The United Kingdom’s Public Accounts Committee (PAC) and National Audit Office (NAO) have repeatedly identified issues and made recommendations on the need to improve delivery of major projects. While these recommendations seek to better the UK experience, there are takeaways which should guide the delivery of major projects in other countries. Most notably is the need to invest in technology to enable effective contract management.
Major Projects are no walk in the park
The UK’s Infrastructure and Projects Authority’s (IPA) 2020 annual report on the Government’s Major Projects Portfolio includes 125 projects, with a whole life cost of £448 billion. HS2, the largest project, @£55.7 billion, is ranked unachievable.
CURSHAW’s interactive presentation of this data reveals that only 0.6% by value of all projects are rated as ‘highly likely’ to meet their objectives, rising to just 4.5% if ‘probable’ is included.
Best practice contract management is critical
The challenges faced on major projects are many and varied. Not the least of these is contract management. The NAO, PAC and IPA recognise the obvious benefits to be gained through adopting innovation and best practice in contract management.
The NAO’s report on ‘Transforming Government’s Contract Management’ (2014) noted that ‘poor contract management is a long-standing issue’; ‘previous attempts to improve contract management have not delivered sufficient change’; ‘managers have rarely demanded combined portfolio information to scrutinise and challenge operational contracts’; ‘contract management has been vulnerable to under investment’ and ‘the government will not get value for money from its contracts until it improves contract management.’
(i) The Formula
Good contract management is under-pinned by the truism that optimal project outcomes result from investing in People, Tools & Processes.
Throwing people at contract management is not the solution. People are not a cheap resource and change over time. There is a downward pressure on trained and skilled resources. Even if money were no obstacle, it would be hard to argue why technology should not be adopted in place of people where technology can perform the same function better, faster and cheaper. People should be reserved to work on areas where technology has yet to catch up.
Projects that fall short in investing in competent people empowered with good processes and a good technology stack are likely to fail.
(ii) The Technology
Tech savvy SMEs are now driving a transformational change in contract management. These companies allow major projects to adopt best of breed tools in a fully integrated manner. As McKinsey observes:
‘the construction technology ecosystem is shifting toward integrated software platforms that better serve customer needs’.– McKinsey & Company, “Rise of the platform era: The next chapter in construction technology” (October 30, 2020)
A key starting point is the contracts themselves. Although contracts are at the core of any major project, a number of major projects still manage them in 25 y.o. PDF format. Affinitext’s global customers recognise that this pre-web format does not meet their needs. They know their contracts are valuable assets and treat them appropriately by upgrading them into an Intelligent Document Format (IDF) format.
IDF provides all stakeholders with easy understanding of complex contracts; coupled with auditable compliance and knowledge sharing at each clause. Simultaneously, it drives collaborative contract management and breaks down silos that exist between teams, projects and parties. Our customers build their internal processes and corporate knowledge into the documents and instantly enjoy best practice contract management across individual projects and portfolios of major projects.
The UK has long been regarded as a leading force in the delivery of major projects. It is clear, however, that there are areas which require urgent redress. Fortunately, technology now exists which will immediately eliminate a number of challenges traditionally associated with contract management. That’s good news for the UK. It’s also good news for every other country that is embarking on promising major project and mega project pipelines.