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- Herausgeber: John Wiley & Sons
- Kategorie: Wissenschaft und neue Technologien
- Sprache: Englisch
A guide to effective corporate and project management in the construction industry with a focus on the role that people play in the process Global Construction Success explores the importance that human dynamics play in risk management of construction projects. Every time a project is structured, designed and built, personal behaviours and inputs can either lead to success or be the cause of failure. With contributions from noted experts on the topic, the book offers insight into stakeholders' reactions in a variety of situations, provides expert analyses of risk management and proposes potential solutions and recommendations in order to ensure effective construction management. The book explores common causes of project failure, outlines the key factors of successful projects, shows how to implement Public Private Partnerships, explores the different stages of structuring projects and reveals what it takes to manage difficult client/contractor relationships. International case studies of major projects clearly illustrate how communications and relationships can lead to helpful solutions to commonly encountered challenges to achieve positive results. * Offers a comprehensive review of the impact human dynamics play in the success or failure of construction projects * Stresses the importance of the leadership of senior management * Offers a chapter on managing and resolving conflicts * Shows why the industry needs better risk management * Includes new information for managing communications and relationships * Explores new areas of technology that are being embraced by the construction industry Written for construction industry senior management in both the corporate and government sectors, project management professionals, consultants and supply chain participants, Global Construction Success includes material for minimizing risk and improving management quality and profitability when working with international construction projects.
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Veröffentlichungsjahr: 2018
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Table of Contents
Cover
Author's Notes
Notes on Project References
Acknowledgements
Biographies
Preface
Why Have I Written this Book?
Objectives
My Journey from the Australian Bush to International Construction
Who Should Read this Book and Why?
Conclusion
1 Introduction
1.1 Opening Remarks
1.2 Section A – The State of the Industry (Chapters 2–6)
1.3 Section B – People and Teamwork (Chapters 7–11)
1.4 Section C – The Right Framework – Forms of Contract, Business Models, and Public Private Partnerships (Chapters )
1.5 Section D – Management of Risk (Chapters 16–23)
1.6 Section E – Robust Processes – Corporate and Project Management (Chapters 24–27)
1.7 Section F – Emerging Conclusions (Chapter 28)
1.8 Final Note
Section A: The State of the Industry
2 Global Overview of the Construction Industry
2.1 Introduction – Globalisation Impacts on Construction
2.2 Construction Industry Cycles
2.3 Industry Trends – Business Models, Contract Types, Financing, Technology
2.4 Regional Trends – Middle East, Asia Pacific, Africa, the Americas, UK and Europe
2.5 Bad News and Its Consequences
2.6 The Good News – Significant Improvements in the Right Direction
2.7 Summary and Conclusions
3 Construction Consultants in the Global Market Place
3.1 Introduction
3.2 Political Risk
3.3 Regional/Cultural Differences
3.4 Payment or Fee Recovery
3.5 Localisation
3.6 Failure to Attract or Retain Skilled People
3.7 Contractual Terms and Conditions
3.8 Ability to Deliver Across Major Projects/Programmes
3.9 Cyber Security
3.10 Contractor Failure
3.11 Design Liability
4 Common Causes of Project Failure
4.1 Introduction
4.2 High Profile
‘Problem Projects’
