The Building Economist - March 2019

MARCH 2019

3 WHY IS BIM IMPORTANT TO THE QUANTITY SURVEYOR?

8 CONTRACTS FOR OFFSITE CONSTRUCTION

16 ADELAIDE BOTANIC HIGH SCHOOL REACHING NEW HEIGHTS IN EDUCATION

43 DEVELOPING COLLABORATIVE AND LESS ADVERSARIAL PROJECT TEAMS THROUGH COACHING

CONTENTS 2 Message from the CEO

26 The Past, Present, and Future of Project Controls

3 Why is BIM important to the Quantity Surveyor?

30 Leading agile transformation: The new capabilities

8 Contracts for Offsite Construction

leaders need to build 21st-century organisations

13 Australia’s Largest Library of Construction Cost Information

39 BIM Properties Generator 40 The Infrastructure Conundrum

16 Adelaide Botanic High School Reaching New Heights In

43 Developing Collaborative and Less Adversarial Project

Education

Teams Through Coaching

22 A Vision for the Future Role of Cost Engineers and

48 Building Construction Index (available in print edition only)

Quantity Surveyors About The Building Economist is the flagship publication of Australian Institute of Quantity Surveyors (AIQS). Produced quarterly, The Building Economist seeks to provide information that is relevant for quantity surveying, cost management and construction professionals.

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Contact at AIQS Anthony Lieberman Communications and Marketing Manager T: +61 2 8234 4009 E: marketing@aiqs.com.au

Disclaimer AIQS does not take any responsibility for the opinions expressed by any third parties involved in the writing of The Building Economist.

ISSN 0007-3431

THE BUILDING ECONOMIST - MARCH 2019 - 1

MESSAGE FROM THE CEO

CONSTRUCTION ISSUES IN THE WAKE OF OPAL TOWER STRUCTURAL DEFICIENCIES AND LACROSSE APARTMENT BUILDING FIRE The Shergold and Weir Report (Building Confidence - February 2018), the Murray Report (Review of Security of Payment Laws - December 2017), recent findings associated with the Lacrosse apartment building fire in Melbourne’s Docklands, and the Opal Tower structural damage in Sydney’s Olympic Park have highlighted the necessity for immediate change in the procurement model for Australia’s built environment.

The Victorian Civil and Administrative Tribunal (VCAT) determination in the Lacrosse apartment building fire showed significant breaches of contractual and consultant agreements as well as noncompliance with the Building Code of Australia (BCA).

The Opal Tower Investigation Final Report identified deficiencies in the checking and certification of engineering, design and construction.

Whilst the outcomes of these reports and investigations are not in dispute, what has not been addressed are the reasons associated with many of these issues facing the construction industry across Australia. It is easy to set standards and compliance regimes which, in theory, provide for the construction of safe and effective buildings and infrastructure assets. However, the disproportionate allocation of risk from the top down and the subsequent driving down of costs and professional fees to such an extent that virtually all participants (contractors, sub-contractors and consultants) are being forced to provide less than optimal services in order to stay in business.

This continues to adversely impact both government and private sector construction projects.

Since the demise of the traditional Clerk of Works role, certification and has been left to a relative few to check compliance at specific stages. Consequently, there is no mechanism for ensuring all aspects of the construction project comply with the design, contract specifications and the BCA. Whilst the Building Certifier / Surveyor has often been blamed for lack of verification during the construction process, many of these matters do not form part of their contractual obligations.

The push from the top down has been the delivery of construction projects for the cheapest price possible. Anybody who has been involved in the industry is well aware of the three critical maxims of construction; Time – Cost – Quality. This includes the provision of consultancy services across the construction sector.

Governments typically view this from the basis of saving public money, while in the private sector maximising profit is the driver. Unfortunately, the cheaper the product or service invariably results in a lower quantity outcome. Similarly, the quicker the required turnaround (with the exception of incorporating prefabricated products), the lower the quality outcome.

Conversely, the higher the product / service cost, invariably results in an optimal outcome for both the client and end user alike.

To address these risk factors associated with the construction industry, an independent Audit Consultant should

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be engaged at project inception to ensure project design reflects the clients’ requirements and the actual construction complies with the design. The Audit Consultant should; • provide procurement advice best suited to the project • have a thorough understanding of the approvals and construction process required for the project • understand the risks associated with construction, at all stages • be well versed in contract administration and management • provide independent, impartial and expert advice in relation to strategies to minimize risks associated with time, cost, quality, environment, and safety.

A Certified Quantity Surveyor is the only truly independent professional consultant with the requisite skills and experience to ensure all pre-and during construction risks are appropriately minimised.

Quantity Surveyor’s currently undertake this role (Independent Certifier/Reviewer) on Public Private Partnerships (PPP) projects on behalf of clients.

Regards

Grant Warner

CEO Australian Institute of Quantity Surveyors

BIM

WHY IS BIM IMPORTANT TO THE QUANTITY SURVEYOR? THE BUILDING ECONOMIST - MARCH 2019 - 3

BIM

BIM is an effective digital tool for the Quantity Surveyor to assess and affect the design and delivery process for better commercial outcomes.

For the Quantity Surveyor, it is essential to understand the importance of their involvement from the outset of a project, communicating with the design team effectively whilst simultaneously guiding and understanding their approach, in order to interrogate and review a model throughout the project’s lifecycle.

Benefits of adopting best practice: • reduce cost and increase efficiency

included within the model.

Among other common uses, BIM extends 3D design with the ability to add a time dimension (4D) and a cost dimension (5D).

The fifth dimension (5D) in BIM is a misnomer – it doesn’t exist in physics. It commonly refers to the addition of cost within specific elements within the model which in reality, does not happen.

Now that BIM authoring software is mainstream there are common misconceptions regarding the role of the Quantity Surveyor, which include:

• provide certain and consistent outcomes

• a Bill of Quantities can be produced with the click of a button

• establish a base skill level for upskilling and education

• all quantities reside within the model

• provide an industry-specific pool of common knowledge • allow other stakeholders to understand the specific outcomes we require • provide a basis and starting point for future development • set the minimum level of compliance for ethics and legal implications.

BIM is an agreed collaboration process that commonly ends with a 3D design linked to a database. BIM is essentially the same as 2D documentation; drawings, specifications etc, however it is easier to visualise.

The process is requested in the Employer’s Information Requirements (EIR) then defined in the project BIM Execution Plan which is developed at the start of the project by the project team, including the client. This process may be facilitated by a BIM Manager but requires input from all parties. It is essential that the Quantity Surveyor articulates what information they need and collaborates with the design team to agree what will and what will not be

information for quantification. To a Quantity Surveyor using BIM, greater emphasis is placed on the verification and validation process.

BIM collaboration is a key component in the Quantity Surveyor’s tool bag – one that greatly enhances the value they bring to the client.

To a Quantity Surveyor using BIM, greater emphasis is placed on the verification and validation process.

• an Architect or Engineer can extract quantities from a model, so they can now do the role of the Quantity Surveyor.

While a Quantity Surveyor may use a BIM to speed up some basic quantity take-off, the true value of the Quantity Surveyor is not in counting doors or furniture, rather in the interrogation of the design intent or trade contractor models to understand what isn’t included. This enables the Quantity Surveyor to recommend alternatives which could be adopted, and ultimately provide the client with assurance that the most cost-effective option has been put forward.

Quantity Surveyors using BIM undertake the same fundamental process as traditional Quantity Surveying; they just have increased time to spend on value-adding processes, including benchmarking cost rates and simulating the effects changes to, material types or methods of construction could have on the overall project budget. The deliverables for design phase, precontract and post contract Quantity Surveying are the same but enhanced by the collaboration process that BIM enables and the ability to use digital

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4D The fourth dimension (4D) refers to the linking of the 3D design models with the program schedule.

The Quantity Surveyor can play a role as he would in a traditional project, by working with the Planner and providing commercial advice on, for example, labour and plant hire. Together they can develop a lean process that optimises resources.

Cost escalation on projects from delay, often occurs through lack of planning of activities – what trades are going to which jobs, in which areas, and at which times to maximise the site’s constraints.

4D allows for these activities to be simulated and tested multiple times virtually, where the cost of getting it wrong during the simulation is a tiny fraction of having an unproductive site.

5D 5D is about cost, not quantities.

Extracting quantities is not 5D nor is it

BIM

Quantity Surveying. It is in this phase or space that the Quantity Surveyor utilises their skill set and knowledge to perform a professional cost management role on the project.

Finland’s COBIM 2012, Series 7, (Page 5) states; “a BIM does not resolve quantity take-off related issues 'exhaustively' and not all quantities needed during a project can be taken off from a BIM. The professional skill of a Quantity Surveyor is still needed for assessing the validity of the source data and source materials, ensuring the coverage of the take-off, proposing alternative solutions and analysing the results.”

Leveraging the 3D information model, Quantity Surveyors can achieve the following: • fast and efficient quantity validation and verification • rapid processing of design revisions/ updates • more reliable and responsive cost advice/cost estimation • quickly cost design options to allow early informed decisions.

WHAT TO EXPECT ON A BIM PROJECT Sometimes BIM will be included in a contract; sometimes it won’t. In both cases, one can expect BIM to be used by the design/construction teams. The role of the Quantity Surveyor is to form a dialogue with these teams to guide the ways the models are developed to get improved value.

Although there are many types of procurement methods employed to deliver a project, there are two key forms of BIM projects, each with their own advantages and disadvantages to the Quantity Surveyor: 1. BIM as a contract deliverable; and

2. BIM used outside of any contract deliverable.

BIM AS A CONTRACT DELIVERABLE When BIM is a contract deliverable, the Quantity Surveyor will be expected to play their part. The client will have significant input to the digital process and will have contract clauses and deliverables for the design, project controls, and main contractor parties.

Procurement of consultants and construction contractors is a key part of this process, with often non-priced “best for project” weightings for project team selection. The client is required to set the BIM brief for the project team to respond to in a BIM Execution or Management Plan (BEP or BMP). The project is typically set up to ensure that the data created throughout the design and construction phases is suitable for asset operation.

The Quantity Surveyor’s input early in the process is imperative to ensure the

model is set-up with proper geometry and contains key information for effective cost planning is addressed in the project BEP. This process enables the Quantity Surveyor to manage BIM expectations efficiently.

NON-CONTRACTED BIM Projects where BIM is not a contract deliverable are common and the models if shared with the Quantity Surveyor still provide value for cost planning activities.

