anthony shaw

It is said that in the first design meeting, Miralles, armed with some twigs and leaves,
thrust them onto a table and declared "This is the Scottish Parliament"...

In 1998, the Scottish Parliament Corporate Body decided to build a new parliament house
in Edinburgh to be completed by mid 2001. The new parliament was finally completed
20 months late at more than eight times the cost, from £50 million in December 1997 to
£431 million in February 2004. The resulting buildings are an architectural success,
however, could the excessive escalation in cost and schedule have been reduced by
better project management practices?

Project management is the process of ensuring that a project successfully achieves the
client’s requirements. It could therefore be argued that any parameter that does not
contribute to project success is not important to the process of project management.
Research has shown that the measure of the success of a project clearly differs between
public sector projects (funded by a State) and private sector projects (funded by private
companies) due to significantly different project environments and sources of funding.

An evaluation of the project management processes, schedule and cost performance of a

public sector project such as Holyrood, therefore requires a consideration of the major
differences that exist between state funded and privately funded projects.

Private Sector Projects

Private Sector Projects differ from public sector projects in that cost, time and quality are
all of equal importance since the project product will enter a competitive market with
cost, time and quality thresholds.

Public Sector Projects

Public Sector Projects are funded by a State through the authority of a State
representative. In reality, public sector projects are not cost limited and usually not time
limited, however, it is unlikely that a State representative would declare such a position in
relation to a state funded project. Consequently, the only real measure of the success of
the project is the clients’ perception of the quality of the product.

Project Management of public sector projects

A significant problem for project managing a public sector project is that the State will
attempt to retain control of the project and will not pass complete authority to the project
manager to deal with the risks to costs and schedule posed by the distinct characteristics
of the public sector project. This may be a subversive means of ensuring that true costs
remain transparent until late in the project life. The three distinguishing characteristics of
state sponsored projects which pose the greatest risk to project success can be identified
as follows;

1. Political pressure

A significant external environmental factor experienced in a public sector project is

political pressure. Political pressure acts upon the client since it is ultimately accountable
to a political force, usually an electorate. A State will expect a public sector project to
deliver a high quality product that ensures a high level of performance over the product
life cycle. The costs of achieving such a product however, can be politically sensitive with
an electorate and therefore the State representative will underestimate initial costs to
gain electorate approval. Unfortunately, the initial underestimation of costs can
undermine any attempt at effective cost and schedule management for the entire
duration of the project.
anthony shaw

2. Conflicting stakeholders

A public sector project, due to it’s nature, will be influenced by the needs of many varied
stakeholders. Opposing political parties, conflicting views amongst members of
parliament, environmental protection groups and other public action groups all have the
power to influence a public sector project. The varied and often conflicting expectations
of the stakeholders can be a significant source of delay to approvals and modifications to
project specifications.

3. State funding.

The state has an almost unlimited ability to pay the bills. In almost all cases, the political
embarrassment of not completing a project ensures that the state will continue to pay
until the project is finally completed. This can lead to an ambivalence towards project
costs amongst contractors and subcontractors.

Evaluation of project management at Holyrood.

A project can be broken down into four distinct sequential phases; concept, design,
implement and commission. Holyrood, is an example of a fast-tracked project, where
the design, implement and commission phases are executed at the same time rather than
in succession. A fast track project attempts to execute a project in a time limited
schedule by performing activities in parallel within the restraints of the logical
progression of inter-related activities. The cost-time trade off means that fast tracking
leads to a higher cost per unit of work, but if correctly managed, can lead to a reduced
schedule at a predictable and acceptable cost. The key to executing a successful fast
track project is a an accurate and detailed feasibility study and concept phase.

Feasibility Study

The feasibility study is the fundamental basis for defining the project work scope and is
performed by the contractor as part of the project concept phase on the basis of the
project charter or brief provided by the client. The feasibility study should involve a very
detailed analysis of stakeholder interests, clients’ needs, project viability and constraints,
investigation of options, value management and cost benefit analysis along with
recommendations. Any deficiencies in the project charter proposed by the client should
be revealed, clarified and resolved by the feasibility study. It is important that the
feasibility study is supported with sufficient time and resources to provide a thorough
analysis of the potential project variables. An accurate, detailed and realistic feasibility
study minimises the potential for the client to make later alterations and provides the
basis for accurate project planning, controlling and execution.