Since 2000
4.3 The 35 Common Causes
4.4 Project Leadership – How Bad Can It Get?
4.5 Lessons Learnt from Incompetent Site Management
4.6 Conclusion
5 The Use and Abuse of Construction Supply Chains
5.1 Introduction
5.2 Construction: An Outsourced Industry
5.3 Adverse Economic Forces Bearing Down on the Supply Chain
5.4 Supply Chain Dysfunctionality
5.5 Addressing the Issues and Solutions
5.6 The Future
6 A Discussion on Preventing Corporate Failure: Learning from the UK Construction Crisis
6.1 A Call to Action'
6.2 Lifting the General Level of Corporate Management
6.3 Improving Risk Management
6.4 Joint Recommendations by the Corporate Risk Manager and the Investment Banker
6.5 Conclusions
Section B: People and Teamwork
7 Obstacles to Senior Management and Board Success
7.1 Introduction
7.2 Groupthink and Team Selection
7.3 Training
7.4 Choosing the Wrong Strategy and/or Projects
7.5 Need for ‘Macro‐Level’ Focus, with Effective Corporate Oversight (‘the Wider Picture’)
7.6 Effective Communication and Delegation
7.7 Summary
8 Structuring Successful Projects
8.1 Introduction
8.2 So What Happens on Successful Projects? What Are the Key Factors that Create Success?
8.3 The Different Activities and Responsibilities, from Concept to Completion of Construction
8.4 Checklist for Structuring Successful Projects
8.5 Summary
9 Understanding and Managing Difficult Client/Contractor Relationships
9.1 Introduction
9.2 Problems Posed by Difficult Clients
9.3 How to Manage Difficult Clients
9.4 Problems Posed by Difficult Contractors
9.5 Steps to Manage Difficult Contractors
9.6 Conclusion
10 Social Intelligence – The Critical Ingredient to Project Success
10.1 Introduction
10.2 Project Intelligence
10.3 Social Intelligence
10.4 Learning and Development
10.5 Building Cohesive Teams
10.6 Introducing a Specialist into Your Team
10.7 Coaching the Team
10.8 Managing Behavioural Risk
11 Practical Human Resources Considerations
11.1 The Changing Job Requirements in the Construction Industry – Government and Corporate
11.2 The Argument for Broader Based Training of Tomorrow's Industry Leaders
11.3 What Makes a Good Leader in the Construction Industry – for Contractors, Government Departments and PPP Players?
11.4 Personnel Recruitment and Positioning – A Different Perspective
11.5 Leadership Considerations
11.6 The Inherent Risks of Decision Making for Survival
11.7 The Human Fallout from a Failed Project
11.8 Summary
Section C: The Right Framework - Forms of Contract, Business Models, and Public Private Partnerships
12 The Contract as the Primary Risk Management Tool
13 The New Engineering Contract (NEC) Interface with Early Warning Systems and Collaboration
14 Development Contracting – An Efficient Way to Implement Major Projects
14.1 Introduction
14.2 Major Projects Are Unique
14.3 Commitment and Costs
14.4 The Tools for Successful Development Contracting
14.5 Conclusion
15 A Critical Review of PPPs and Recommendations for Improvement
15.1 Introduction
15.2 Proponents and Opponents
15.3 Project Viability and Necessary Due Diligence
15.4 Some Current Perspectives on the PPP Process
15.5 Efficient Structuring and Managing of PPPs
15.6 PPP Claims and Disputes
15.7 Summary of Key Factors for Success and Minimising Risk
Section D: Management of Risk
16 A Tale of Oil Rigs, Space Shots, and Dispute Boards: Human Factors in Risk Management
16.1 Human Factors in Risk Management
16.2 The Challenger Disaster
16.3 Dispute Boards
16.4 Nuclear Fusion
16.5 The ITER Project
16.6 Conclusion
17 Effective Risk Management Processes
17.1 Introduction
17.2 Effects of Human Behaviour in Risk Management
17.3 Typical Project Risks
17.4 Keeping Risk Management Simple
17.5 Procedures to Eliminate, Mitigate, and Control Risks
17.6 Conclusions
18 Risk Management and its Relation to Success in the North American Context
18.1 Introduction
18.2 Relationship of Success to Risk Management
18.3 Planning for Success and Managing Risks
18.4 Go/No‐Go Stage
18.5 Summary
18.6 Recent Projects: A Success and a Failure
19 Early Warning Systems (EWSs), the Missing Link
19.1 Introduction
19.2 Look Outside of the Technical Bubble
19.3 Cultural Barriers
19.4 Learning to Value ‘Gut Feel’
19.5 Case Study
19.6 Summary
20 Construction Risk Management – Technology to Manage Risk (ConTech)
20.1 Introduction to Technology in Construction
20.2 What Do We Mean by ConTech?
20.3 ConTech as a Tool Not a Toy
20.4 Major Projects – Temporary Smart Cities
20.5 Smart City Principles
20.6 ‘Smart’ Commercial Management
20.7 Dehumanising Risk Management
20.8 Joining the Dots for Exponential Growth
20.9 Project Control and Risk Management – The Future
20.10 Conclusion
21 Intelligent Document Processes to Capture Data and Manage Risk and Compliance
21.1 Introduction
21.2 The Dimensions of IDF
22 Organisational Information Requirements for Successful BIM Implementation
22.1 Introduction
22.2 Leveraging Organisational Information Requirements for Business Success
22.3 Developing OIRs Using BIM
22.4 Conclusion
References
23 Examples of Successful Projects and how they Managed Risk
23.1 Introduction
23.2 People, People, People – London 2012 Olympic and Paralympic Games
23.3 Managing Risk – Tunnels for Heathrow's Terminal 5 (2001–2005)
Acknowledgements
Bibliography
23.4 Cyber Design Development – Alder Hey Institute in the Park, UK
23.5 The Importance of Clear Ownership and Leadership by the Senior Management of the Client and the Contractor
Section E: Robust Processes - Corporate and Project Management
24 Planning and Programming Major Projects
24.1 The Foundations of Success
24.2 Monitoring ‘Progress versus Programme’ and ‘Cost‐to‐Complete versus Budget’
24.3 Extensions of Time, Concurrency and Associated Costs
24.4 Ownership of Float
25 Managing and Resolving Conflict
25.1 Conflict Can Be Good
25.2 Co‐operation
Versus
Confrontation
25.3 We Are All Different
25.4 Fairness or Justice (or Both)
25.5 Relationships
25.6 The Move Towards Collaborative Working
25.7 Best Deals
25.8 Staged Resolution
25.9 Conclusion
26 Dispute Resolution – The Benefits and Risks of Alternative Methods
26.1 Introduction
26.2 Avoiding Formal Disputes Through Early Communications and Negotiations
26.3 Main Considerations of the Parties When They End Up in a Formal Dispute
26.4 What Do Commercial Clients Want Out of a Formal Dispute Process?
26.5 Working with Lawyers
26.6 Techniques for Negotiating Settlements
27 Peer Reviews and Independent Auditing of Construction Projects
Section F: Emerging Conclusions
28 Conclusions and Recommendations
28.1 Overview
28.2 Where Is the Global Industry Headed?
28.3 Key Observations and Recommended Actions
28.4 Final Thoughts
Appendix A
Index
End User License Agreement
List of Tables
Chapter 5
Table 5.1
Chapter 14
Table 14.1 Stakeholder strategy, responsibilities and deliverables matrix.
Table 14.2 Standard report including.
Chapter 17
Table 17.1 Example of a ‘by exception’ report.
Chapter 18
18.1 An example of some of the components of an initial ‘go/no go’ risk matrix.
18.2 An example of a generic risk matrix based on the assumption the project is ...
Chapter 19
Table 19.1 Examples of behavioural blockages to the use of EWSs.
Chapter 22
Table 22.1 Organisation activities as per PAS1192‐3 versus required information ...
Chapter 28
Table 28.1 Different Levels of Contractor Efficiency.
List of Illustrations
Chapter 6
Figure 6.1
Chapter 8
Figure 8.1
Chapter 10
Figure 10.1 The three components of project intelligence.
Chapter 14
Figure 14.1 The stakeholder communication globe.
Figure 14.2 Typical graphical project plan.
Chapter 17
Figure 17.1 Bid Risk management team structure.
Chapter 20
Figure 20.1 The ‘commercial’ triangle.
Figure 20.2 The progression ‐ commercial triangle to tetrahedron to 3D ...
Figure 20.3 A very simple exponential versus straight line change.
Chapter 21
Figure 21.1
Chapter 22
Figure 22.1 Components of building information modelling.
Figure 22.2 Framework for the relationship between business success and ...
Figure 22.3 Relationship between the elements of information management ...
Figure 22.4 Categories of Organisational Information Requirements.
Figure 22.5 Subcategories of organisational information requirements (1)...
Figure 22.7 Example template for OIRs.
Figure 22.6 Sub‐categories of organisational information requirements (2...
Chapter 23
Figure 23.1 Aerial view of the T5 project (Williams 2008).
Figure 23.2 T5 project and the location of the tunnel projects (Williams...
Figure 23.3 The right values and behaviours.
Chapter 24
Figure 24.1 A typical S‐Curve.