Typically, some models are exchanged during this process organically (e.g. for design coordination, construction planning and programming, and the handover of a structural model for steel shop detailing). Quantity Surveyors will have to request the design team to export models in a format that their software can read. The models may or may not be optimal for cost planning or tendering quantity extraction due to the nonbinding nature of the relationship of the initiation of the project.

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BIM

COLLABORATION As Quantity Surveyors, communication is needed with the design team, so they know what information is required, (including unit of measurement etc.) from the digital model at each stage of the project to facilitate efficient cost planning.

This is typically done via a set of standard protocols and templates, included in documents such as the BEP, which are developed at the outset of the project.

to articulate their requirements to the design team, ensure this is recorded within the BEP and work with the designers to ensure they understand what information is used and how it will be relied upon by the Quantity Surveyor.

This also enables the design team to communicate what information is not going to be modelled, ensuring clarity of approach by all parties.

Established collaboration practices in the construction industry are documentcentric, however, significant improvement in recent years has allowed models to be easily shared and viewed by the project team.

The keys to a collaborative BIM project for the Quantity Surveyor are: • early communication of the client’s BIM requirements with the design team • agreed set of requirements established prior to the design commencing, set out in a BIM Execution Plan / BIM Management Plan, and supported by a BIM Model Content Plan • respect and appreciation of other’s disciplines and their objectives • appropriate collaborative software in place; and • an individual/organisation in place coordinating and managing the BIM process.

Design team members can be reluctant to provide their models to Quantity Surveyors and contractors, often citing liability or Intellectual Property concerns.

While these concerns may be valid, discussing what the model will be used for and how it will be used at specific stages, will often result in designers being more open to providing their models.

In summary, the Quantity Surveyor needs

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This information is an extract from the Australia and New Zealand BIM Best Practice Guidelines, developed by Australian Institute of Quantity Surveyors in partnership with New Zealand Institute of Quantity Surveyors. To download the full document which contains more information including Model, Integration and Validation visit www.aiqs.com.au

LEGAL

CONTRACTS FOR OFFSITE CONSTRUCTION A look at the main contractual differences emerging with the increasing use of modular design

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LEGAL

Where project critical components are sourced offsite, care must be taken to protect the project stakeholders from unexpected losses which arise from not providing for the increased risk profile

THE BUILDING ECONOMIST - MARCH 2019 - 9

LEGAL

Historically, construction contracts in canvassing the various issues associated with contract risk relied heavily on clauses allowing considerable supervision through onsite quality control processes. With the emergence and adoption of offsite construction however, we now see a requirement for the offsite construction contract to evolve to protect the interests of all interested parties given a vitally different risk profile.

RISK PROFILES Compare the traditional position where a builder in 1920 employed a bricklayer to erect a façade against a modern builder sourcing an aluminium and glass façade from China.

More “traditional” building practices allowed for clients to exercise a substantial degree of control over the project; from inspecting the mortar mix, checking tolerances and allowed much flexibility in requesting ad hoc plan changes.

This approach also allowed the client to manage and mitigate their risk exposure accordingly. Enter the modular disruptor, who typically accepts an order from the client, manufactures the component in isolation from the construction site and delivers to the site a finished product, with very little room for error.

In order to ensure sufficient protection is

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LEGAL

provided to the client, contracts should include clauses covering title, intellectual property, fitness for purpose warranties, damages, insurance and dispute resolution at a minimum.

PROCUREMENT The supply chain logistics usually associated with construction contracts allow for extended schedules, predicting delayed stakeholder engagement, approval processes and flexibility regarding variations and EOT claims (notably for variations, latent conditions, industrial action and inclement weather).

Offsite construction goes a fair way in relieving the pressure of potential delays by locating production in an enclosed location, usually a factory, thus less prone to the whims of nature and uncertainty.

But there is a price for this efficiency: precision and time. In the early stages of planning, firm decisions are required to proceed with the offsite build and there is limited scope for a protracted approvals process. Thus, it is imperative that engineers, designers and builders work together from the outset towards the same outcome to ensure everyone is on the same page – and constructing the same project.

design – changes could be carried out onsite ad hoc – modular design requires exceptional project and stakeholder management in order to manage expectations and deliver quality to a tight cost and time schedule.

production and delivery, the contract should provide adequate protection to protect the client’s interests in the components particularly when payments have been made.

ARBITRATION

OWNERSHIP An important question for buyers of offsite construction is when do they own the offsite manufactured product? Is it when they accept/approve/provide designs to the manufacturer, secure raw material, once the product is made or when it is delivered?

This issue overlaps with insurance which we will discuss further below, but with regards to title drafters must ensure that the contract captures the appropriate contingences in order that their client is protected.

Typically, ownership vests with passing of possession unless a contrary intention is expressly noted in the contract. It is considered best practice however to ensure ownership is clearly specified to pass much earlier.

The contract with the 1920 bricklayer would be easily resolved in the Local Magistrates Court, but offsite production is often overseas and the only effective resolution scheme requires an international arbitration clause. If well considered, the arbitration process leads to effective enforcement in a foreign country as well as expedited procedures and reduced costs.

CONCLUSION Where project critical components are sourced offsite, care must be taken to protect the project stakeholders from unexpected losses which arise from not providing for the increased risk profile.

Critically if the product is a standard item produced by the manufacturer with a long lead time then redirection to another customer of the manufacturer is a matter of concern.

DESIGN Planning becomes a paramount consideration, with design taking a front seat in offsite construction. Designs need to be approved well in advance of production, and there may be little to no room for change once manufacturing has begun, locking in the buyer to the finished product. When compared to traditional construction, which inherently carried a high degree of flexibility in

INSURANCE Closely linked to the risk profile discussed earlier, the contract should also address relevant risks of the loss of manufactured components, with each covered under an appropriate insurance policy to be held by the builder or owner.

If the manufacturer or intermediaries become insolvent prior to completing

This article has been provided by Doyles Construction Laywers. www.doylesconstructionlawyers.com

THE BUILDING ECONOMIST - MARCH 2019 - 11

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CONSTRUCTION COSTS

AUSTRALIA’S LARGEST LIBRARY OF CONSTRUCTION COST INFORMATION . . AT YOUR FINGER TIPS Commencing practice in 1953, Rawlinsons (W.A.) is a notable and highly reputable Quantity Surveying firm. As well as being a recognised industry name, Rawlinsons (W.A.) are the proud creators and editors of the extensively circulated Rawlinsons Australian Construction Handbook and Rawlinsons Construction Cost Guide, the most comprehensive and current library of construction pricing information and data sources in Australia.

After identifying a need for an allinclusive building cost reference guide 38 years ago, the Directors took a leap of faith and, in 1984, formulated an extensive cost reference book that embraced all sections of the construction industry. The first of their kind, and now in its 37th edition, these publications have become construction industry bibles and the cornerstone of construction cost estimating.

Editor and Director of Publishing,

Matthew Roddis, is a Quantity Surveyor by profession and is in charge of the research, calculation, compilation and editing of the enormous amount of data that is contained in these annual publications. The 2019 edition marks his fourteenth year as Editor, and, with a wealth of construction cost pricing information under his belt, is, without doubt, an expert in his field.

With the assistance of a comprehensive list of respected construction

THE BUILDING ECONOMIST - MARCH 2019 - 13

CONSTRUCTION COSTS

professionals, contractors and suppliers, some contributing since the first edition, Mr Roddis tirelessly gathers the essential valued cost information required to compile these annual cost guide publications.

Mr Roddis explains the process involved in researching and compiling the cost data, “The research process is thorough and complex, starting with in depth discussions with suppliers, sub-contractors and construction industry professionals in regards to the current and perceived states of their market. Following these discussions, the rates are generally built from the following elements; material cost, labour norms and labour rates.”

“The calculated rate is reviewed against the tender return trend and the supplier ‘state of the market’ and amended if necessary. Tender returns are reviewed so that the current construction trends can be ascertained.

As a final check process, tenders are priced based on the Detailed Prices, then reviewed after the tenders have been returned.”

Not just limited to Quantity

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Surveyors and Estimators, a plethora of construction industry professional’s use the publications, including architects, engineers, designers and builders. Many government bodies, state and local government departments, insurance companies, valuers and educational establishments also purchase Rawlinsons cost publications.

Rawlinsons Director, Niall Mc Aree, a well-respected Quantity Surveyor with a wealth of estimating experience under his belt, shared with me the multifarious benefits gained by varying professionals and consultants throughout the industry from utilising the publications.

“Correctly used, the Rawlinsons Australian Construction Handbook and Construction Cost Guide becomes a cost control tool from the inception of a project to the project completion and handover.”

“During the early stages of concept and feasibility when there is limited information available, the cost per sqm section is used in order to establish a project budget. A benchmark rate per sqm of the building is determined by parameters such as building function, size of development as well as the quality of finish required. This ensures a realistic budget can be estimated for a client at this early conceptual stage in the overall process”, explains Mr Mc Aree.

“As a project progresses through concept design to schematic design and more information on the building layout and level of finishes becomes available, the comparative rates section of the cost guide is used to accurately estimate the overall cost of a project. As the design develops, this ensures that the refined cost estimate can be reviewed against the original budget. Additionally, at this point in the project, the client can be provided with value engineering options in terms of the standards of finishes required. Progressing into the contract documentation stage, the detailed pricing section is used at project tender to

CONSTRUCTION COSTS

accurately price each individual unit of work, enabling a detailed and accurate pre-tender estimate for individual trades”, concludes Mr Mc Aree.

Aside from the use of the cost guides for estimating, the publications also contains a vast array of sundry information on construction topics such as contractual procedures and conditions of contract, estimated construction timeframes, information on current tax depreciation regulations and requirements, replacement insurance valuations and environmentally sustainable costs.

With two cost publications to choose from, the Rawlinsons Australian Construction Handbook and Rawlinsons Construction Cost Guide, I sought the opinion of Mr Mc Aree as to which guide is best for what project.

“When we are asked this question by our customers, we ask them the type of construction they are operating in, as well as the average values of work undertaken. If the construction is of a more domestic nature and the project value is below $1.5 million, we recommend the Cost Guide as it is tailored to the use of smaller scale residential projects. In general our most popular publication is the Handbook which deals with projects of a more complex and difficult nature, covering values over and above $1.5 million.”

digital version, predominantly due to the ease of navigation and search capabilities, which makes finding the information in quite a large technical document quick and efficient. Additionally, the benefits in the digital version are the ease of access whilst on site or in a project meeting. In saying all of the above, I do have an attachment to the hardcopy publication which sits on my desk at all times.

