boundaries, and people moving jobs and taking what they have learnt with them, this may be the project’s strongest legacy.
Panel discussion: the role of boards
Moderator: Dr Atif Ansar, Programme Director, MSc in Major Programme Management
Professor Bent Flyvbjerg, BT Chair in Major Programme Management
David Richter, CEO, Hill International
Dr Amjad Bangash, General Manager for Europe, Middle East and Africa, Bechtel Infrastructure
Terri Harrington, Head of Portfolio Insight at Infrastructure and Projects Authority (IPA), UK Cabinet Office
Raj Kannan, Managing Director, Tusk Advisory
How do boards and management teams reconcile their different perspectives?
- It is usually assumed that boards have a long-term view; it’s the management team that thinks short term because members of the management team are ‘auditioning for their jobs every 90 days’. However, boards tend to focus on keeping shareholders happy, which means they have a quarterly focus.
- However, the position of board member is largely part-time – usually no more than 20 or 30 days a year. This means that board members don’t have time to manage directly – they look at the big picture, while the management team lives and breathes the details of projects and operations.
- Boards are much more focused on the down-side – looking at risk and compliance issues, making sure that nothing blows up ‘on their watch’. Management, on the other hand, has to focus on seizing opportunities.
- Hill International has a split Board, with five incumbent directors, and five new directors representing activists and other shareholders. This might sound like a recipe for disaster, but in fact it forces people from both sides to work together: no one viewpoint is able to dominate.
What is the role of the ‘corporate’ board in relation to projects?
- Megaprojects usually have several layers of boards, with the non-executive board at the top. It is most important to ensure that there is complete alignment of objectives. The non-executive board is necessarily one step removed from the project and is watching the big picture. This is needed because the management team (or executive board) is likely to be so focused on delivery that it may develop blind spots. But both boards have to have same end-game in sight.
- The other big contribution made by the non-executive board is shielding the project from political or other factors that can interfere in delivery. They are usually better suited to this role, and representative of stakeholders.
- Membership of the board has to be representative, and members must have some ‘skin in the game’ of the mission below. Without that the board becomes ineffective in supporting the management team. So you need people who know the business, and those who come from key stakeholders that control funding, the environment, and political involvement, etc.
Are boards currently doing their job?
- Some are not. However, when projects go wrong it is often because problems are not flagged early enough. They are allowed to continue beyond the point where they can be solved.
- There is a growing awareness that projects need better monitoring and auditing systems that pick up these sorts of problems and communicate them to the board. When things go wrong, boards ‘often get agitated and want to do something about it,’ and this is when they start to involve themselves in the detail of delivery.
How does project governance work in the public sector?
There is little consistency in how projects are run in the UK government. The most successful departments operate a portfolio board to understand all the projects and how they relate to each other. Which are really important and which are just the pet projects of the minister?
Politics has its own ‘cycle of myopia’, driven by the election cycle. Most government projects are intended to be delivered in five years (or whatever the election cycle is). But they lose time at the beginning and the end of the project, so there is a smaller window of opportunity in which to deliver. This is one of the reasons that government projects always appear not to finish on time, because they always have to wait for an official go-ahead.
What changes could be made to improve performance?
- Anglo-Saxon models of governance are typically designed to protect shareholder interest. Is it time for corporate governance to think about a shift of accountability to a wider group of stakeholders?
- But who should be on the board and how do you decide? Do you give a seat on the table to community representatives, government, environmental groups, etc?
- Remember that boards are only going to be as good as the people on them. We need to look also at the intelligence, character, and experience of board members.
- Diversity adds value but care is needed. When diverse boards have been constructed on the argument that no single person can possibly have all the expertise needed, there is a tendency then to rely on the relevant ‘expert’ to make each decision. Other board members don’t question or challenge the expert in each field.
- Megaprojects belong in the C-suite and on the board. In most organisations, as soon as something is designated a project it gets delegated or decentralised. For megaprojects that is a huge mistake. If megaprojects go wrong they can kill you and your organisation, either financially or reputationally (or both).
- Data is important and useful. Most organisations are not interested in data: ‘They think they know how to do things so there is no point in looking back.’ People are more happy to do something they’re comfortable with, even if it’s a failing project, than to do something they are not comfortable with and succeed. People are not used to being successful – so they will do projects that fail over and over again!
- Communication between the board and the project director needs to be improved. It is true that the project director might be a nerdy engineer, deeply immersed in the project, nervous (because presenting to the board can feel intimidating), and not very good at communicating. But that is no excuse. Nor can board members hide behind saying that they cannot understand the project director. Everyone needs to have the confidence to challenge everyone and know that it is not career-limiting.
How technology can ensure a successful legacy
Yasser Mahmud, Vice President Industry Strategy & Business Development, Oracle
Yasser Mahmud opened his presentation with a fascinating slide showing the extent to which the construction industry is based on collaboration. It is a booming market, worth $9.8 trillion globally, and the amount of external collaboration (between different companies and organisations) is more than twice that of its nearest competitor.
And yet it has the lowest level of digitisation of any industry. Less than one per cent of the revenues generated by the industry are then invested in technology. Contracts, payments, communication, and organisation are still conducted largely through paper-based systems.
So how can this be fixed, and what benefits can a better use of technology bring?
Improving capital project delivery
This is fundamentally about portfolio management: are you doing the right projects? Are you doing reference class forecasting on the budgets? By using electronic systems that allow you to capture information and make it transparent, you can improve your decision-making and get better over time.
In a complex project with different contracting models and many layers of subcontractors, how can it possibly be managed on a paper-based system? Apart from the sheer amount of paper involved, you end up with different versions of the truth. Digital systems allow for complete transparency and auditability.
The development of cloud-based technology has made it easier for contractors at all points in the project to have access to project management applications. With mobile technology and cheaper bandwidth, information can be made available down to the very last user, and everyone can have the solutions necessary to get the job done.
A lifecycle perspective
Once you’ve built an asset, the next step is to know how to prolong the life of that asset. This is where technology can step in and help with portfolio management and facilities management.
New buildings in Denmark, for example, come complete with 60 sensors that monitor everything from lighting to people’s presence in different parts of the building. Data from the sensors can be used to predict time to failure and other maintenance issues.
If you do everything right, according to Mahmud, you can save roughly 40% of the capital budget. ‘Technology is not a panacea for all ills,’ he said, ‘but it is an incredible enabler. If it is used correctly, it can make a massive difference to the delivery of major projects.’