Guide
Cover
Table of Contents
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Global Construction Success
Charles O'Neil, FCIArb
Contract Dynamics Consulting
With contributions from 17 industry leaders
Copyright
This edition first published 2019
© 2019 John Wiley & Sons Ltd
All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, except as permitted by law. Advice on how to obtain permission to reuse material from this title is available at http://www.wiley.com/go/permissions.
The right of Charles O'Neil to be identified as the author of this work has been asserted in accordance with law.
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John Wiley & Sons, Inc., 111 River Street, Hoboken, NJ 07030, USA
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While the publisher and authors have used their best efforts in preparing this work, they make no representations or warranties with respect to the accuracy or completeness of the contents of this work and specifically disclaim all warranties, including without limitation any implied warranties of merchantability or fitness for a particular purpose. No warranty may be created or extended by sales representatives, written sales materials or promotional statements for this work. The fact that an organization, website, or product is referred to in this work as a citation and/or potential source of further information does not mean that the publisher and authors endorse the information or services the organization, website, or product may provide or recommendations it may make. This work is sold with the understanding that the publisher is not engaged in rendering professional services. The advice and strategies contained herein may not be suitable for your situation. You should consult with a specialist where appropriate. Further, readers should be aware that websites listed in this work may have changed or disappeared between when this work was written and when it is read. Neither the publisher nor authors shall be liable for any loss of profit or any other commercial damages, including but not limited to special, incidental, consequential, or other damages.
Library of Congress Cataloging‐in‐Publication Data applied for
Hardback ISBN: 9781119440253
Cover Design: Wiley
Cover Images: © Rafik/iStock.com
Endorsements for “Global Construction Success”
The authors of Global Construction Success are extremely grateful to have received the following endorsements from industry leaders in the U.K., U.S., South Africa, China, Malaysia, Singapore and Australia.
Lord Andrew Adonis Chair of the UK National Infrastructure Commission 2017
Secretary of State for Transport 2009‐10
Minister of State for Transport 2008‐09
“Charles O'Neil and his co‐authors have produced an impressive and important contribution to the construction industry that should be read by everyone involved in construction projects”.
Nick Barrett Editor of Construction Law Magazine, U.K.
“This book emphasising human factors and risk management in delivering successful construction projects comes at a potentially crucial turning point for the construction industry, with a new readiness to consider major changes to business models and processes evident following the Carillion collapse in the UK. The industry needs to read it”.
Matthew Bell Senior Lecturer and Co‐Director of Studies, Construction Law,
Melbourne Law School, Australia
“Introducing this immensely useful book, Charles O'Neil writes that ‘there is no better experience than learning the hard way’. This is true. Charles and his colleagues have generously shared their experience on construction projects around the world so that the rest of us can recognise and steer away from the commercial, technical and – especially – human factors which cause so many projects to founder”.
Ann Bentley Global Board Director, Rider Levett Bucknall
Member of the UK Construction Leadership Council
“A very well researched and easy to read book, which adds to the growing body of knowledge demonstrating that there is a better way of doing things in construction”
Gerhard Bester MD of CAPIC, a South‐African owned, specialist consulting services firm in the infrastructure development, construction and engineering industries.
“Africa's decision makers, both public and private, clients and contractors alike, should jump at the opportunity to acquire the benefit of hindsight from the industry in first world countries – Africa generally follows their infrastructure delivery mechanisms, contracting regimes and unfortunately, consequential flaws… Africa has some additional variables to make things more challenging, but we cannot afford to ignore the wisdom and guidance on the way forward if we are to achieve “Global Construction Success” as presented by Charles O'Neil and his co‐authors in this aptly named book!”
Chris Blythe CEO, The Chartered Institute of Building, U.K.
“A great read with something for anyone wanting a successful construction industry. Construction is the art of getting ordinary people to do extraordinary things. Throughout the book, contributors show the best and worst behaviours that give the industry its extremes of reward and frustration. The wrong behaviours take the ordinary and produce the mediocre by repeating mistakes and not learning from them. Construction is too important as a driver of the global economy for the risks of failure to be as high as they are. This book offers an agenda for de‐risking construction.”
Dr. Fuyong Chen Deputy Secretary‐General of Beijing Arbitration Commission/Beijing International Arbitration Centre; Vice‐President of Asia Pacific Regional Arbitration Group
“Global Construction Success is a must‐read for any decision makers in the construction industry. As a leading arbitration institution in China, Beijing Arbitration Commission/Beijing International Arbitration Center has accepted over 6000 construction cases since its establishment in 1995. These cases involved nearly any type of dispute that a project may have. However, all these disputes are definitely not inevitable. The recipe to avoid dispute is clearly included in the recommendations made by a stunning line‐up of industry experts in this book”.
John Dick Partner, Dentons Rodyk & Davidson LLP, Singapore
“I have known Charles O'Neil for over 25 years, from his days running the Somerset Chancellor Court development in Ho Chi Minh City Vietnam. One thing about Charles that I have noted over the years is that when he expresses an opinion, it is worth listening to him. This work provides readers with a practical insight into understanding risks and how to manage them for successful project implementation. It highlights deficiencies in current infrastructure development frameworks, particularly relevant in the South East Asian markets, where Governments are relying more and more on PPP type frameworks for infrastructure development. Essential reading for construction success.”
Mark Farmer Author of The Construction Industry Review “Modernise or Die” 2016, U.K.
“I believe we stand at an unprecedented crossroads in the construction industry's evolution driven by a structural and long‐term decline in skills and capability. This is no longer another false dawn driven by periodic discontent. The risks of continuing are now all consuming and include the increasingly destructive consequences of poor risk management and embedded conflict. The burgeoning technology led opportunity we are now presented with as our potential saviour will not be maximised though without embracing fundamentally different organisational, procurement and contractual models that drive process integration & common interest. This book is a very useful reference point using key lessons learned and pointing the way forward.”
Professor Peter Hansford Honorary Professor in the Bartlett School of Construction and Project Management, University College London,
Former Chief Construction Adviser to the UK Government
Charles O'Neil and his contributors tackle the underlying issues in construction head on. This book sets out clear recommendations aimed at achieving tangible change. Building on his previous book, ‘Human Dynamics in Construction Risk Management – the key to success or failure’, O'Neil identifies human behaviour as a key ingredient to project success; this together with ensuring appropriate business models, embracing technology and of course adopting rigorous risk management – all subjects very close to my heart. I commend this book to students of project management, as well as to practitioners at all levels.