Many of our customers like to have both a soft and hard copy of our publications, but at the end of the day, it comes down to individual preference.”

It can be said with confidence, after 37 years in publication, that the 1983 Rawlinsons Directors leap of faith was a success. Not only satisfying the industry’s need for a comprehensive building cost reference guide, but steadfastly contributing to the economy, providing Australians with a completely Australian product.

Additionally Rawlinsons offers a Process Engineering Handbook, which has been developed as an aid to the experienced estimator or project manager for large infrastructure and process engineering projects.

Launching a digital version in 2018, Mr Mc Aree shares, “We feel the digital version is a valuable addition to our products. As we know the world we live in now is a digital space and therefore we felt it was important to provide our customers with an electronic platform.

On a day to day basis I tend to use the

Written by Kirsty Maxted, Business Manager for Rawlinsons (W.A.)

THE BUILDING ECONOMIST - MARCH 2019 - 15

CASE STUDY

ADELAIDE BOTANIC HIGH SCHOOL REACHING NEW HEIGHTS IN EDUCATION 16 - MARCH 2019 - THE BUILDING ECONOMIST

CASE STUDY

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CASE STUDY

A new ‘world class’ CBD vertical secondary school with an educational focus on health and STEM (Sciences, Technology, Engineering and Mathematics) and interdisciplinary subjects. The school is designed to accommodate 1250 students offering contemporary interdisciplinary teaching and learning.

construction and operation. Learning from the built form will deliver intuitive, investigative, environmentally aware students who will shape our future communities.

This state-of-the-art designed school will promote individualised learning, creating settings for innovative teaching, incorporating new technology, environmental sustainability, collaboration and exploration of the surrounding environment.

Rider Levett Bucknall (RLB) was engaged by the Department of Planning, Transport and Infrastructure to provide full cost management services. RLB began working closely with the Department for Education and the Department of Planning, Transport and Infrastructure in early 2015 preparing early cost models for building options based on space planning schemes.

Designed by Cox Architecture in partnership with Design Inc, the Adelaide Botanic High School delivers an innovative and flexible space to encapsulate the best in contemporary learning pedagogy. The ageing University of South Australia Reid Building was refurbished, providing 6 learning levels plus a basement hosting music and drama practice spaces and secure parking for 170 bicycles. The refurbished building is linked by a glass atrium to a brand new 7 storey building, also with a basement and rooftop terrace. Five rooms cantilever from the two buildings into the atrium overlooking the stunning surrounds of the Adelaide Botanic Gardens, Adelaide Zoo, parklands and the vibrant university precinct.

The purpose-built learning environment enables the building architecture to enhance the student learning experience.

Once hidden mechanical and electrical engineering mechanisms within the Reid Building have been exposed, and the new building design has mirrored the design, making it difficult to determine old from new. Students are exposed to the application of engineering principles and technology to building design,

COST MANAGEMENT CONSULTANCY

With the Adelaide Botanic High School being the first true vertical school in South Australia, RLB was able to benchmark similar projects from our Global Cost Database enabling our Cost Planners to provide relevant cost data from precedent projects.

As the Department for Education determined projected student needs, RLB was requested to prepare cost options for 1000, 1250, 1500 and 2000 student capacities to determine the relative cost benefit and value proposition to increase capacity.

RLB was also involved in developing cost-efficient high-performance design elements such as: energy efficient wall façade systems, modular atrium glazing systems, efficient structural solutions (in particular the sports gym which supports an outdoor learning terrace), and external ‘pop-out’ learning pods etc.

All internal design elements were designed with flexibility and robustness to minimise ongoing maintenance and achieve outcome alignment with the fully integrated team.

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‘The project success could not have been achieved without a high performance, collaborative project team across all disciplines.’ said Managing Director, Andrew Suttie.

COST PLANNING CHALLENGES Key project challenges included: • Understanding the existing building conditions and the adaptive reuse implications. These included hazardous material removal, earthquake and seismic upgrades, building code compliance upgrades, façade removal and reinstatement, external link bridge connections and full building engineering services upgrades • With the step change in educational pedagogy, challenges occurred when benchmarking the investigation of the functional fitout requirements, such as open plan teaching environments which also have the ability to contain teaching spaces when required with operable walls, and the inclusion of the latest ICT/AV teaching requirements • Procurement by Early Contractor Involvement (ECI) comprising of two Tier 1 Contractors in competition during the Design Phase, with both providing simultaneous program, cost and constructability advice (a relatively untested innovative procurement strategy) • Providing a robust and independent cost plan throughout the project planning, design and documentation phases, often involving conflicting advice from the ECI Contractors • Undertaking multiple value engineering sessions to align to the Value Management Roadmap to ensure not only budget compliance, but to achieve maximum value for

CASE STUDY

money, and whilst considering the longevity of building materials and engineering solutions • Detailed tender assessments to ensure appropriate conversion into a Total Fixed Price (TFP) Design and Construct (D&C) Contract and successful novation of the design team • Undertaking cost analysis studies with varying construction methodologies to safely construct a new development adjacent an existing occupied University Building (including an operating animal house at basement level). This involved analysing several construction staging methods, external acoustic treatment options, flexible structural building connections etc.

COST PLANNING OPPORTUNITIES Our in-house technology, ROSS 5D enabled our Cost Planners to prepare accurate estimates, cost plans and models from diverse information sources including BIM Models, 2D and 3D CAD drawings, hand drawn illustrations, schedules and other project documentation. Our software enabled flexibility in presentation and analysis of cost models allowing for a range of different estimate breakdowns, by utilising either: elements, trades, floor by floor or building components, separate buildings and the project phases.

Site infrastructure is often an area that is not dealt with adequately by cost consultants, with general allowances being allocated in early cost plans.

Infrastructure is a specialist division within RLB that is

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CASE STUDY

staffed with Engineers and specialist Civil Estimators who complement our Quantity Surveying personnel. RLB was able to utilise its expertise for the infrastructure component.

RLB also drew from the expertise of our in-house Engineering Services Cost Managers to provide an independent assessment and benchmark the engineering services estimates.

RLB provided a full review of the site infrastructure costs, including stormwater, gas, sewer, electrical, etc.

Several façade scope verification and value management sessions were undertaken with proactive industry feedback to ensure budget compliance, whilst maintaining the architectural vision for the school.

RLB was a key team member in assisting the Department for Education in realising the construction of two additional levels to accommodate the increased anticipated student population of 1250.

CONTRACT SELECTION AND PROCUREMENT STRATEGY The project commenced with an Early Contractor Involvement (ECI) phase, with the intent to convert into a Total Fixed Price (TFP) Design and Construct method of procurement.

RLB reviewed and benchmarked functional areas to ensure the proposed scheme was efficient in addition to reviewing project risks and incorporating appropriate contingencies. Following a robust Project Risk Review, establishing the appropriate project contingencies was critical. Due consideration was required for all the project’s varying risk factors including; working adjacent an occupied building, potential for inground indigenous archaeological artefacts,

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hazardous material removal, challenging structural building link connections etc.

Applying the appropriate contingency levels was a key challenge to ensure the building fabric and functionality was ultimately not compromised.

RLB facilitated multiple value management sessions, including with the ECI partners to ensure best value was achieved for the Department of Planning, Transport and Infrastructure and the Department for Education.

For an ECI/TFP Procurement Model the dynamics are different and reporting protocols need to be understood and observed by the Cost Planning Team.

In a pure Managing Contractor Model the cost plan or model would be shared with the entire project team including the Contractor as a procurement tool for budgeting the trade scope. In effect the Managing Contractor is an integral member of the consultant team and major cost risks remain with the client.

However, under an ECI/TFP Procurement Model, the Contractor will assume the major cost risks, and care needs to be given in relation to the extent of the cost planning and cost modelling information shared. Otherwise there remains the risk that the TFP commercial negotiations process could be potentially compromised.

PROACTIVE BUDGET REPORTING RLB took a proactive, solutions based approach to the management of scope and costs. When the budget was threatened, it was important to ‘get on the front foot’ to tackle the issues.

RLB provided early warning budget advice and facilitated strategic Value Management Sessions to understand the issues and opportunities that were

CASE STUDY

available. RLB monitored the developing design documents to ensure that the aligned value management initiatives were implemented. We believe the process worked particularly well and set the Adelaide Botanic High School project up for successful commercial negotiation and commercial close.

LESSONS LEARNED The Adelaide Botanic High School was delivered by Early Contractor Involvement (ECI), then converted to a Total Fixed Price Contract (TFP), which does heavily rely on: a comprehensive Principal’s Project Requirements (PPR), precise client vision, robust cost planning, proactive value management and budget forecasting.

The project was delivered on time and within budget and is regarded as a benchmark contemporary secondary education facility.

CLIENTS

Department of Planning Transport and Infrastructure Department for Education

LOCATION

Adelaide, South Australia

VALUE

$100 million

COMPLETION January 2019

RLB PROJECT LEADERSHIP

Andrew Suttie, Managing Director Sam Martin, Associate

DESIGN TEAM

Cox Architecture partnered with DesignInc, TCL, AECOM and KBR

BUILDING CONTRACTOR

Lendlease Building Contractors Pty Ltd

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VISION

A VISION FOR THE

FUTURE ROLE OF

COST ENGINEERS AND QUANTITY SURVEYORS The Quantity Surveyor and Cost Engineer professions have the opportunity to embrace a broader vision for the future and redefine traditional roles. As new technology sweeps rapidly across the construction industry, existing professionals and new graduates must evolve to meet the changing demands of global clients.

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VISION

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VISION

There is a saying that “what got us here will not get us there”. For professionals working in the rapidly evolving built environment sector, this is increasingly true.

Cost Engineers (CEs) and Quantity Surveyors (QSs), in particular, are facing a critical moment in their professional lives as the traditional infrastructure project delivery practices are being disrupted by new, digitally enabled and data driven processes.

Like every other profession in the built environment, CEs and QSs face a major challenge to redefine their role and stay relevant in this new world; a world in which clients are more demanding, more informed, and expect greater value from every professional service that they buy.

However, they also have a major opportunity to strike out and reposition themselves in this new and evolving world; driving new levels of efficiency, creating competitive advantages and providing the value-added services demanded by modern clients.

To achieve this goal, CEs and QSs will have to change their professional approach and the services they provide.

While some of these changes might be considered evolutionary, others will require more fundamental rethinking.

MERGER OF MINDS – BIRTH OF THE CEQS PROFESSION The traditional concept of employing a QS to measure quantities and a CE to provide advice on costs is becoming a relic of the past.

