The budget holder must take on the role of a strong, heroic leader fighting to change the way megaproject work is achieved, and develop leadership skills in partners. They will make it clear to all that they are willing to make significant sacrifices to work in a new way that makes the project come in on time and on budget with all the promised benefits.
This begins by establishing a policy organisation, modelled on a board of directors. At least half of its membership should consist of people outside the project execution teams. Include likely antagonists. Any compensation this group receives should be directly tied to the project hitting its goals.
The sharing of risks and rewards
The key points here are as follows:
• Award contracts to suppliers on the basis of experience and skill, not on the basis of projected cost.
• Only engage in agreeing contractual terms once the accountants on the budget holder and supplier sides believe they are seeing genuinely open costs and books.
• Align all the parties to a common structure of goals such that all profits come out of savings made on the project as a whole, not individual parts.
• Create healthy incentives to reduce costs and innovate without jeopardising shared rewards.
• Get real about managing risk. Accept that, in one way or another, the budget holder will pay when things go wrong. Set up the agreement so that suppliers make profits when things do not go wrong or when they make up for losses with savings elsewhere.
Commitment-based management is modelled on the way agile, entrepreneurial startup teams work.
At its heart its about all team members making commitments to each other for results for which the members are then responsible. It means really listening and not just hearing what you expect to hear.
It also means making each commitment specific and being confident enough to decline requests you cannot fulfil. When members of a team encounter unhappy surprises, they say so, so they can be dealt with and learnt from.
Why the fix works
Megaprojects put us in a very different world from other projects, where achieving and working with clear causal chains and role d efinitions usually solves problems. They require a completely different approach from conventional project and factory management.
Our approach, combining integrated project delivery with commitment-based management, draws on the way we act as members of a community, and the way that communities manage complexity and role integration.
To read the full report ‘How to Fix Megaprojects’, click here, where you can also download a pdf.
VISION is an international organisation that helps businesses transform their operational practices, leadership, and culture for the long term – a combination that is essential for organisations managing capital projects of significant scale.