William A Marino CEO, Star America Infrastructure Partners, LLC, New York, USA
Chairman, Association for The Improvement of American Infrastructure (AIAI)
Charles O'Neil helps crystallize Public Private Partnerships as an important tool to be used in addressing America's crumbling infrastructure needs. Infrastructure in the U.S. has aged and, in many cases, has passed its useful life. The costs to revive this vital area, while addressing advances in technology, efficiency in process, and life cycle, are well documented by Mr O'Neil. Great work, well written.
Leighton O'Brien Partner, Construction and Infrastructure
Allens Linklaters Lawyers, Sydney, Australia
“O'Neil's book is a comprehensive review of the challenges and successes in the field. It will appeal to all participants in the construction industry as it is both approachable and authoritative.
The book presents a distillation of many years of experience and wisdom into an easily digestible format that utilises case‐studies to reinforce concrete and practical lessons about successful construction projects.
Guest chapters by other notable figures within the industry provide a broad range of perspectives on a variety of topics internationally that gives the text added legitimacy and a global reach.”
Datuk Sundra Rajoo Director Asian International Arbitration Centre (AIAC), Kuala Lumpur, Malaysia
Past President of the Chartered Institute of Arbitrators, U.K. (2016)
“This book is an exceptional collection of insight and wisdom from various experts across the global construction industry. It provides a 360‐degree overview of the current state of international construction, including impacts of globalization, a detailed analysis of industry and regional trends in construction as well as the challenges faced by various sectors in the industry, making it relevant across the globe. This book is also written in simple and effective language, identifying the key areas of improvement within the industry and offering viable solutions for all stakeholders concerned. The author has also done a remarkable job in structuring the book in such a way that makes it thorough and comprehensive, which is a boon for all of us in the industry. I believe this book will be a useful reference for all stakeholders concerned with navigating the emerging issues and challenges of risk management that plague this industry today”
Ian Rogers Senior Legal Adviser, Arup, U.K.
“This hard‐hitting collection of essays reveals the real problems in the construction industry, identifying not just the symptoms and how they might be treated, but also tackling the underlying causes. People and governance are top of the list and until these are addressed, change will be merely superficial. It is a vitally important contribution to the debate over the future of a key global industry”.
Carol Stark Managing Director, Aon Infrastructure Solutions, Chicago, USA
Global Construction Success provides an insider perspective on the construction industry as well as the PPP industry. The authors simplify the keys to a successful PPP procurement while challenging the industry to evolve. Their insights span the globe, highlighting the challenges a Special Purpose Companies face in implementing fulsome risk management programs when entering new geographies.
Don Ward CEO of Constructing Excellence, U.K
“So many Governments and industry stakeholders around the world are anxious to see construction sector reform for major improvement in delivery. So why doesn't it happen faster? The insights in this book are hugely valuable to policy makers and industry leaders everywhere, with their focus on getting strong leadership and vision for projects, modernising the capability of people culture & behaviours in project teams, and aligning common processes and tools. Perhaps most crucial is the alignment of commercial arrangements throughout the supply chain.”
Author's Notes
All opinions expressed in the contributors' chapters in this book are those of the authors and not of any organisation with which they may be associated.
All the other chapters that do not have a nominated author have been written by me, Charles O'Neil, and the opinions expressed in these chapters are mine alone and not of any organisation with which I am associated. The same applies to the quotations in boxes that have not been attributed to anyone in particular; some are commonly used in the industry and some are mine.
Notes on Project References
For obvious reasons we only refer to projects by name if the information quoted is publicly available on the internet from credible sources, such as from company announcements, court records, PPP portals, or approved in writing by the parties involved, and in each case we disclose the source.
Where the information is not publicly available, but we feel that important ‘lessons learned’ have occurred we describe ‘anonymous’ projects. With these references the key facts that caused the situation are based on a real project in each case and are accurately described without any embellishment, but the names of the parties and the location are not mentioned.
Acknowledgements
When I commenced putting this book together I sought advice from a number of my colleagues. This advice was so helpful that the conversation then led to ‘why don't you write a chapter?’
So, we have ended up with 17 contributing authors and I would like to thank all of you very much, because there is no doubt that your experience and insights have given the book a much broader and more interesting perspective. Additionally, you have provided many constructive comments along the way.
I would also like to thank all of my business colleagues and family members who have put in considerable effort in helping to get the book to the finish line, including my wife Andrea Slotnarin, Tony Blackler, Dr David Hancock, David Jardine, Damian Joy, Andy Matthews, Hugh O'Connor, Joanne O'Neil, Kenneth Reid, Frank Schramm, Thomas Schwenzer, Tim Sharpe, Gavin Stuart and Graham Whitson. No doubt there are others whose names I have overlooked who have been really helpful and I thank you equally.
When we completed the main draft of the manuscript we approached industry leaders in several countries to review our book and from this we have received their comments, which we greatly appreciate. On behalf of all of us who have been involved in writing the book, I would like to express our sincere thanks to all our reviewers for taking the time to read the book prior to publication and provide us with their generous endorsements. The purpose of this book is not to be critical of the construction industry for the sake of criticism. It is a call to action so that the industry takes its rightful place as a driver of the global economy for the benefit of all. I believe the comments we have received recognise the potential of the industry to achieve this.
With the production, the team at John Wiley & Sons Ltd have led the way, from initiating the book in the first place, and then with their excellent guidance and suggestions along the path to publication.
October 2018
Charles O'Neil
Biographies
Charles O'Neil DipArb FCIArb
Director, Contract Dynamics Consulting
Charles has over 40 years' experience in construction, steel fabrication, and asset management, predominantly in design and construction (D&C) and Public Private Partnership (PPP) projects – industrial; mining; grain terminals; motorways and bridges; hospitals, schools, prisons; shopping centres; multi‐storeys, including offices, hotels, and apartments. With ‘D&C’ delivery, his career focus has always been on ‘performance contracting’, completing on‐time and on‐budget, based on very detailed planning, specifications, cost estimates, and contracts in order to minimise variations and cost increases for the clients and to avoid disputes.