Today’s clients expect more flexibility and broader professional advice. They will turn to the CE for advice on issues as wide as procurement management and engineering or look to QSs to estimate costs of preliminary designs without

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drawings but using their experiences, data sheets and rules of thumbs.

Given this blurring of responsibility, a merger of the two professions as CEQS is an obvious win. This new group of professionals would provide a range of services covering cost advice, procurement management and strategic advice, design reviews, facilitation based on risk and value, and perform value engineering exercises.

The role would be transformed from passive individual to become an effective, central contributor to the client’s entire project team. With an inherent knowledge of design efficiency, combined with a deep understanding of cost drivers and structure, the CEQS will be in a unique position to provide clients with holistic advice on project cost, time and quality.

THE NEED FOR A KNOWLEDGE UPGRADE AND NETWORKING Of course, this transformation would require the CEQS to substantially increase their understanding of construction technology and basic engineering principles. In addition, they would require good knowledge of contract law to help the CEQS offer procurement advice to promote the modern partnering arrangements sought by clients as they seek to boost productivity.

And clearly enhancing skills across the professions will require an environment that actively supports learning. As such, a professional knowledge network would be critical to support and drive the development of required skills across businesses and ensure that the learning and efficiencies gained are shared across the emerging profession.

VISION

Similarly, a program of mentoring throughout the new CEQS profession would be vital to ensure that younger professionals can learn quickly from the experience and knowledge of colleagues around them.

FACILITATION AND THE ART OF COLLABORATION More often than not, the CEs and QSs find themselves at the heart of the design discussion, using and demanding information from all design disciplines and ensuring that information is correct and verified. They play a critical role in bringing parties together – facilitating communication and promoting collaboration – a role that is increasingly in demand by modern clients and that should be embraced by the CEQS profession.

The roles and responsibilities of a facilitator are wide and may include conducting cross-disciplinary workshops, to help understand the emerging issues, and to find collaborative solutions. Again, as with other new skills required by CEQSs, special training program for such facilitation would be required.

THE USE OF COMPUTATIONAL BIM Technology will be central to the future role of the CEQS profession. Specifically, computational BIM, the next frontier of BIM tools, will be critical. Such advanced BIM modelling requires designers to better understand the BIM model and get the best out of the data.

For the CEQS profession this presents great opportunities due to their inherent closeness to, and familiarity with, the project data. But it also presents great

challenges, not least from the need for the new profession to accelerate its own understanding of the emerging discipline.

Some form of computational BIM will have to be taught to CEQS professionals so as to expose them to the outer limits of the use of BIM. That will mean understanding how to interrogate models, how find optimum solutions for value engineering purposes or how to identify cost drivers.

cost management and cost engineering will always remain embedded in the QS and CE professions, there is a need to broaden the vision of existing professionals and new graduates to align with the new world of intense competition, client-centricity and technology advancements.

It will be a big challenge as the speed of technological advancement is so rapid. What once took design team months to do, can now be carried out in minutes. The CEQS profession must evolve to keep up.

OPERATING IN THE GLOBAL ENVIRONMENT; OPERATING IN THE VIRTUAL ENVIRONMENT Meanwhile, the world is getting smaller as actual and virtual borders are being torn down. Firms are increasingly moving the main bulk of their measurement activities to more cost-effective parts of the world, leaving traditional graduate roles “outsourced”.

However, this challenge opens up great opportunities for the young CEQS who will now be tasked with acquiring the new skills required to manage these outsourced processes. They will, in effect, move further up the project value chain, adding greater client value and commanding greater reward.

CONCLUSION The scale and pace of change sweeping across the construction industry means that leaders must act now to embrace the new world. While the core skills of

This article has been written by Eugene Seah FAIQS from Threesixty Cost Management Pte Ltd and Threesixty Contract Advisory Pte Ltd, Surbana Jurong Private Limited

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PROJECT CONTROLS

THE PAST, PRESENT, AND FUTURE OF PROJECT CONTROLS Dr. Alexia A. Nalewaik, CCP FRICS

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PROJECT CONTROLS

INTRODUCTION Whether it is called project management, project controls, cost engineering, or quantity surveying, managing cost during the lifecycle of a project is accomplished through the application of certain principles, accepted as “best practices”.

Initially, these principles were adopted by project controls from other professions, ultimately leading to a push-pull relationship between various disciplines.

Certain relationships can be inferred between the history of project controls, the creation and of management science, and the evolution of production engineering, resulting in a strengthening of controls and analytical techniques in financial and project management.

These trends are also reflected in the history of contracts and procurement.

The history of project controls, when considered in the context of management theory and industrial engineering, offers clues to the future of the profession.

A TIMELINE OF CONCEPTS During the first industrial revolution, railroad construction in the 1840’s and 1850’s essentially created the disciplines of industrial engineering, project controls (Pinney, 2002), and business management (AICPA ASEC Emerging Assurance Technologies Task Force, 2012), due to the tasks of planning and constructing railroads, and related manufacturing. Specific project and business management techniques developed during this time period include published pricing, scheduling (network planning), construction and financial cost accounting, project organisation matrices, expenditure audit, and more¹. Mechanical and civil engineering societies were also founded during this time period.

Project controls continued to evolve and

gain traction during the second industrial revolution: In the final third of the 19th century and the beginning of the 20th century, improvements in manufacturing and production along with a focus on efficiency, led to the development of more scientific approaches to management, and the creation of business schools (Greiner, Bhambri, & Cummings, 2003).

Many of the core concepts (or “best practices”) developed at that time remain in use today by project controls professionals, including bar (Gantt) charts, cost/benefit analysis (CBA), assembly costing, and risk allocation¹.

Military, scientific, and other research and development during the 1950’s economic boom (Johnson, 1997) yielded increasingly sophisticated concepts

that were quickly added to the project controls body of knowledge. Such techniques as statistical risk modeling, systems analysis, and CPM/PERT scheduling (Kwak, 2003) remain in use today¹. In the 1960’s, advancements in management science concentrated on program performance, accuracy, and decision-making processes (Nalewaik, Systemic Audit and Substantive Evaluation in the Built Environment, 2010), and are key elements of classic management theory (Greenwood, 1974).

Innovative concepts ideated during the 1960’s and 1970’s included resource planning and earned value methods¹, while business school curricula included new management approaches including operational audit, internal controls, and

PRODUCTION MANAGEMENT ENGINEERING / FINANCE

INDUSTRIAL ENGINEERING

PROJECT CONTROLS

Figure 1 – Project controls influencers (Nalewaik, Industrial Engineering, Management Science, and the Future of Cost Engineering, 2018)

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PROJECT CONTROLS

scenario planning (Jayeoba & Ajibade, 2016). At this point, there began a certain amount of fluidity of concepts between industrial engineering, project controls, and management science. Management science in the 1980’s focused on measuring value, understanding stakeholders, reducing uncertainty, lifecycle costing, change management (Stretton, 2007), technology strategy (Shane & Ulrich, 2004), and software development (Matthews, 2006).

Today, project controls is a datadriven profession that relies heavily on computerised analysis, soft skills, and human judgment. Popular project management topics in the past two decades have included quality management, strategic management, re-engineering, relationship contracting, organisational learning, knowledge management (Greiner, Bhambri, & Cummings, 2003), and agility (Shenhar & Dov, 2004). The rapid advancement of computerised techniques, including artificial intelligence and predictive analytics, are a hallmark of the current decade. Current trends in management science lean towards the application of soft skills, and advancements in industrial

engineering are almost entirely focused on computer applications, including cognitive computing, robotics, wearables, and 3-D printing.

THE FUTURE OF PROJECT CONTROLS The future depends on how this profession (and others) reacts to demands for real-time information and harnesses technology proliferation, advancements in artificial intelligence, and the internet of things. Automated systems are good at consistently performing routine, standardised, programmable tasks that follow logical rules. These tasks include optimisation, recognising patterns, clustering, classification, and predication based on probability and statistics. Cognitive technologies are being used to augment human decision-making, in terms of detection, prediction, and prevention.

Because computers can collect, process, and report information in a fraction of the time that humans require, with greater accuracy (and no need for sleep), this is their highest and best use. The internet of things and mobile devices can be used to provide real-time data, enabling truly

continuous and timely analysis, and early reporting of issues.

Leaving computers to do the number crunching leaves cost engineers free to provide even greater value, as analysts and interpreters of the data, in a trusted advisor capacity. The world of projects cannot yet be entirely reduced to simple repeatable rules and structures, nor is it necessarily a good investment to codify every possible project action and reaction.

Computers cannot yet fully understand or solve project problems without human judgement (Robinson, 2014). Existing areas of specialty that rely on critical questioning, complex perception, and situational understanding (such as claims analysis, risk modeling, and dispute resolution) are already and will continue to be a stronghold for cost engineers.

Necessary insights are distinctly human; such characteristics as collaboration, interpretation of nuance, understanding of context, emotional intelligence, and creativity. The same is true in management science, and all engineering professions. Further, humans will always be needed for oversight, leadership, and QA/QC of computerised systems, and training (AICPA ASEC Emerging Assurance Technologies Task Force, 2012).

Figure 2 – Key project controls tools Efficiency Networking Planning Engineering Economics Cost Accounting

Risk Modeling Process Engineering QA/QC Systems Analysis

MANUFACTURING

RESEARCH AND DEVELOPMENT

MANAGEMENT AND FINANCE

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(Nalewaik, Industrial Engineering, Management Science, and the Future of Cost Engineering, 2018)

Audit Financial Goals Program Evaluation Change Management Strategy Organisational Learning

PROJECT CONTROLS

CONCLUSION While the development of core concepts in project controls can be seen to have been heavily influenced by management science, production engineering, and industrial engineering, fluidity and transfer of concepts has become so rapid and near-instantaneous that new developments appear across industries

and professions in parallel. This trend can be expected to continue, barring game-changing major disruption and innovation. The ability to collect, analyze, and interpret data has advanced to the point where artificial intelligence is transforming how problems are identified, relieving practitioners of repetitive tasks, and providing auditability and transparency. It is up to project controls professionals to harness that data and

technology, commanding a fee and salary premium by adding value for clients and projects. In doing so, the prestige of the profession will be increased. As common repetitive tasks are automated, the future of the profession also lies in sensemaking, using and applying qualities that are uniquely human.

Independent thinking, questioning the status quo, soft skills, and cognitive flexibility are the keys to adding value.

