The new Government has made a very clear statement of intent to reinvigorate the development of infrastructure in the UK. This is very positive for the sector but also presents a challenge. The sector has complained, quite rightly, about excessive planning regulations, local opposition to national programmes, lack of long-term commitment and resistance to innovative financial solutions.
There appears to be a real possibility these issues may be tackled in the months and years ahead. So that leaves the question: can UK industry really deliver? When a project is frustrated by socio-political, factors it is sometimes a convenient dumping ground to hide delays and overspend which are purely internal to the project. The worst possible outcome is for the UK to transform itself into an economy which is a project sponsors dream, only for the project managers to fail to deliver.
Maybe, optimistically, you feel that once released of its shackles the profession will demonstrate it is an efficient delivery machine churning out new infrastructure on a conveyor belt of national renewal.
Well, the Third Menai Crossing, HS2 Northern Leg, Crossrail, the Sellafield Silos Processing Plant, Crossrail 2, Police Scotland i6 system, Wylfa Newydd, Moorside & HPC nuclear power stations, and unfortunately many more, suggest there is a real challenge here. The UK’s performance in delivering new infrastructure has progressively fallen away over the last 50 years and the current Government Major Project Portfolio has the highest level of amber and red projects since its inception.
Research carried out by MIGSO-PCUBED has identified that there are four recurring reasons for this failure. They are: poor business to business relationships, slow decision making, high project complexity and poor integration of IT systems. Unless these issues are addressed it is unlikely in our opinion that performance will improve significantly.
Of the most immediate concern, given the government’s strategy, is how we develop excellent business to business (B2B) relationships (including government to business relationships) in our major project eco-system.
The government has stated that it wants to enter into partnership with industry. It is setting aside a £7bn national wealth fund and wishes industry investors to join them at a ratio of around 3 to 1. It has even mooted that private public partnerships may be back in the frame. Well, that sounds good to me, but if we’re not very good at B2B relationships and PPPs were considered to have under-performed by the last government, why will it be any different his time?
We used to be good at forming B2B relationships. CEGB, Westinghouse, GEC and John Laing were held as a role model of B2B relationships for the Sizewell B build programme. Sizewell C has less chance of a similar outcome. None of the Sizewell B partners exist in the same form anymore. Divestment, privatisation and global acquisition of national assets has left us with a multitude of stakeholders when previously we had three.
Compare and contrast our nuclear power build programme with the Barakah power station in the UAE. Delivered pretty much on time and to cost it had a partnership model very similar to Sizewell B.
A major project in the UK may now find itself with a multitude of important players, many of them UK divisions of foreign companies. A smaller share of the project and no emotional stake in UK national success means that these companies tend to act in a more commercial way with regard to a project of national importance. I’m not saying the UK divisions aren’t invested in the project’s success. Based on our research (see below) I’m convinced they are, but will they be overruled by their HQ if it’s not looking good for the P&L or balance sheet?
So where do we go from here? MIGSO-PCUBED have recently launched a unique capability and its associated intellectual property (IP) in collaboration with Shape International Limited. A consultancy specialising in improving B2B relationships to deliver business success. We are in the process of extending the original research conducted by SHAPE to focus on how B2B relationships affect major projects.
We are interviewing senior execs from some of the UK’s most important projects. What the original research concluded is that B2B relationships are critical to business success and we think this also applies to project success and presents a critical threat to a major project. However, there is no consensus on how to manage this risk and often the risk does not even appear on the risk register.
The original research carried out by SHAPE found that B2B relationships are far more complex than most people imagine. In fact there are seven “dimensions” of B2B relationships:
In our research we have not found ANY examples of a project being successfully delivered where the relationships between the main partners can be classed as failed. It’s possible to argue that if a project starts to fail the relationships go with it and this is a credible argument.
However, it misses the impact of one of dimensions of successful B2B relationships, i.e. “Dealing with Problems”. The research has shown that one of the key attributes of a strong B2B relationship is the ability to focus on problem solving without damaging the relationship. In fact in the best examples, successful problem solving strengthens the relationship.
There’s no shortage of advice and guidance on this topic. For example, the (excellent) Project 13 programme sponsored by the Institution of Civil Engineers highlights that successful B2B relationships are critical for project success. So why do we see these failures keep happening?
In our current research we have found that most project leaders understand the importance of B2B relationships, but they are often not aware of all seven dimensions. Generally, they understand the need for a collaborative contract and effective inter-personal relationships, and they put effort and time into these two dimensions. There are some inspiring examples of how they do this.
However, they rarely think about selecting partners based on collaborative behaviours, establishing a relational way of dealing with problems and almost never measure the key B2B relationship metrics and set actions accordingly.
What is clear is that if we are to enter into a new relational way of delivering projects with closer relationships between the public and private sectors then it’s essential we improve the understanding of how to build strong B2B relationships and implement new systems to create them, measure them and improve them.
Written by David Whitmore – Strategic Advisor MIGSO-PCUBED.
