The saying don’t fix what isn’t broken is sometimes good advice, but when something is broken beyond repair, then replacement is the only effective option.
A great deal has been written about why mega projects fail and many hypotheses have been expounded. The simple truth is that engineering construction projects, mega or otherwise, succeed or fail because of human endeavour and behaviour.
The procurement models in common use in Engineering, Procurement, Construction arrangements (eg. Lump Sum Turn Key, Lump Sim etc) are not of themselves bad; it is the way in which they are used and abused that sows the seeds of project failure and because, most frequently, there is little or no opportunity for collaboration and improvisation.
In the long history of humankind…those who learned to collaborate and improvise most effectively have prevailed (Charles Darwin).
Collaborative style contracts have been around for several years. However, it is not the contract itself that brings the results, it is the people using the contract that practice collaborative working within the legal framework of the contract that drives success. Mindset and the willingness to do things differently are the basic levers for success – collaboration and improvising to prevail as per Darwin’s observations.
Those that have practiced collaboration and improvisation on their projects effectively have generally been successful – performance and delivery is achieved safely and to the required quality, in less time and at less cost than other procurement methods and provided a satisfying experience for the people. What is there to disagree with? In engineering construction, use of the ECITB’s Collaboration Toolkit has shown significant improvements compared to “traditional” methods of contracting in the UK North Sea sector.
So why has collaborative working practices on engineering construction contracts not been adopted universally when the benefits are so obvious to substantially reduce or eliminate the risk of project failure or put another way – increase considerably the possibility of success?
Simple:
- although those procuring engineering construction supplies, work and services often recognise the obvious benefits of collaborative working, many prefer the master – servant relationship that resides at the core of LSTK EPC and similar contracting arrangements, and
- those financing the projects often prefer that the supply chain takes and absorbs the risks, even though it is invariably well-recognised that they are not the parties most able to bear and manage many of the risks.
Here lies the origin of project failure. Those continuing to participate in this approach are destined not to prevail. Except in specific circumstances where used and applied as orignially intended, the LSTK EPC and similar contracting models are broken beyond repair and no longer fit for purpose. What further damage will be done to the engineering construction industry by perpetuating procurement of EPC work on the basis LSTK and similar contracting arrangements?
Conversely, those organisations willing to adopt collaborative working practices within the framework of suitably crafted contracts will create the opportunity for successful project delivery, leading to greater and more certain investment and industry sustainability.
The European Construction Institute in collaboration with Constructing Excellence, is holding a WEBINAR on 6 May 2020 – COLLABORATIVE PROCUREMENT. This will explore, through case studies and the personal experiences of a panel of practitioners and specialists from a wide spectrum of industry, including an exposition of the successes achieved thus far with ECITB’s Collaboration Toolkit, the benefits of collaborative working for the engineering construction industry and the actions needed to be taken to accelerate the use of this procurement model.
This WEBINAR is open to owners / investors, contractors, manufacturers, suppliers, specialists and consultants engaged in global engineering construction projects.
To register your participation and receive details of the WEBINAR, go to https://www.eventbrite.co.uk/e/major-projects-driving-long-term-value-through-collaborative-procurement-tickets-100806232154
Join us and help to transform your industry and put an end to failing projects.
John Fotherby
Chair
European Construction Institute