ยน Timeline data compiled en masse from (Boudreau, 2004), (Shane & Ulrich, 2004), (Greiner, Bhambri, & Cummings, 2003), (Kwak, 2003), (Greenwood, 1974), (Shenhar & Dov, 2004), (Stretton, 2007), (Pinney, 2002), (Jayeoba & Ajibade, 2016), and other sources as listed in References References AICPA ASEC Emerging Assurance Technologies Task Force. (2012). Evolution of Auditing : From the Traditional Approach to the Future Audit. New York, NY: AICPA. Boudreau, J. W. (2004, November). Organizational Behavior, Strategy, Performance, and Design in "Management Science". Management Science, 50(11), 1463-1476.

Greenwood, W. T. (1974). Future Management Theory : A "Comparative" Evolution to a General Theory. The Academy of Management Journal, 17(3), 503-513.

Greiner, L. E., Bhambri, A., & Cummings, T. G. (2003, December). Searching for a Strategy to Teach Strategy. Academy of Management Learning & Education, 2(4), 402-420.

Jayeoba, O., & Ajibade, A. (2016, April). Evolution and Development of Auditing. Unique Journal of Business Management Research, 3(1), 32-40.

Johnson, S. B. (1997, October). Three Approaches to Big Technology : Operations Research, Systems Engineering, and Project Management. Technology and Culture, 38(4), 891-919.

Kwak, Y. H. (2003). Brief History of Project Management. In Carayannis, Kwak, & Anbari, The Story of Managing Projects (p. Chapter 2). Quorum Books.

Matthews, D. (2006, December). From Ticking to Clicking : Changes in Auditing Techniques from the 19th Century to the Present. The Accounting Historians Journal, 33(2), 63-102.

Nalewaik, A. (2010). Systemic Audit and Substantive Evaluation in the Built Environment. 7th International Cost Engineering Council World Congress.

Singapore: ICEC. Nalewaik, A. (2018). Industrial Engineering, Management Science, and the Future of Cost Engineering. AACE International Conference & Expo. San Diego, CA: AACE International.

Nalewaik, A., & Bennett, N. (2012). Intersection and Divergence in CE, QS, and PM: Competencies, Qualifications, and Professional Recognition . 8th International Cost Engineering Council World Congress. Durban: ICEC. Nalewaik, A., & Mills, A. (2014). Times of Change: The Future of Professional Institutions in the Built Environment. 9th International Cost Engineering Council World Congress. Milan: ICEC. Pinney, B. W. (2002, December). Projects, Management, and Protean Times : Engineering Enterprise in the United States, 1870-1960. Enterprise & Society, 3(4), 620-626.

Robinson, R. (2014, September 7). 11 Reasons Computers Can't Understand or Solve Our Problems Without Human Judgement. Retrieved February 19, 2018, from The Urban Technologist: https://theurbantechnologist.com/2014/09/07/11-reasons-computers-cant-understand-or-solve-our-problems-withouthuman-judgement/ Shane, S. A., & Ulrich, K. T. (2004, February). Technological Innovation, Product Development, and Entrepreneurship in Management Science. Management Science, 50(2), 133-144.

Shenhar, A., & Dov, D. (2004). Project Management Evolution - Past History and Future Research Directions. PMI Research Conference. London: Project Management Institute.

Stretton, A. (2007, October). A Short History of Modern Project Management. PM World Today, 9(10).

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TRANSFORMATION

LEADING AGILE TRANSFORMATION THE NEW CAPABILITIES LEADERS NEED TO BUILD 21ST-CENTURY ORGANISATIONS Written by Aaron De Smet, Michael Lurie, Andrew St George Parts 1 and 2

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TRANSFORMATION

INTRODUCTION To survive and thrive today, many organisations are undertaking the fundamental shift from a traditional organisational model designed for the industrial economy to an agile model designed for today’s digital economy.

This paradigm shift heralds a new form of organisation that enables innovation, collaboration, and value creation at unprecedented speed, scale, and impact.

Agile organisations can develop products five times faster, make decisions three times faster, and reallocate resources adroitly and quickly.

Making this shift can be exhilarating. As one senior leader of a global healthcare company told us, “I’ve been in business for 25 years, and this is like nothing I’ve ever done. We’re needing to develop a whole new way of seeing the world, our business, and even ourselves. I’ve never been more excited about what we’ll be able to create—and terrified about my ability to do this.”

To form and lead an agile transformation successfully, leaders need a new approach. The mind-sets and skills they have carefully honed over years of experience are necessary but not sufficient to lead 21st-century organisations. By evolving their ability to lead, executives can transform their organisations into agile enterprises engineered for the digital economy.

While this paper is written for senior leaders (typically defined as the top three to four levels of leaders), much of it applies to leaders at every level across your organisation. It has the following five parts, each of which concludes with a box of summary takeaways: 1. Part 1 summarises the emergence of agile organisations (for readers unfamiliar with this field) and links to our sister papers for more detail.

2. Part 2 presents our latest thinking on the mind-sets and practices you need to lead an agile transformation successfully.

3. Part 3 focuses on how you can bring a distinctively agile approach to the team, the core unit of agile organisations.

4. Part 4 sets out the capabilities you need to enable agility throughout the organisation.

5. Part 5 discusses how your organisation can build and embed these capabilities among leaders at every level, starting with senior leaders.

PART 1: ON THE AGILE STORY Why agile organisations? Why has this become such an important topic for senior leaders? It’s a direct result of the era in which we are living. In this age of our fourth industrial revolution, rapid technological and social change mean an increasing number of sectors are approaching a tipping point at which companies must become agile to compete and survive. Information-rich industries, like technology, publishing, and media, have long operated in this new world; others, like retail and banking, reached this tipping point in the recent past; and some, like pharmaceuticals and energy, are getting there quickly.¹ The pace of these changes is outstripping the ability of our existing private, public, and social institutions to keep up. In our recent research across a range of industries, including technology, only 4 percent of some 2,500 companies surveyed had reached enterprise agility.

More and more companies are becoming overwhelmed with the increasing need to enhance customer-centricity, speed, growth, efficiency, and employee engagement—all in parallel.

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TRANSFORMATION

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TRANSFORMATION

CHARACTERISTICS OF THE TRADITIONAL ORGANISATION So, what is an agile organisation, and how different is it from a traditional model? Simply put, the dominant traditional organisation model evolved primarily for stability in a well-known environment: it assumes the world is predictable. It is based on the idea of an organisation as a machine and tends to favor a static, siloed, structural hierarchy that operates through linear planning and control to execute one or a very few business models.

However, as the world grows more complex, this view gives rise to a more complex, more rules, and more control in an attempt to cope. Many organisations are now reaching the limits of this approach, with their people feeling that they are drowning in complexity.

The penalty for ignoring this issue can be severe. Nokia, Eastman Kodak, and Motorola, once feted icons of management and innovation, lost their way—not because they weren’t smart, but because their organisations were designed for a world that was rapidly disappearing.

Characteristics of the agile organisation Agile² organisations, viewed as living systems, have evolved to thrive in an unpredictable, rapidly changing environment. Agile organisations are both stable and dynamic. They focus on customers, embedding customercentricity in all they do. They have tried and tested practices that can fluidly adapt and adjust to market changes, innovative technology, customer feedback, and government regulation. They are open, inclusive, and nonhierarchical, evolving continually without the frequent disruptive restructurings required in more mechanistic organisations; and they embrace uncertainty and ambiguity with

greater confidence. Such organisations, we believe, are far better equipped for the future.

While there are many different forms of enterprise agility, they share some common trademarks. We have identified and enumerated these in the report ‘The five trademarks of agile organisations’.³ In summary, agile organisations embody the following novel and highly disciplined set of practices: • Agile organisations have a “north star” embodied across the organisation.

Guided by this north star, they reimagine both who they create value for and how. They are obsessively customer focused, and they are committed to creating value with and for a wide range of other stakeholders, including employees, investors, partners, and communities.

• Agile organisations work through a network of small, empowered teams.

They maintain a stable backbone structure but replace much of the remaining traditional hierarchy with a flexible, scalable network of teams.

• Agile organisations use rapid decision and learning cycles. They work in rapid cycles of thinking and doing, breaking work down into small packages; executing in short, focused bursts; and frequently recalibrating based on carefully tracked goals and metrics.

• Agile organisations have a dynamic people model that ignites passion.

They put people at the heart of culture and leadership, engaging and empowering everyone in the organisation to create value quickly, collaboratively, and effectively.

• Agile organisations use next-generationenabling technology. They radically rethink their underlying technologies to support quick iterations, higher deployment velocity, and flexibility through new practices and tools.

Many organisations today are somewhere in the middle of traditional and agile approaches, applying some elements of some of these trademarks. As a result, they no longer look like archetypal command hierarchies, but they are not yet agile. To reach and go beyond the tipping point, organisations must apply all five trademarks.

LEADERSHIP IN AGILE ORGANISATIONS This new kind of agile organisation requires a new and fundamentally different kind of leadership. Research has long demonstrated the profound impact of leadership effectiveness on organisational performance and health.⁴ Recent research confirms that leadership is arguably even more important in agile organisations.

Leadership and how leadership shapes culture are the biggest barriers to—and the biggest enablers of— successful agile transformations (Exhibit 1).

If you are planning to lead an agile transformation, you must therefore begin by both extending and transcending the competencies that made you successful in the past.⁵ For many years, we have seen leaders as planners, directors, and controllers. In organisations seen as machines, leaders brought certainty, control, and authority based on rank.

Now, it might be appropriate to explore a new language of leadership: the leader as visionary, architect, coach, and catalyst. For organisations seen as living organisms, the appropriate metaphor might be for the leader to be a gardener— a creative guide and steward who has a nurturing role and a variety of relations with different parts of a garden.⁶ For instance, as a gardener, the agile leader might pay attention to creating the fertile soil and environment that will enable growth and creativity to flourish.

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TRANSFORMATION

Exhibit 1 The greatest enablers of – or barriers to- a successful agile transformation are leadership and culture Top 5 challenges during an agile transformation Selected by participants (top 3 selection possible); N=1,411 Transforming the culture and ways of working¹ Lack of leadership and talent

76

Establishment a clear vision and implementation plan

42

34

Insufficient resources

28

Overcoming technological bottlenacks

28

SHIFTING FROM REACTIVE TO CREATIVE MIND-SETS

“Culture is perhaps the most important element of this sort of change effort. We have spent an enormous amount of energy and leadership time trying to role model the sort of behavior—ownership, empowerment, customer centricity—that is appropriate in an agile culture.”