The Holyrood project did not involve a properly conducted feasibility study due to the
haste of the client to initiate the project. An exhaustive feasibility study would have
delayed construction start up, however significant deficiencies would have been identified
and resolved reducing overall downstream costs and saving time. The Spenceley report
(March 2000) presents a chronological history of changes to the client’s project
requirements and the design contractor’s estimate of cost from project initiation until
March 2000. Evidently, a comprehensive feasibility study was not conducted. Instead, a
protracted process of design development took place whilst design and construction
phases were already underway.
anthony shaw

Basic project management experience indicates that the cost to make change increases
significantly from the concept phase to the design phase and so on. The cost of change is
therefore very high when the change effects construction activities. A fast track project is
particularly susceptable to cost escalation since design changes usually incur significant
rework in construction. The quality of the feasibility study is therefore very important in
fast track projects since it is the means to ensure that expensive project change is
minimised.

The inadequacy of the feasibility study is the fundamental reason for the slippage and
over run of the Holyrood project. However, there are other factors that contributed to the
escalation of the budget and extension of the schedule, an analysis of the nine main
areas of project management application identifies some of these factors.

1. Project Scope Management.

2. Project Time Management.

3. Project Cost Management.

Initiating a project without an accurate and well defined scope of work and cost/work
breakdown not only undermines accurate cost and schedule planning but also prevents
effective progress monitoring and reporting taking place and creates uncertainty in
project scheduling and forecasting of the final project end date, since an accurate
programme and budget cannot be established. The Project management monitoring and
reporting process at Holyrood was unable to estimate costs and completion dates until
the last few months of the project, an indication of the extent of the difficulty
experienced by the monitoring systems (or lack of) and the extent of cost and schedule
disruption due to design developments.

4. Project Quality Management.

In this respect the Holyrood project successfully incorporated the clients quality
requirements.

5. Project Human Resource Management.

A difficult project can lead to dissatisfaction and a high turnover of employees posing a
risk to the project objectives. Two Project Managers resigned during the project, however
the impact to costs and schedules due to any disruption is relatively small.

6. Project Risk Management.

Risk management was severely impeded by the general lack of incentive to address
problems since cost control was ineffective and costs therefore became inconsequential.
As a result, a risk acceptance philosophy dominated the Holyrood project. However, a
rigorous risk management plan is a fundamental tool for ensuring that the possibility of a
successful project is maximised and possibility of an unsuccessful project is minimised.
Therefore, the Holyrood project schedule and costs were negatively impacted by
suboptimal Risk Management stemming from a risk acceptance philosophy.

7. Project Procurement Management.

anthony shaw

The Holyrood project adopted the Construction Management method of procurement.

This method is appropriate for fast track projects since it allows the construction phase
to commence with phased design deliverables without the need to define detailed work
packages. The construction contracts can be awarded and work initiated since the sub
contractors are contracted to provide a resource to perform services rather than
contracted to provide services to complete a work package. This method can be
advantageous where the project specifications have been accurately resolved during the
feasibility study and project scope, cost and time management systems are effective.
However, where the project scope has been inadequately defined and continual design
changes occur, the construction management contractual method will magnify the cost
escalation since it allows early mobilisation of construction resources and therefore
maximises the cost to make change. The financial risk remains entirely with the client
since the contractor is paid for all work irrespective of progress. This leads to an
apathetic approach to progress and taking initiatives since there is no financial incentive.

8. Project Communications Management.

9. Project Integration.

The Project Manager should be authorised by the client to act as the single point of
responsibility for the project. The Project Mananager should be responsible for
integrating the processes of project planning, control and execution and communicating
project decisions. The line of authority at Holyrood ensured that control remained with
the client, the Corporate Body. The Corporate Body appointed an Accountable Officer to
be responsible for completing the project with responsibility for day to day issues
delegated to the Project Director who worked in conjunction with the Progress Group.
Effectively, project authority remained with civil servants throughout the project, who
acted with political motivations. The Project Manager was not empowered to act as the
single point of authority which may explain the poor implementation of Project
Management methods, lack of project direction and undoubtedly added to the
inefficiency of the project.

Conclusions

The inefficiencies that caused the escalation of costs and extension of schedule at
Holyrood could have been avoided by completing a comprehensive feasibility study. This
would have lead to an accurate definition of the client’s requirements and accurate
planning of work scopes, schedules, budgets and the development of an effective Risk
Management Plan prior to embarking on the fast tracked design and construction phases.
In such circumstances, the Construction Management of procurement would possibly
have been relatively beneficial since changes would be minimised and effectively
managed. In addition, to ensure that the project management systems are successful, the
Corporate Body would need to empower the Project Manager as the single point of
authority. In reality, the unique characteristics of public sector projects would tend to
ensure that an efficient approach to project management would not be taken since it
would expose accurate project costs to public scrutiny and disapproval.