Want to avoid a major project fiasco? Learn from others’ mistakes

Written by Louise Hart on 21 September 2015 in Analysis
Analysis

Louise Hart, author of Procuring Successful Mega-Projects and a former project director for the establishment of major transport infrastructure contracts in Sydney and London, explains that when it comes to setting up major government contracts, learning from experience is commendable, but learning from other people’s experience is much less painful

I used be a project director, engaged in establishing major government contracts in Sydney and London, the largest of which was a $3.6bn privately financed project for the procurement of 78 trains for the Sydney metropolitan rail network. When I later left to work as an independent consultant, one of my colleagues remarked how impressed he had been in the early days of the project that I approached problems without preconceived ideas, and was willing to listen to the team’s suggestions before deciding what to do.

It was true I had no preconceived ideas. All too often I had no ideas at all. There was very little available in the way of useful guidance on how to set up a contract for the delivery of a mega-project. 

Standard procurement guidelines were positively unhelpful. One set told me to accept the best bid without negotiation. Fair enough when you are dealing with a standard form contract for delivery of well-understood goods or services. But a mega-project? The largest contract I dealt with took the form of more than 200 separate agreements, which filled 21 three inch ring binders chock-a-block when printed on double-sided A4. You want me to sign that up without negotiation? Puh-leez.


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Project management skills certainly came in handy, but PMBOK, the Project Management Body of Knowledge, remains silent on mega-project essentials, like how to secure a slot on the Cabinet agenda when the minister’s staffers are feuding with the Cabinet Office (try asking Treasury) or what to do if your steering committee leaks (no ifs, they all leak like sieves, concentrate on managing the information that goes in and make it the chairman’s problem to deal with stuff that comes out).

The lack of useful guidance is the more depressing because time after time, public inquiries into mega-project debacles have shown that the roots of the fiasco are found in the procurement phase. Mistakes made in contract establishment can doom a 30-year contract before the ink is dry on the corporate seal.

Public inquiries and court reports have, in fact, been one of the better sources of guidance available to a project director. No one who has read Cubic Transportation Systems Inc & Anor v State of New South Wales & 2 ors [2002] NSWSC 656 will ever make the mistake of discussing the procurement process with a bidder without an independent witness: the bidder alleged various damaging things had been said. The process challenge was ultimately dismissed, but not before the unfortunate project director had spent nine full days in the witness box, eight of them under gruelling cross-examination. 

Personal suffering is not the only downside to this approach to professional development. The Report of the Laidlaw Inquiry, 6 December 2012 (HC 809), one of several inquiries into the Department for Transport’s failed attempt to set up a £5.5bn contract for the InterCity West Coast passenger train franchise, provided many valuable insights into how not to set up a contract. But learning from failure is expensive: the department spent £2.7m on professional fees relating to the legal challenge to the procurement process and £4.3m on costs relating to the various inquiries, never mind the tens of millions paid in compensation to the bidders.

The tools and techniques that make or break the procurement phase of a mega-project need to be more widely available. Every project is different, and the learnings from each need to be communicated and shared. I have tried to distil my own 30 years of experience into my book, Procuring Successful Mega-Projects. It’s the book I wish had been available to me when I was starting out. If you are involved in setting up major contracts, whether as principal or adviser, public sector or private sector, I hope it will mean you don’t have to learn some of this stuff the hard way. Good luck. 

About the author

Louise Hart’s book Procuring Successful Mega-Projects: How to Establish Major Government Contracts Without Ending up in Court is published by Gower

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