Bart Schlatmann, previously Chief Operating Of¬cer, ING Netherlands ¹Misalignment of agile ways of working with requirements of day-to-day activities, lack of collaboration across levels and/or units, employee resistance to changes, entrenched employee behaviors and mindsets. Source: McKinsey Global Survey: How to Create an Agile Organisation, October 2017

To build and lead agile organisations, leaders must develop three major new sets of capabilities. First, they should adopt new personal mind-sets and behaviors. Second, they should learn to help teams work in new ways. Third, they should learn how to build enterprise agility into the design and culture of the whole organisation. In the next three parts of this article, we will look in detail at these three sets of capabilities.

ON THE AGILE STORY: TAKEAWAYS • To what extent does your market environment require your organisation to become more agile?

• How traditional or agile is your organisation? To what extent do you see the five agility trademarks across

the process of becoming an integrated human being.”⁷ Leaders wishing to transform their organisations must begin by transforming themselves, starting with their mind-sets. Our research on organisational health shows that making the leader’s mind-set the subject of conscious scrutiny is indispensable to all leadership effectiveness.⁸ Or, more poetically (and with apologies to José Ortega y Gasset): tell me what you pay attention to, and I will tell you who you are as a leader.

all or parts of your organisation?

• How ready are your leaders to lead an agile transformation? Is leadership in your organisation about planning, directing, and controlling? Or is it about gardening, with the leader as a visionary, architect, coach, and catalyst?

• Which of the three new sets of capabilities are most important for you to learn: agile mind-sets and behaviors, agile ways of working, or agile organisation design and culture?

PART 2: ON TRANSFORMING YOURSELF A novel approach to leading starts with a new way of being; as Warren Bennis memorably said, “… the process of becoming a leader is much the same as

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Changing our mind-set—or adjusting it to the new context—is no easy task, but developing this “inner agility”⁹ is essential in releasing our potential to lead an agile transformation. It is clear from the work of Robert Kegan and many others that leaders of agile organisations must, above all, make a profound personal shift in their mind-sets from reactive to creative.¹⁰ Reactive, or socialized, mind-sets are an outside-in way of experiencing the world based on reacting to our circumstances and other people’s expectations of us. We typically default to this mode when challenged—in other words, very frequently during a typical business day — which limits our perspective, focuses us on what can go awry, and causes feelings of fear, anxiety, frustration, and stress.

Creative, or self-authoring, mind-sets are an inside-out way of experiencing the world based on creating our reality and way forward through tapping into and expressing our authentic selves, our core passion and purpose. Being “in the creative” expands our perspective and focuses us on the positive, and we experience joy, fun, love, and flow.

TRANSFORMATION

Research shows that most adults spend the large majority of their days “in the reactive,” and as a result, traditional organisations are designed to run on the reactive.¹¹ To build and lead agile organisations, leaders must make a personal shift to run primarily in the creative. Think about your typical day. Do you (and your team) spend most of your time reacting to problems and your boss’ requests, seeking to control others, and working to deliver perfect outcomes? Or do you spend most of your time pursuing your purpose and passion, trusting and empowering others, and exploring new, and sometimes messy, possibilities?

There are three fundamental reactive-tocreative mind-set shifts we have found critical to foster the culture of innovation, collaboration, and value creation at the heart of agile organisations: from certainty to discovery, from authority to partnership, and from scarcity to abundance.

FROM CERTAINTY TO DISCOVERY: FOSTERING INNOVATION A reactive mind-set of certainty is about playing not to lose, being in control, and replicating the past. This mind-set underlies the way traditional organisations operate through detailed linear planning, by using fixed annual budgets, annual individual-performance goals, and the precedence of narrow expertise and known best practices.

It can work well in a predictable environment in which leaders can foresee the future with high degrees of precision.

However, the mind-set of certainty also leads to game playing and waste. For example, budgets planned a year or more in advance, at the end of the annual cycle, are spent exactly as planned, almost to the penny. This mind-set will miss the unforeseen emergent

opportunity, the chance to seize or create something new and unexpected.

Equally, it will encourage an avoidance of making mistakes and inculcate a culture of conformance and copying. In military terms, it is about fighting the latest war, designing equipment for the previous threat, and seeking to put old equipment (and old training) to new (unforeseen) uses.¹² Today, leaders need to shift to a creative mind-set of discovery, which is about playing to win, seeking diversity of thought, embracing risk, and fostering creative collision. Leaders must encourage innovation—continual experimentation, testing, and learning.

This doesn’t mean innovation as one small activity within the business, while the rest focuses on execution. It means building innovation into the core way of working and executing for leaders everywhere.

The following five personal practices, extensions of timeless principles of centered leadership,¹³ can meaningfully contribute to this shift to a mind-set of discovery: 1. Pause to move faster. Although counterintuitive, pausing can create space for clear judgment, original thinking, and purposeful action 2. Embrace your ignorance. Listening— and thinking—from a place of not knowing is essential for original, unexpected, breakthrough ideas 3. Radically reframe the questions.

Change the nature of the questions we ask ourselves to unblock your existing mental model 4. Set direction, not destination. In unknowable environments, instead of moving to a fixed goal, join your team on a journey with clear direction.

5. Test your solutions—and yourself.

Quick, cheap experiments can

avert major, costly disasters for your business and for you. Thinking of yourself as a living laboratory constantly testing innovative ways of leading makes it exciting, not terrifying.

A mind-set of discovery is found among leaders at Hilcorp Energy, an oil company¹⁴ operating with many agile practices. Hilcorp Energy formulates strategies and plans with an expectation that their plans will form a distribution around what typically happens. The more unpredictable and fast paced the environment, the wider the distribution, with some spectacular misses that fall short of target and some spectacular wins that seize unexpected opportunities through innovative approaches.

This mind-set is also to be found among leaders at Illinois Tool Works, a leading, diversified maker of specialized industrial equipment. For ITW, a mindset of discovery has been central to its sustained success over decades.

A prolific innovator with over 17,000 granted and pending patents, many of ITW’s product innovations emerge from discussions with customers, each focused on developing an ingenious solution to a specific customer problem.

FROM AUTHORITY TO PARTNERSHIP: FOSTERING COLLABORATION Traditional organisations are designed as siloed hierarchies based on a reactive mind-set of authority. The relationship between leaders and teams is one of superior to subordinate. People lower down the career ladder defer to and comply with the wishes of those at more senior levels. In return, senior leaders protect and reward their people. The key questions when we operate with a mindset of authority are, “Who do I report to, and who reports to me?”

Designed for collaboration, agile

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TRANSFORMATION

organisations employ networks of autonomous teams. This requires an underlying creative mind-set of partnership, of managing by agreement.

Such organisations strive to tap into ideas, skills, and strengths through freedom, trust, and accountability, which requires peer-to-peer relationships based on mutual acceptance and respect. Leaders must develop relational expertise, create conditions for effective teamwork, build networks, and burst silos. The key questions when we operate with a mindset of partnership are, “Who can I help, and who can help me?”

Partnership requires not only trusting, listening, and collaborating more but also being prepared to own and influence less. It also depends on being prepared to challenge the group consensus, welcoming dissent (such as the “obligation to dissent” taught to every new colleague at McKinsey), fostering inclusion, seeking diverse opinion or data, and entertaining plural views.

Seniority and advancement—reasonable motivators in all organisations—need not depend on budget size or population in a department but more on depth of knowledge and relationships. A more senior leader might have fewer reports than his or her junior.

Leaders in agile organisations focus on guiding and supporting rather than directing and micromanaging. The wellknown research of Google suggested that creating a sense of psychologic safety, where people feel comfortable speaking openly, suggesting ideas, and admitting they don’t know, was one of the pervasive characteristics of high-performing teams.¹⁵ Agile leaders focus on creating this environment by encouraging everyone to contribute, facilitating joint problem solving, and encouraging all team members to take accountability for individual and team outcomes.

Applying this mind-set of partnership is

central to the success of Morning Star, the world’s largest tomato processor.

The company empowers autonomous teams to operate without formal leaders, reflecting its deep commitment to freedom and collaboration within and across teams. Every year, colleagues negotiate with their stakeholders a “colleague letter of understanding” that formally commits to partnership, accountability, and reciprocity.

FROM SCARCITY TO ABUNDANCE: FOSTERING VALUE CREATION In stable, slowly evolving markets, companies seek to maximize their shares at the expense of others to boost shareholder value. The underlying premise signifies a reactive mind-set of scarcity that focuses on limited opportunities and resources and a win– lose approach. This mind-set is about maximizing the share of an existing pie.

Today’s markets, however, evolve continually and rapidly, offering unprecedented challenges and opportunities. To deliver results now, leaders must view their markets and businesses with a creative mind-set of abundance that recognizes the unlimited resources and potential available to their organisations. A mind-set of abundance includes customer-centricity, entrepreneurship, inclusion, and cocreation. Leaders must learn to grow a larger pie by continually seeking win–win options that deliver value simultaneously to all stakeholders.¹⁶ What Apple did after Steve Jobs’s return demonstrates this shift to abundance.

Instead of continuing to do everything in house, Apple launched iTunes and then the App Store, inviting what became tens of thousands of partners to cocreate an unprecedented ecosystem. By sharing and massively expanding the supply pool

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in this way, Apple unlocked enormous demand and value potential, enabling it to become one of the most valuable companies in the world. The reactive mind-sets of scarcity, authority, and certainty no longer fit the ever-changing world. They cause us to focus inward and backward, and they lose sight of amazing opportunities. Making the three fundamental shifts to creative mind-sets of abundance, partnership, and discovery lets us look outward and forward, unleashing the full potential of our people and organisations.

A DISCIPLINED APPROACH While these mind-set shifts might be new and require a significant “letting go” of old beliefs and paradigms, collectively they form a very disciplined approach to leadership. And because of inherent autonomy and freedom, leadership in agile organisations comes from a selfdisciplined approach—leading not in fear of punishment or sanction but in service of your purpose and passion.

This approach means, among other things, leading with certain characteristics: • leading with discovery by applying the following actions: • leading more with asking questions versus advocating your opinion • listening deeply, with a focus on what you might be missing • creating space to pause and reflect • leading with partnership by applying the following actions: • taking responsibility for what is yours • reviewing your role and clarifying expectations with others • surrounding yourself with people who think differently from you

TRANSFORMATION

THE BUILDING ECONOMIST - MARCH 2019 - 37

TRANSFORMATION

• leading with abundance by applying the following actions: • identifying new opportunities and unmet needs • exploring how to provide more value to attract the resources you need • seeking win–win outcomes based on contribution and cocreation

ON TRANSFORMING YOURSELF: TAKEAWAYS • Change yourself first, then the organisation.