Charles has worked in Australia, NZ, China, Vietnam, Malaysia, Singapore, Indonesia, Myanmar, UK, Europe, Chile, Canada, South Africa, and Rwanda, gaining an understanding of the different cultural and business practices in these countries. Since 2001 Charles has specialised in PPPs, with involvement in more than 60 projects in nine countries, in a variety of roles including structuring and bidding, design, construction, asset management, and in dispute resolution. He has undertaken appointments in several countries as an Arbitrator, Mediator, Dispute Board Member, Expert Determiner, Expert Witness, and Neutral Negotiator.
Currently, Charles' main activities are consulting on infrastructure and PPP risk management and undertaking infrastructure dispute resolution. He has written several publications on these topics and is a regular university guest lecturer and conference speaker on them.
Ian Williams MSc, CEng, FICE, FCIArb
Ian is a Chartered Engineer and a Fellow of the Institution of Civil Engineers and Institute of Arbitrators. He has over 30 years' experience in major engineering projects in the UK, Southern Africa, the Middle East, and South East Asia. Ian is currently working for the Supreme Committee responsible for transport operations for the 2022 FIFA World Cup Qatar™. Before joining the Supreme Committee, he was Head of Projects for the Government Olympic Executive on the London 2012 Olympic Games. Prior to the Olympics, he held key positions on the delivery of metros in London and Singapore, and airport infrastructure developments at Heathrow for Terminal 5 and the redevelopment of Terminals 3 and 4.
Judy Adams BSc, MRICS
Director and Global Head of Risk Management, Turner & Townsend
Judy joined Turner & Townsend in 1995 as Senior Cost Manager and was made Director in 2002.
She has worked in both the UK and overseas, for clients including BAA, The Wellcome Trust, Royal Bank of Scotland and the Department for International Development. She has also held senior management roles in Turner & Townsend's European and Asian businesses and was Global Operations Director from 2007 to 2011. Since 2011, Judy has performed the role of Global Head of Risk Management.
In addition to her current role, she is also one of Turner & Townsend's 96 global partners.
Professor Rudi Klein LLB, FCIOB, FRSA, Barrister, Cert Ed
Rudi Klein is CEO of the Specialist Engineering Contractors' (SEC) Group UK, an umbrella body representing the UK's premier trade associations in the specialist engineering sector. He is a barrister specialising in construction law and President of the New Engineering Contract (NEC) Users' Group. Rudi is acknowledged as the driving force behind the changes introduced over the years to improve payment performance in the UK construction industry. These have included the Construction Act and project bank accounts. He helped draft the Construction Contracts Act in Ireland, which was added to the Irish Statute Book in July 2013. Rudi is the author of two legal publications and countless legal articles in the construction press and academic journals. He is Visiting Professor of Construction Law at the University of Northumbria and Visiting Law Lecturer at the University of Stuttgart. In 2015 the Technology and Construction Court Solicitors' Association awarded him the Clare Edwards Award for his professional excellence and contribution in the field of construction law. In October 2016 Rudi was presented with a Lifetime Achievement Award by SELECT, the campaigning trade body for the electro‐technical industry in Scotland. SEC Group was awarded the 2018 Gold Award at the H&V News Awards.
Stephen Woodward FAPM
Corporate Risk Management Consultant
Stephen has an interest in human behaviour (NLP Master Practitioner), principled negotiation and conflict avoidance. As a contractors' quantity surveyor (formerly FCIOB) he exploited his risk skills in claims generation. Influenced by construction management procurement he changed direction, becoming commercial director at a Japanese multinational contractor, pioneering early risk identification, fair risk sharing, and project mediation (CEDR Accredited Mediator). Subsequently working with funders, he moved project monitoring from a historical cost to a predictive risk service. For two decades he has been a construction risk advisor to project sponsors, funders and investors, and UK government offices.
Nigel Brindley MBA, IMC, BSc (Hons), CEng, MIMechE, MIFT
Director Infraquest Limited
Nigel advises investors in construction and infrastructure projects and businesses and is a non‐executive director. He specialises in performance improvement and has advised a private equity firm in the acquisition of two distressed construction companies in 2018. Previously, Nigel led the asset management and investor reporting for Barclays Private Equity's infrastructure funds. He fulfilled a similar role at the investments division of Mowlem prior to its acquisition by Carillion. Nigel's background is in managing high profile construction projects (including BP Oil's new headquarters and the MI5's Thames House refurbishment). Nigel started his career at Arup where he was a design engineer on the iconic Lloyds Building in London.
David Somerset BSc LLB(Hons) FRICS FCIArb MEWI
Managing Director Somerset Consult UK
David is Managing Director of Somerset Consult (based in London), a claims, disputes and legal support services consultancy specialising in construction and engineering projects. David is a Chartered Surveyor and also holds a Law Degree.
David is a highly experienced expert witness, having been involved in a number of high profile disputes in the UK and internationally. The disputes include loss and expense claims, claims for rectification costs of defects and professional negligence claims. He is currently the quantum expert of a project assessing the construction costs in excess of US$1 billion.
David has written a number of articles relating to mechanical and electrical design responsibilities, claims from subcontractors and costing information. He is also advisor to a number of large organisations in the UK regarding procurement strategy and claims management. www.somersetconsult.com
Tony Llewellyn FRICS
Collaboration Director at Resolex Ltd., UK
Tony is a specialist in interpersonal dynamics and the effectiveness of project teams. Originally training as a surveyor, he has spent over 30 years working on major construction projects.
Tony has published two books on the topic of team coaching, Performances Coaching for Complex Projects, and The Team Coaching Toolkit. He is also a visiting lecturer at the University of Westminster where he runs a masters module on Developing Effective Project Teams.
Rob Horne CArb, FCIArb, LLM (Disp Res), FSALS, FFAVE (Master), LLB
Head of Construction Risk at Osborne Clarke LLP, London
Rob is a partner at Osborne Clarke, a leading international law firm. He received his Royal Charter as an Arbitrator over 10 years ago as one of the youngest ever Chartered Arbitrators. He is recognised by the legal directories for his innovation in finding solutions to complex project problems and as a leading expert in the NEC form of contract. He is the author of The Expert Witness in Construction published in 2013 and multiple guidance notes on adjudication published through the Adjudication Society and the Chartered Institute of Arbitrators. He is a committee member of the City of London Law Society Construction Group as well as being the chief examiner for the Royal Institution of Chartered Surveyors.
