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Partnership is More Important than Digital Innovation when it comes to Complex Construction Projects

Across all industries, construction management has perhaps been the slowest to adopt digital technologies, and many opportunities exist to drive out inefficiencies.   Due to the multi-stakeholder and shifting nature of roles and responsibilities over the life of construction projects, numerous factors can be aided by digital technologies.

I recently worked on a detailed case study of a successful R&D facility construction project at Gilead Science, one of our SCRC partner companies.  In interviewing managers for this case, I discovered how digital investments for managing large complex projects are not enough;  they must be accompanied by the selection of the right team of individuals, a strong sense of partnership with key suppliers, a burning platform that drives changes in behavior, and a transformation of the cultural values of an organization tied to fundamental operational principles.  The project in this case faced considerable challenges, including a highly constrained market environment, a very brief time window, cost constraints, and an Engineering group that was in the middle of a multi-year organization transformation with a diverse mix of stakeholder objectives for the project that had to be met.

Despite these challenges, the project was brought in under-budget and on schedule, achieving other objectives that often seem at odds with each other (best-in-class sustainability ratings, quality scores from customers and with a remarkably low number of change requests), resulting in a state-of-the-art laboratory research facility for one of the leading scientific healthcare companies in the world.  In this study we found that deep operational working principles set the foundation for internal and external stakeholder relationship management in the project procurement activity.

In general, we find that significant stakeholder engagement early in the architect and contractor selection process leads to a more harmonious relationship, which plays a critical role in the ensuing contract management process, and ultimately successful outcomes.

The differentiating factor that resulted in the award of the business to several suppliers being considered was that the winning company, despite not having lab-related or biopharma construction experience, had a better alignment with the buying company’s culture, and would be dedicating one of their co-founders to the project,.  One of the key questions used in the evaluation assessment was “Provide a recent example of how a potential cost overrun was identified, communicated to owner, and avoided. What key lessons learned came from the experience?”  This component that assessed the right alignment of cultures later proved to be a critical factor during the execution of the project, which involved a good number of complex negotiations.  The team recognized the need for a contractor that was not unprepared for high levels of uncertainty and change in a project environment, and sought one that would understand the importance of facing facts, acknowledging problems when they occurred, and engaging the team to collaboratively work out each challenge as it arose. Continued dialogue around performance metrics allowed both parties to produce an amazingly successful project outcome.

A key insight from this case involves the need for differentiated supplier relationship management for procurement-project team integration.  Standard bidding practices are ineffective for construction contracts that are fraught with high levels of risk, diverse stakeholder requirements, and constrained market conditions.  The results suggest that the combined effect of reliance on metrics (the Deming method) and frequent visibility (digital insights) lead to improved communication between internal and external parties, which is imperative to enable agile responses to a changing project ecosystem.