• When do you show up with a reactive mind-set? When do you show up with a creative mind-set?

• How might you choose mind-sets of discovery, partnership, and abundance more frequently? What would be the impact on you and those around you?

• What disciplined practices might you adopt to be in a creative mind-set?

References ¹ “How to create an agile organisation,” October 2017, McKinsey.com. ² The term “agile” as applied to a way of working originated in 2001 with a new approach to software development. As organisations increasingly sought to become more agile in the sense of faster and more flexible, they recognized that principles of agile software development could be applied much more broadly to organisations as a whole. ³ Wouter Aghina, Aaron De Smet, Gerald Lackey, Michael Lurie, and Monica Murarka, “The five trademarks of agile organisations,” January 2018, McKinsey.com. ⁴ It is rare to achieve top-quartile health without top-quartile leadership effectiveness. In fact, organisations with top-quartile leadership effectiveness have, on average, 3.5 times greater the total returns to shareholders over a 3.0-year period than do those with bottom-quartile scores. And organisations that invest in developing leaders during significant transformations are 2.4 time more likely to hit their performance targets. ⁵ Our research has revealed that leaders of all organisations need a core set of baseline behaviors, which are then supplemented by additional situational behaviors to enable the organisation to enhance its performance and health. See Michael Bazigos, Chris Gagnon, and Bill Schaninger, “Leadership in Context”, McKinsey Quarterly, January 2016, McKinsey.com. ⁶ There are many cultures and world literatures that relate to growth and production in this way.

Lawns can be cut or left to grow new wild plants; weeds are not always weeds; pests might be useful; equally, vegetables need strict timing and precise care, while trees need benign neglect and occasional pruning; and so on. Such are the many relations—and the languages—that leaders of agile organisations might consider. ⁷ Warren Bennis, On Becoming a Leader, Reading, MA: Addison-Wesley Publishing Company, 1989. ⁸ Organisational Health Index by McKinsey, 2010. ⁹ Sam Bourton, Johanne Lavoie, and Tiffany Vogel, “Leading with inner agility,” McKinsey Quarterly, March 2018, McKinsey.com. ¹⁰ See for example: Robert Kegan and Lisa Laskow Lahey, Immunity to Change, 2009, Harvard Business Review Press; Robert J. Anderson and William A. Adams, Mastering Leadership, 2016, Wiley; and Frederic Laloux, Reinventing Organisations, 2014, Nelson Parker. ¹¹ See Carol S. Dweck, Mindset: The New Psychology of Success, New York, NY: Ballantine Books, 2016. ¹² For brilliant accounts of adaptive, agile warfare in the modern world, see Rupert Smith, The Utility of Force: The Art of War in the Modern World, New York, NY: Vintage Books, 2005; and Stanley McChrystal et al, Team of Teams: New Rules of Engagement for a Modern World, New York, NY: Portfolio, 2015. ¹³ Sam Bourton, Johanne Lavoie, and Tiffany Vogel, “Leading with inner agility,” McKinsey Quarterly, March 2018, McKinsey.com. ¹⁴ “Digging deep for organisational innovation,” McKinsey Quarterly, April 2018, McKinsey.com.

This article was originally published by McKinsey & Company, www.mckinsey. com. Copyright (c) 2018 All rights reserved.

Reprinted by permission.

¹⁵ Laura Delizonna, “High-Performing Teams Need Psychological Safety. Here’s How to Create It,” August 2017, HBR.org. ¹⁶ The attractiveness of win-win is supported by research on open and closed mind-sets (Carol Dweck or Seth Godin) and successful negotiation (Roger Fry, William Ury, and Howard Raiffa).

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THE BUILDING ECONOMIST - MARCH 2019 - 39

INFRASTRUCTURE

THE INFRASTRUCTURE CONUNDRUM 40 - MARCH 2019 - THE BUILDING ECONOMIST

INFRASTRUCTURE

Two thirds of Australians now live in our capital cities, and the growth of our urban nation continues to accelerate at an everincreasing rate.

According to Infrastructure Australia, the percentage of city dwellers will rise from 69.3 per cent in 2031 to 73.4 per cent by 2061. By then, up to 15.7 million Australians will live in our capital cities.

Accommodating this growth will be one of the great challenges of our nation’s city-builders in the decades to come.

But how will we meet the infrastructure needs of this population growth? How will we fund this infrastructure? And how will we overcome the grave deficiencies in the current infrastructure network?

Solving these conundrums lies at the heart of our infrastructure challenge.

Before we look to the future, we need to fix the deficiencies in our current network. Some of this can be attributed to our lack of forward planning. Threeyear election cycles are never long enough to adequately develop and implement an infrastructure plan. But there are other factors at play. A lack of joined-up thinking is also at fault.

There are currently three major plans in NSW produced by Infrastructure NSW, Transport for NSW and the Greater Sydney Commission, for example. This leaves us without a single plan for NSW that addresses the complex interface between housing, social infrastructure, work and travel, and how we provide more job opportunities closer to major residential areas.

Attitudinal shifts are required too. We need to recalibrate the community’s mindset towards densification, and to demand a rethink on car ownership. But smooth infrastructure delivery demands more than just planning and public support. It also requires a laser focus on industry productivity.

In 2015, the Warren Centre launched the

IP30: Infrastructure Productivity project to increase the value of infrastructure delivery in Australia by reducing waste.

This research indicated that eliminating inefficiencies in the construction sector could save 25 per cent in costs totaling $30 billion.

Among the efficiencies identified were unnecessary complexity resulting in time and cost delays, poor designs hampering construction, confusing standards and specifications, multiple reworking, non-conformance, delays, poor quality materials, defects and performance failures.

RISK MANAGEMENT: A FINE BALANCING ACT Of all the questions arising from the Warren Centre research, risk allocation is perhaps the most important. Far too frequently, the preferred approach is to pass risk onto the contractor.

This ignores the fact that astute risk management allocates the risk to the party best able to manage that risk. By off-loading all risk, clients ultimately pay a higher cost for the contractor’s management of those risks.

The current stoush between the NSW Government and Spanish contractor Acciona is instructive. In June 2018, the media reported that Acciona, which is currently building the $2.1 billion CBD to South East light rail project, had demanded an extra $1.1 billion to finish the job. Acciona claims alterations to the route and the discovery of extra utility connections and wires under George Street have cost millions. This comes after one of the three tenderers for the job withdrew because it was unhappy with the risk allocation of the utilities relocations required.

Compare this with the experience on the Cross City Tunnel project. NSW’s

then Roads and Traffic Authority decided that, given the length of the procurement process, it was prudent to move utility assets prior to the main tunneling works commencing. The relocations were done under budget and delivered on time in a relationship of collaboration.

COST AND CONTRACT TRANSPARENCY Transparency of costs is also essential to the delivery of efficient and ultimately successful infrastructure projects.

Collaborative contracting approaches – whereby clients agree to collaborate with bidding suppliers to find the best solution that creates and shares value for each party and each situation – is a successful model employed around the world. Working collaboratively increases efficiency and reduces abortive work, especially on complex projects with restricted timeframes. However, collaborative contracting demands that all parties actively seek win/win outcomes.

The complex and often confusing multiplicity of standards, especially between federal, state and territory legislative systems, also reduces efficiencies. The most efficient way of working is clear: the same standards and legislative code in each government jurisdiction. Imagine, a single Security of Payment Act to follow regardless of where works were undertaken? Or a single OHS, WorkCover or public liability system? Meanwhile, our current structure continues to impede efficiencies in project delivery.

One of the biggest inefficiencies in procurement of works are the contracts used. There is a tendency to use old contracts that have been tested in the courts, as everyone is familiar with their workings. However, these contracts must be heavily modified to capture the latest legislative changes. The multitude of

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INFRASTRUCTURE

different contracts available is enormous, but they are rarely left unamended, even if they are currently compliant. Each project team may want to create their own special contract, but few projects are unique. By using a single suite of contracts through the country, we would realise significant efficiencies, which would, in turn, lead to lower tender prices and shorter procurement periods.

SUITABLE SKILLS TO DELIVER A final risk to infrastructure projects is ensuring the industry has the skills to deliver. In some cases, this is not a concern. For example, Australia has sufficiently-skilled tunnellers from the mining boom who can meet the staged release of tunnel projects.

The challenge arises in finding suitable skilled and qualified consultants to manage, design, cost and control these projects. The NSW Department of Education and Training’s summary of 2016 student figures has found that only 2.3 per cent of students are studying architecture and building. A further 7.9 per cent of students are studying engineering and related technologies.

We must encourage more people to choose well-paid, interesting and fulfilling careers in the construction industry, otherwise there will be nowhere for our new residents to live, work and play.

FUNDING THE FUTURE The million-dollar question remains: how will we pay for all this infrastructure?

Value capture along transport corridors is an obvious way to help fund the future.

The term ‘value capture’ refers to funding and financing mechanisms which leverage the multiple benefits generated by new or upgraded transport infrastructure, from uplift in property values and higher workforce participation rates. The Australian Government launched a value capture discussion paper in 2016 and is currently examining how to use policy and funding levers to stimulate the use of value capture in the development and delivery of transport infrastructure.

The value capture model can encompass areas of significant population, commercial and other employment growth areas such as education, health and retail. Currently, Sydney Metro North West is undertaking significant planning around new stations. At Rouse Hill station, for example, Sydney Metro North West is exploring major residential and commercial opportunities to develop the right mix that encourages businesses to relocate. The master planning is being controlled to ensure that a preferred solution is achieved.

Value capture can also be applied in other areas by building over the top of existing transport corridors in proximity to the city. Current proposals are being prepared to develop the air space over the rail corridor between Central Station and

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Cleveland Street. This area is dead space in the centre of the city and its potential use could add significant commercial and residential opportunities while maintaining the full functionality of the station. There have been missed opportunities in the past, such as the Epping to Chatswood Rail Line, at which options were considered for a large residential and commercial tower above the station. We can’t miss these opportunities again.

Despite their unpopularity with the public, user pays models should also be on the table. While media articles continue to sensationalise the impact of current and proposed toll roads in Sydney, these have been demonized over need, impacts, cost and tolls. A special investigation by the Daily Telegraph in June 2017 found that Sydney will have more road tolls than any city in the world by 2023. This begs the question: how else should infrastructure be funded? Despite the challenges, we are poised at the cusp of a very exciting time in Australia – one which will lay the foundation for our nation’s ongoing prosperity. Our risk is that we fail to deliver the infrastructure we need for growth. While there are inherent risks in any project, the benefits to the nation – enhanced productivity, liveability and prosperity – are too big to ignore.