Rob's practice is largely based on major projects within the UK and internationally across the Middle East, Africa, and Europe, and even advising on projects in Australia, in which he is often brought into very early to help steer them through the commercial minefield. He has been involved in disputes up to a value of £250million all tending to be centred around complex engineering problems, significant delay and analysis of disruption caused as a result across transport, power, health commercial, residential, and many other project types.
Richard Bayfield BSc (Hons), MSc, CEng, CEnv, FICE, FCIArb
Construction Consultant, Risk Director and Adjudicator
www.richardbayfield.com
Richard began his career working for Costain on major projects including the Thames Barrier in 1976. He has had senior roles as a contractor, consultant and client. His recent experience includes several major capital projects including the Sainsbury Wellcome Centre at UCL, the new Lambeth Palace Library, the Gradel Quad at New College, Oxford and HS2. Some career highlights follow:
Three times British Construction Industry Award (
www.bcia.org.uk
) winner as Client representative – 2016 – Sainsbury Wellcome Centre at UCL, 2013 – Bishop Edward King Chapel, Cuddesdon Oxford and 2002 – Honda New European Plant, Swindon.
Member of Construction Minister's sounding board of 6 ‘key industry figures’ appointed to assist the DTI/BEIS (2006/10).
Member of London 2012 Olympics and Heathrow Terminal 5 Dispute Panels.
Former Chairman and Honorary Member of Society of Construction Law (2006).
Joint author of DTI/BEIS sponsored report analysing 40% construction savings made by Honda when developing its 600 acre site at Swindon (2001/2002).
Jon Lyle BBuild (Hons) UNSW,
Development Director, Grocon Australia
Jon Lyle is an experienced international development and construction executive with an extensive track record in emerging and developed markets, delivering major mixed use developments and masterplans. His project portfolio stretches from Australia and New Zealand, through Indonesia and Malaysia to the Middle East, in Bahrain, Abu Dhabi, Dubai, and Saudi Arabia.
With a project portfolio in excess of US$10 billion of delivered projects Jon's understanding of project completion and operations allows him to know the ‘end game’ and what needs to be done on day one to get there successfully.
Jon is a property development strategist who delivers developments using his extensive experience in both construction and development, allowing him to create high level development plans that incorporate all stakeholders and respective schedules of deliverables to ensure all interdependencies required are identified and complied with in accordance with the project plan. Jon is currently (2018) delivering the W Hotel for Marriott on Sydney Harbour.
Dr Robert Gaitskell QC BSc (Eng) FIET FIMechE FCIArb,
Keating Chambers, London, UK
Dr Gaitskell is the Chairman of the Dispute Board for the ITER nuclear fusion project in France, one of Europe's biggest power ventures. He is a Queen's Counsel, and acts regularly as a Dispute Board Member, Arbitrator, Mediator, Adjudicator and Expert Determinator in construction/engineering disputes worldwide. He is also a Chartered Engineer, a Fellow of the Institution of Engineering and Technology (FIET), a Fellow of the Institution of Mechanical Engineers (FIMechE), and a Fellow of the Chartered Institute of Arbitrators (FCIArb). As an engineer he was involved in the design of power stations and oil rigs. He is a former Vice‐President of the IEE/IET (Europe's largest professional engineering body) and Senator of the Engineering Council and a part‐time judge. Dr Gaitskell is the Editor of The Keating Construction Dispute Resolution Handbook 3rd edn, December 2016. His PhD, from King's College, London, concerned engineering standard form contracts. He is the Chairman of the IET/IMechE Joint Committee on Model Forms, which produces the MF/1‐4 Suite of Contracts (used for power plants and other infrastructure projects).
John McArthur Dip Env Pl, BLA
Chairman, Kiewit Development Company, Toronto, Ontario, Canada and
Omaha, Nebraska, USA
John McArthur has 40 years' experience in the design, construction and investment business throughout North America. His education in urban planning and landscape architecture comprise his formal educational training and that, coupled with his years of experience in the design, construction, and infrastructure investment business throughout North America, form the basis of his understanding of risk management. During his career he has developed projects with one of Canada's largest real estate development companies throughout Canada. He also spent several years with a major Canadian construction company working on a variety of large building projects. Since 2003 he has been in the PPP investment business, initially for an international German construction/investment company and more recently with a large American construction/investment company. Over the course of a long career he has seen risk management develop to become the sophisticated process that it is today. Risk management is now widely employed by designers, subcontractors, owners, investors, rating agencies, insurance/bonding companies, and public agencies. He notes that in the past it was only given a minor level of recognition, but now it has become one of the trademarks of not only top tier companies, but also is a process utilised by most that are involved both directly and indirectly in the construction business.
Edward Moore MICW BSc
Edward has been Chief Executive at ResoLex UK since 2004. He is a specialist in embedding collaboration in teams and monitoring the effectiveness of team development. He created the RADAR methodology and toolset, which is a web based project horizon scanning and risk monitoring tool. The service has been developed to understand the impact of human dynamics on risk management and bridges the gap between forensic data and the perceptions of project stakeholders. It is now utilised on major projects to align team collaboration, behavioural risk and traditional risk management. Edward also designs and embeds alternate dispute prevention and resolution processes within project teams and commercial agreements.
Graham Thompson DipEng(Elec), LLB(Hons)
Graham is co‐founder and CEO of Affinitext, a leading technology company which transforms the ability to quickly and confidently understand and manage complex contracts.
Graham has built an international reputation, first as an engineer and then as a key legal and commercial advisor on major infrastructure projects whilst a partner of Pinsent Masons and King & Wood Mallesons, with a lead role in developing successful collaborative contracting models, particularly project alliances.
This unique combination of international engineering, legal and commercial experience, coupled with a strong belief in the benefits of collaboration, led to a keen interest in developing smart technologies to transform the understanding and management of complex contracts.
