2010 APM Conference: Partnerships and Contracts Stream

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APM Project Management Conference
21 October 2010
The Brewery, London

Authored by: Mary McKinlay (stream chair)

This stream provided an opportunity for discussion, examples and history of the relationships in projects, programmes and portfolios. Despite the current fashion elsewhere in life for relationships without contracts, the distinguished contributors to the stream all came out in favour of contracts. As with most things, the devil is in the detail. Working together implies that alliances must be created and as complexity increases these alliances have to be nurtured.

Dr Martin Barnes CBE was the first speaker of the day. Martin, president of APM, was a project management pioneer, one of the first members of APM and a founder of IPMA. In his long career he has amassed both experience and wisdom. It was a joy later at the awards evening to see this recognised by APM as he was presented with the Sir Monty Finniston Award for lifetime achievement. One of Dr Barnes achievements was the generation of the NEC, no not the one in Birmingham but the New Engineering Contract.

Starting from a look at the Sizewell B Nuclear Power Station, Martin drew attention to the fact that as complexity increases, so does the number of interfaces between organisations, a phenomenon which led him to formulate Barnes  Law. Interfaces in turn lead to an increase in risk, and partnerships should be made in order to agree how risks will be treated. The NEC was a response to the question How can we do better? Contracts in the past had depended on the law to resolve issues, this point having been well illustrated by Stephen Carver in the first plenary lecture. According to him the traditional mode of contracting was likened to jousting and position of the semi-colon was critical - this was a model that I recognised. On the other hand creating the NEC provided a foundation for partnerships that would enable organisations to avoid disputes rather than to mitigate them. Operation of the NEC provides early warning of difficulties.

Sue Kershaw was the second speaker in the stream and provided the audience with an example of the multiplicity of interfaces by describing the Olympics 2012 programme. Sue is the head of programme management at ODA Transport and started with a mind-boggling overview of the context of her work. The objectives, structures and organisation and a stakeholder map that seemed to take the audiences breath away were all described. Later a questioner asked Sue about the size of her team and was surprised at how small it is. The secret is in the high level of trust and the proactive and effective relationships that have been put in place to ensure supplier performance. The contract management code for ODA covers different varieties of NEC, bespoke frameworks and memoranda of understandings carefully tailored to meet needs and defining roles and responsibilities. The challenges that ODA Transport has to face are concerned with relationships, communications, scope creep and operational risk. It was surprising to hear about the lack of communication between major transport related organisations until now. ODA have taken an overview of all transport modes and look at them as a whole to provide services both for the Games and as a legacy. Londoners will be encouraged to be more innovative about how they travel.

ODA has not prescribed procedures and processes but relies on strong governance, regular assurances like the 360 degree pulse checks and a culture of making it happen. The good news is that The Games are on schedule and performing to cost. So here we have an example of the need for contracts, good relationships and a light touch - Commend but not command with reserve powers to be used in extremis.

Sue spoke of recently having undergone a gateway review and this made a second link to the third speaker, Mr David Pitchford, executive director of major projects with the Efficiency and Reform Group (ERG) at the Cabinet Office (formerly known as OGC). The first link was that earlier in his career he had been chief operating officer of the Melbourne Commonwealth Games. David used examples from his career to date to illustrate his views on the importance of contracts and organisational relationships. He stressed the importance of the two-way process of communication and compared it with the Dubai model, I command and you do it. He worked on the largest projects in Australia during his time as chief executive of the City of Melbourne and by comparison, the scale, size, complexity and budgets of UK Government Major Projects are of a different magnitude - Government projects demand partnerships and the present financial stringency will cause a line up of the planets and risk as never before.

David is finding  his way into the new job and one of the difficulties is that there is not a clear picture of the current major projects, where are they, what are they and what has been agreed. The first step for ERG is to create an accurate register of major projects and then to prioritise them. This project assessment review is taking place, using existing staff and will report to the ERG board on 7 November. The ERG itself is a first time partnership, between the Treasury and the Cabinet Office. The National Audit Office has made a valuable contribution in a recent study where major Projects were defined as being valued at between 300bn and 600bn. The NAO also recommended that there should be a single assurance process for each of these major projects.

David went on to talk about the reasons for project failure and identified the following issues:

  • Political pressure resulting in work starting before planning
  • The need for frank and fearless advice before, during and after projects
  • No agreed budget
  • Procurement starts before approval
  • Trying to do things that have never been done before  Innovation with 100% risk is not a project, its a gamble
  • The lack of capability to negotiate or administer contracts.

The rescue effort starts now.

After lunch and the second plenary delivered by Sir Peter Gershon CBE, the stream started again. The fourth speaker was Mr Tom Foulkes, Tom is director general of the Institution of Civil Engineers. His previous career had involved him in the management of a range of projects, civil, military and mechanical engineering. His approach includes the development of strong teams and strategic partnerships. Tom talked about the role of ICE and the changes that have taken place over the years but his principal focus was on the Guide to Best Practice in Project Delivery. This was another link to Sue Kershaw who was a co-author of the guide. This is a very practical guide to be used mainly in construction projects but as Toms description went on, most of the audience were convinced of its applicability in other domains. Good clients get good projects and so again we have the notion of partnership and working together. A clear contractual framework and good role definition are built into the guide.

The fifth and final speaker in the stream was Stephen Livingstone, programme control director from BAA Heathrow. Stephen described the ways in which BAA had evolved to become an intelligent client. He defined an intelligent client in the following way:

They must :

  • Define the need & the requirement 
  • Assign work to satisfy
  • Select ideal sources 
  • Award effective incentivised contracts
  • Clear away obstacles
  • Deliver self performance promises
  • Enforce contract
  • Define and exemplify the organisational  values

Stephen came out completely on the need for contracts.

He took us through the current work on the new Terminal 2 at Heathrow and showed how these  precepts were being used. What Stephen did not mention as a requirement was the need for passion and enthusiasm but his presentation was clear proof of his own.

I enjoyed my day and am very grateful to all the speakers for their contributions. The final session brought Tom, Martin and Stephen together as a panel and their willingness to answer questions frankly was much appreciated.

Speaker presentations from this stream can be found below:

Martin Barnes - How to Make Relationships Work - and why it matters.pdf

Sue Kershaw - ODA transport - partnership in action.pdf

Tom Foulkes - Best practice in project delivery, the ICE view.pdf

Stephen Livingstone - The intelligent client.pdf

Posted on 11th Nov 2010
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