This article has been written by Gillian Cottle, Director at Slattery.

First published in the Australian Local Government Infrastructure Yearbook 2019

INFRASTRUCTURE - PROJECT TEAMS

DEVELOPING COLLABORATIVE AND LESS ADVERSARIAL PROJECT TEAMS THROUGH COACHING Dr Dominic Ahiaga-Dagbui Deakin University Travis Juffermans Barwon Water

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INFRASTRUCTURE - PROJECT TEAMS

Ask any sports fanatic what some of the defining characteristics of a champion team are and you will likely hear these - “Effective Teamwork”, “Strong Leadership” and “Clear Vision”. It’s a story proven time and time again in the locker room, the battlefield and the boardroom – teamwork and leadership are essential enablers that can turn a group of individuals into a well-oiled ‘machine’ capable of reaching high performance that far surpasses their individual capabilities. But the key enablers of high performance do not just happen by chance – they have to be intentionally developed and nurtured over time.

Creating a team culture capable of supporting productive social and project environments enables high performance, innovation and efficiency.

Yet, fixed-priced contracts based on traditional design-bid-build delivery can foster an adversarial mentality that is counter intuitive to these principles.

Time and time again construction and infrastructure delivery companies and individuals are brought together in high-stake, high-pressure, complex environment and expected not just to perform but to succeed from the onset.

Project relationships are governed by contracts designed to allocate risks between parties with provisions like performance bonds and guarantees, liquidated damages and retentions that attempt to enforce performance.

What is often overlooked is that such environments often set the commercial drivers of the clients and contractors on a collision course.

The adversarial win-lose mentality perpetuated in such a contractual environment has the potential to negatively impact not only the quality of

delivery but relationships between the project team as a result of claims and disputes. As a consequence, a significant effort is often expended on detailed documentation to protect against a potential later dispute, even where parties are on relatively good terms.

Relationship based contracting approaches, such as alliancing and partnering, seek to address this by building better functional relationships and cooperation. However, these approaches are only appropriate, for high-risk, high-value projects and clients with regular high-volume project work to incentivise contractors to make relationship adjustments. The most common form of contractual relationship in the construction industry thus remains the traditional fixed price design-bid-build, which typically does not incorporate relationship building strategies for developing effective teamwork. Incorporating relationship principles into traditional fixed price design-bid-build projects through team coaching and facilitation may hold untapped potential to support high performance in construction delivery.

"Fixed-priced contracts based on traditional design-bidbuild delivery can foster an adversarial mentality that set the commercial drivers of the clients and contractors on a collision course."

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AN OPPORTUNITY TO THINK DIFFERENTLY Barwon Water’s 2012 Water Supply Demand Strategy identified the need for a major water supply upgrade project aimed at improving long term water supply security and resilience in the town of Colac, a key industrial, commercial and administrative centre located in the Colac Otway Shire 150km south-west of Melbourne, Australia. Consisting of a 14km pipeline, pump station, earthen basin storage and diversion structures, the upgrade project was originally planned as a single works package to be delivered sequentially over a 24-month period commencing 2018. However, based on updated hydrology forecasts and water security assessments completed late 2015, the project delivery timeframe was accelerated.

Design commenced in January 2016 with a planned project completion date of 2017. In order to achieve this accelerated delivery timeframe, the four major works packages had to be delivered concurrently. In addition to the typical challenges of constructing large infrastructure projects and project fast tracking, this strategy introduced new risks and requirements associated with managing multiple contractor interface points within a constrained work area and separate construction schedule critical paths that were potentially in conflict.

Risk planning completed in the early stages of the project highlighted the need for effective working relationships and teamwork between the project teams working on the different packages of the project to ensure smooth integration, joint problem solving and innovation. This presented the chance to think differently

INFRASTRUCTURE - PROJECT TEAMS

and try a new approach. To mitigate risk of adversarial relationships and barriers to collaboration, Barwon Water sought the expertise of John Morrison from Frontline Coach Ltd and Deakin University researchers, Dr. Dominic Ahiaga-Dagbui and Dr Olubukola Tokede, to develop and test the effectiveness of a pilot concept called Project Leadership Program (PLP).

COACHING AND FACILITATION The PLP consisted of a Facilitation Model based around on-site workshops and team coaching led by an external facilitator (Frontline Coach Ltd) throughout the project delivery cycle in order to support project stakeholder teams and engender strong leadership and optimum client-contractor relationships. The coaching was focused on enhancing performance within a team by attempting to remove relational obstacles and empowering the team with the resources and capabilities necessary to circumvent challenges, solve problems together and reinforce good performance to achieve optimum project outcomes.

The coach’s role also involved helping the team set realistic goals and targets, provide assessment and feedback, encourage and motivate the team, and even confront negative behaviour where appropriate and necessary.

Ultimately the coaching approach adopted must be shaped by a number of conditions including the frequency and duration of the coaching relationship, the purpose of the coaching, the number of teams involved in the coaching framework and whether the outcome of the coaching exercise relates to shortterm or long-term goals. Typically, the

coach needs to be flexible and be able to respond to the different dynamics of the team and the project - there is no one size fits all solution.

LEARNING FROM REAL WORLD APPLICATION Data collected from the project team supports a claim that the PLP facilitation program provided the mechanism necessary to develop team behaviours that support enhanced performance and create an environment less adversarial, and more collaborative than traditional contracting. But, how exactly does the facilitation model improve client and contractor relationships and enhance project problem solving and project outcomes? What lessons were learnt in this pilot application of team coaching?

Here are seven key points:

1.

SET GROUND RULES EARLY

The facilitation process begins with the establishment of project team ground rules well in advance of any works on site taking place. These ground rules are shared guidelines that define baseline acceptable behavioural models for project team members in relation to communication, cooperation and problem solving. Setting ground rules is a recognition that successful project delivery depends on managing both the technical aspects of the project as well as the often complex people and organisation dynamics.

2.

PERFORM TEAM “HEALTH CHECK” FREQUENTLY Once the project is underway, regular monthly workshops are used to checkin with team members and assess the project team culture. A crucial part of

these team “health checks” involved team members rating their own and each other’s performance against the set ground rules and providing honest feedback on performance and expectation. This process can sometimes be confronting and the role of the Coach is crucial at this stage to facilitate conversations towards a focus on collaborative outcomes.

3.

YOU GET OUT WHAT YOU PUT IN

Effective facilitation requires full commitment to the process by the entire project team. A key client requirement at tendering stage was that successful bidders had to commit fully to the facilitation program throughout project delivery. To demonstrate their own commitment, the client agreed to cover the contractor’s costs and time allocated to the program.

4.

RELATIONSHIP CONTRACT

In addition to the formal fixed price contract implemented on each works package, the facilitation process results in the formation of a second social “contract” between the client and contractor: this relational contract between the project parties engenders team members with tools and options not available under the formal contract to address critical behavioural issues that can halt, threaten or derail the successful delivery of the project.

5.

ENCOURAGE OPEN AND HONEST COMMUNICATION Facilitation provides an environment for honest communication of project issues necessary for developing a better understanding of each company’s objectives, thereby reducing some of the usual barriers to information sharing and interactions between

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INFRASTRUCTURE - PROJECT TEAMS

project teams. Teams are empowered to express concerns in relation to emergent problems and progress which improves transparency and helps foster critical trust between team members. In the words of one contractor’s project manager “By having your client’s trust there is always a subtle positive shift in relationships on site and in the office.

This shift has a significant impact on project delivery and the site dynamics”

6.

PURSUE BEST FOR PROJECT (BFP) IDEALS

A Best for project (BfP) approach is one where parties commit to behaviours and decision making that consistently prioritises the objectives and outcomes of the project, the main values of which consist: • ‘we win together’ or ‘we lose together’; • ‘we work through problems not by apportioning blame but by looking for solutions together’; and • ‘your problem is my problem’.

BfP principals are uncommon, if not completely absent, from traditional delivery contracts. They enable project teams to remain creative and constructively engaged as opposed to acting from a self-preservative or defensive position which inhibits innovation and value adding.

7.

WALK THE TALK (OLD HABITS DIE HARD)

Fostering a BfP culture necessitates a high level of trust, accountability and teamwork. Clients must exemplify behaviours for the rest of the team to follow as trust begets trust and collaboration begets collaboration.

Where the project team perceives that

the client, or their consultants, are aggressive or belligerent, they would usually revert to traditional adversarial behaviours as well. This is perhaps even more important when things go wrong.

Blame and criticism almost inevitably escalate conflict and disagreement with defensive positions becoming even more entrenched. The role of the coach is important in helping the team navigate these tensions, using requisite imagination to anticipate and proactively attenuate possible reversionary tendencies as they arise.

CONCLUDING THOUGHTS The performance of a project team largely depends on how well they work together to navigate uncertainties and respond to risks within the dynamic site environment. However, construction delivery is often adversarial as the different parties typically have competing commercial drivers. Clients typically rely on the use of arm’s length contractual approaches to ensure compliance and performance and curb the traits of opportunism in transactional frameworks. Coaching through project facilitation presents an opportunity to help the team develop key enablers of high performance such as teamwork, collaboration and trust.

Project facilitation requires effort and commitment from all team members, especially the client. Thus, it may be most suited to clients with a continuous volume of work and regularity of relationship with the same partners. Such clients may be able to develop structures necessary

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to ensure project delivery partners are moved towards increased collaboration and best-for-project ideals where overall benefits outweigh the challenges inherent in such an approach. In some regards, facilitation may best be viewed by clients as a potential soft insurance policy on key projects where the relationship between project team members presents a potential risk to the successful delivery of the project and realisation of the project benefits.

That said, it is also necessary to realise that there will always exist cases where teams or companies just do not work well together and no amount of ‘team building’ or ‘culture creation’ would be useful – in these cases, the team may be better served by the coach focusing their energies on helping members simply deliver their contractual obligations in the contract.

WHAT NEXT? Following a successful initial trial and favourable project outcomes, Barwon Water has moved to implement the PLP Facilitation program on three other critical major projects. Two of these projects are currently under construction, whilst the third was completed in late 2018 with similar successful outcomes as observed on the case reported in this article. In addition to the targeted implementation of facilitation, Barwon Water is currently piloting a small project facilitation process across two asset renewal programs as well as integrating aspects of the PLP facilitation model concept into their project delivery framework for delivery of internal cross functional business projects.

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