His co‐founding of Affinitext was a natural progression of this experience, which has led to the exponential global adoption of its disruptive Intelligent Document Format (‘IDF’) technology. www.affinitext.com
Professor Noha Saleeb PhD, MSc, BArch (Hons), FHEA
Dr Noha Saleeb is an Associate Professor in Construction & Creative Technologies, Middlesex University UK. She is Programme Leader for International MSc Building Information Modelling (BIM) Management, focusing on innovative digital technologies, enhancement processes of design, information, project and construction management. She is also Programme Leader for the BSc Architectural Technology programme. Her research interests are in architecture and IT, specialising in 3D digitisation and BIM, currently investigating implementation of Industry 4.0 technologies in design/construction, e.g. AI and Big Data analytics. Dr Saleeb is a practicing architect providing consultancy in BIM design, construction and onsite project coordination, and has achieved many awards and publications in journals, conferences, and books.
Stephen Warburton RIBA
Director, Design & Project Services Ltd.
Trained in Oxford and London, Stephen moved to Hong Kong in the mid 90s to pursue a career with development companies. After prior architectural internships in Washington DC and New York, Stephen was keen to work overseas again and became engaged on a diverse range of projects including luxury villas in Nha Trang, Vietnam, and Hong Kong's new international airport. On returning to the UK, he led Lend Lease's design teams on the BBC Mediacity Salford project. As a keen exponent of design in the built environment, he has also tutored students at the Oxford School of Architecture and has had projects exhibited at the Ashmolean Museum in Oxford, which were subsequently published in A Treasury of Graphic Techniques by Tom Porter. Stephen was a contributor to Human Dynamics in Construction Risk Management by Charles O'Neil in 2014.
Qualifications:
BA (Hons) in Architecture. Oxford Brookes University
Post‐Graduate Diploma in Architecture. Oxford Brookes University
MSc Construction Economics and Management. London South Bank University
Chartered Member of the Royal Institute of British Architects.
David Richbell FCIArb (Mediation) 1943–2018.
David died on 25 September, 2018. Refer to our Tribute to David in the Preface
David had over 25 years mediating commercial disputes over numerous sectors. He had a particular interest in helping the mediator profession achieve recognition and he was responsible for revising the Chartered Institute of Arbitrators Mediation Rules and wrote their model procedure. He was a Board member of the Civil Mediation Council and was responsible for the introduction of the Registration scheme for Individual Mediators, Providers and Trainers.
David wrote the award‐winning Mediating Construction Disputes, written for users, and the acclaimed How to Master Commercial Mediation, written for commercial mediators at every stage of their career.
Preface
Charles O'Neil, editor and author of 11/28 chapters.
Why Have I Written this Book?
I got a rude awakening to risk management in 1977 when I signed a fixed price contract with a two year programme for a coal handling plant for Gladstone Power Station in Queensland. During the next two years there was rampant wage inflation and we lost heavily, not the client. We were so keen to win the contract we excluded ‘rise and fall’ from our offer. A hard lesson, but we survived and we certainly learnt from it!
In 2008, I was asked to investigate why a €300 million highway project cost more than €600 million and how two major companies in joint venture could get it so badly wrong? I quickly established that the cause was a series of shockingly bad decisions that overrode risk management checkpoints all the way up to Board level, all because a number of senior people ‘really wanted to win the first project in that country’. And in doing so they became completely blinded to or ignored the most obvious risk management ‘stop‐signs’. It was a ‘must win’ situation for all the wrong reasons. It only took me a short time to compare the costs per kilometre of similar projects in the data base of one of the companies, where I could see that the out‐turn cost was always going to be around €600 million, even if they built the highway with their best efficiency. There were no excuses, just a lot of egg on face and embarrassing explanations to shareholders.
This investigation whetted my appetite, and out of interest I started looking into construction and engineering ‘disaster’ projects worldwide and researching what went wrong with each of them. My initial objective was to prepare risk management information for internal use by my employer that summarised the most common causes and the lessons to be learnt. The first time round with this research, I identified 19 common causes of significant project failure, but with more investigation this expanded to 35 causes, as listed in Chapter 4. Of these, 20 occurred during the planning and pre‐contract stage and 15 during the detailed design and construction stage
It became very apparent that in virtually every case the real cause was human behaviour at some level of the decision making or implementation stage. In most cases it was at a senior management level. I concluded that the real issue was that ‘people are definitely the problem, not processes’ and the big question was how to reduce the potential for individuals to sidestep the system and cause all sorts of problems through their erroneous behaviour.
Since then I have taken an increasing interest in the ‘human behaviour’ perspective in planning and construction, the effects that people may actually have on situations and how vital it is to understand this in establishing robust corporate and project management.
All this motivated me to write my first book Human Dynamics in Construction Risk Management – the key to success or failure that I published in 2014 and which chronicled my observations and conclusions, supported by contributions from leading experts in their field. The book was well received. The chapter on ‘35 Common Causes of Project Failure’ attracted a lot of attention and we have updated and repeated it here.
Unfortunately since then there have been more high profile project failures and an apparent increase in contractor and supply chain companies collapsing or getting into serious financial difficulty.
My involvement in the construction industry has now lasted for more than four decades, in almost every aspect of it, starting as a welder in steel fabrication; then studying building and moving into site management, subcontracting and head contracting; into property development, Public Private Partnerships (PPPs) and asset management; to representing clients; and in dispute resolution. This has covered a wide range of civil and building projects and in several countries. I have enjoyed (almost) every minute of it and still do, just as much as at the beginning; some would say passionate about it.
The global construction industry is at a crossroads as we write this book in 2018, with some exciting new technical and digital developments, but at the same time the industry is being seriously hampered by the continuing use of outdated business models and terms of contract that need urgent revision.
Efficient and selective contractors are coping with this, but many are not, and they commonly blame low margins and onerous contracts and payment terms, although often these are just excuses for inefficient and incompetent management. However, it is a worldwide problem and the major issues are common almost everywhere. Construction has also been caught up in the push towards globalisation and today you find Chinese contractors in Africa, Koreans in the UK, Australians in the Middle East, and so on, but every second day you read about problem projects and construction companies in financial difficulty somewhere.
So, all of this has been the motivation for our book, which is the combined effort of our contributing authors who have all built their careers around the construction industry. We all share some very real concerns that the global industry is not changing and adapting many of its traditional practices and cultures rapidly enough to be a financially healthy and sustainable industry in this fast moving world, and by comparison with other industries.
My co‐authors and I have written this book with the following purposes:
To advocate the urgent need for change to the outdated business models, processes, and cultures that are holding back the potential of construction contractors and their supply chain to be financially strong and profitable, and to do this by identifying and analysing the key areas of concern.
To use our combined experience to provide practical examples and make recommendations for improving management efficiency at the government, corporate and project levels in order to help the industry become more efficient and less risky for clients, contractors and investors.
It is a real truism of life that there is no better experience than learning the hard way. We all make mistakes and many of the most successful entrepreneurs and managers in a wide range of industries will tell you that those mistakes and the lessons they learnt from them were an invaluable part of their ultimate success. Once may be OK, but what is not acceptable is to make the same mistakes repeatedly, yet this is exactly what has been occurring in the construction industry for at least the last 40 years that this author has been involved with major projects and certainly it has been going on considerably longer.
Objectives
In line with our purposes, our first objective is to identify and analyse all the structural problems and key issues causing concern in the industry that affect the viability of contractors and the supply chain and which in turn affect their ability to deliver quality projects. These areas include:
People, teamwork, and management competency
Human behaviour and its impact on all areas
Business models, forms, and terms of contract
Corporate and project management processes
Risk management.
We also highlight areas where the industry is making good progress with improvements to practices and processes.
We look at how people react in certain situations under pressure or for other extraneous reasons. The study of human factors is becoming widely accepted as a vital management component by many industries, in healthcare, with airline pilots, in factory production, and so on.
This includes all levels of personnel from Board members to site managers. We delve into the range of human behaviour, including defensiveness, aggression (bullies and sledgehammer managers), greed, ego driven behaviour, loss of perspective and reality, and bottom‐drawer managers who hide or ignore things for different reasons.
From this, our next key objective is to make the ‘lessons learnt’ available in an easy‐to‐read, concise and practical form, so that public and private sector managers can take them on board.
It is equally important to examine successful projects as well as those that get into serious trouble, so that effective comparisons can be made and the differences properly understood.
We review the key strategies and processes of corporate and project management, with comment on the good and bad practices and with recommendations for improving delivery efficiency and profitability.
Other key themes that we examine are communications, collaboration and relationship management, all of which rank highly in importance and they receive a lot of attention.
On an industry wide basis, there has definitely been too much emphasis on winning projects to chase revenue and not nearly enough on profitability, cash flow and prudent risk management. This ‘must win’ competitive approach is totally unacceptable when it results in ever‐increasing borrowings and project and corporate losses. Managers need to remember that they are answerable to their shareholders and lenders and are responsible for the prudent use of the shareholder and loan capital.
In writing this book, the challenge we have faced has been to put our collective thoughts together in a frank and objective way that will encourage top level management to review the way in which they operate and ensure that they are running their construction companies like real businesses, and not just be ‘monument’ builders (a common term for revenue chasers).
At the same time, we believe regulators in each country need to really listen to the concerns of the industry and work collaboratively with industry organisations to implement the necessary changes that will overcome the major issues.
So what are the solutions? Certainly for public companies, senior management competence is paramount, with an end to cronyism and jobs for the boys. And accountability has to be reinforced by the regulators through serious penalties for cover‐ups and false reporting.
What are employees and shareholders meant to think when it comes out that the pension fund has been raided to prop up the cash flow, or that the directors have given themselves pay rises or bonuses while the ship is sinking.
Given that most of the problems today have been occurring on and off for decades, it is clear that there need to be some radical changes to the industry culture. We are certainly not alone in thinking this, as someone is saying it publicly every second day. But major change is exceedingly difficult, with conscious and even sub‐conscious resistance always a problem. It will only come about if industry leaders in both the public and private sectors agree and work together on implementing real change to the culture and business models.
My Journey from the Australian Bush to International Construction
My journey started 400 km west of Sydney in Australia; since then I have lived and worked in several countries and now reside in Germany, but I've been lucky enough to travel to various places around the world on a regular basis.
I grew up on my parent's sheep and cattle farm in central New South Wales. I started school riding a horse 5 km down the road to a one‐teacher bush primary school with 16 pupils. My secondary education was in Sydney at a boarding school, where I passed the final year exams and left school at 16. My results were good enough to go to university, but this was never considered and I went back to the bush to learn about sheep, cattle and farming, often spending long days on horseback. 40 years later and after many winding roads I decided it was time to go to university and enrolled at Reading University in the UK to study Arbitration Law and Practice.
The year after leaving school I was fortunate to tour the world for six months playing cricket with an Australian club team; visiting Canada, the UK and some European cities, and then on to Pakistan, India, Sri Lanka, Singapore, and Indonesia. This opened my eyes to the fact that there was a lot more to the world than sitting on a horse chasing sheep and cattle. This experience unknowingly set the stage for my later international career.
I worked with my father on his farm for four years and then went 500 km north to manage a 7000 acre sheep and cattle property. I developed a passion for repairing machinery, welding and building steel yards and sheds on the farms. In 1969, we had an urgent need for a steel cattle crush, used for administering veterinary treatment to cattle in large numbers. Due to the expense, purchasing one was not an option. So a friend on another farm and I decided to design and build a steel one to fit our needs. We probably over‐built them a bit as they are still working well 50 years later! On the back of this we commenced a manufacturing business and within 12 months had 25 employees. I bought out my partner and expanded the range of equipment and also moved into commercial steel fabrication. In 1972 and in 1974, I won awards for new equipment design at the Australian National Field Days, an annual show for farmers and stock breeders.
In 1974, I obtained my Construction Supervisor's certificate and Builder's Licence and our business entered into general construction. We expanded to 100 employees and completed our first significant project that year, the structural framework for a 30 000 m2 shopping complex that we built in record time. We entered into a penalty/bonus contract with the client, with my team sharing 90% of an attractive performance bonus and the business keeping 10%.
This set the new direction for the business, which from then on concentrated on what we termed ‘performance contracting’: undertaking Design & Construct (D&C) contracts in Australia and New Zealand with demanding schedules and fixed lump sum contract prices. At the same time we undertook some property development with retail, commercial and residential projects. We gained experience in concept design, feasibility studies, financing and facilities management. As our ‘own’ builder we quickly learnt the importance of the S‐Curve when projects are being developed on loan finance. (See Chapter 24
