Video - Innovation, flexibility and learning in (mega) projects by Prof Andrew Davies

Project Half Double - A Proven Concept April 2018

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Video - Innovation, flexibility and learning in (mega) projects by Prof Andrew Davies

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Transcript - Innovation, flexibility and learning in (mega) projects by Prof Andrew Davies - Project Half Double


I hope you enjoyed your lunch and you've

00:07

enjoyed the the event so far I found it

00:09

really fascinating and it's been really

00:12

interesting to hear about half-double

00:14

and and really in many ways I've seen so

00:16

many connections with the work that

00:18

we've been doing in the UK over the last

00:21

10 15 years on mega projects and how you

00:24

bring innovation into mega projects mega

00:29

projects actually has been the whole

00:31

field of mega projects has been really

00:33

developed by Ben sleeve Burke

00:36

FLE bill I'm not very good with my

00:38

Danish so I do apologize you know but

00:40

he's done a fantastic job of really

00:42

developing the area and actually works

00:45

in in the in the UK in the side Business

00:47

School where he's really pioneered a lot

00:50

of working in in in mega projects so

00:54

what he defines as a mega project is

00:56

something which is a billion dollars or

00:58

more and that goes back a few years now

01:00

but that's kind of the regular type of

01:03

scale that we're talking about a mega

01:05

projects are full of uncertainties full

01:07

of risks and full of complexities so one

01:10

of the big challenges in mega projects

01:12

is really how do you actually embrace

01:14

the uncertainty how do you deal with

01:15

uncertainty and especially given the

01:18

long duration of a mega project if many

01:20

of them are have long planning periods

01:22

and they go on for ten years they take

01:25

ten years to develop so how could you

01:27

possibly predict and identify all of the

01:30

sort of risks that might happen all of

01:32

the events that might happen 10 years in

01:35

advance so within a mega project it's

01:37

really important in the recent research

01:39

that we've found to actually have an

01:42

innovative structure a flexible

01:45

structure and the structure that allows

01:46

for learning so you need because you

01:48

can't predict what will happen so many

01:50

years in advance you need to have the

01:52

ability to bring in new innovations new

01:54

technologies that might happen during

01:56

the life of the project the ability to

01:58

be flexible and adaptive as you've

02:00

talked about again connecting to the

02:02

half-double methodology and the bidder

02:04

and the ability to learn learning both

02:06

internally and externally benchmarking

02:09

looking at other industries other

02:10

projects

02:11

to work out how you can can can deliver

02:14

these so what I wanted to talk about is

02:17

really the research that I've been doing

02:18

on London's mega projects over the last

02:21

10 to 15 years and I've been working up

02:24

many of these projects are massive in

02:26

scale certainly in terms of their the

02:29

overall figures they're well over a

02:31

billion dollars and I'll talk more about

02:32

that in a moment

02:34

they're large they're complex and what

02:37

we've seen is a radical shift in the UK

02:39

in that period since about 2003 where

02:43

there's been a new way of delivering

02:45

mega projects and I want to talk about

02:47

that today this afternoon because in the

02:51

past innovation was something we must

02:53

avoid innovation innovation is

02:55

associated with a risk innovation the

02:58

ability to bring new ideas is a cost and

03:00

what we're finding now is that in these

03:02

projects they're actually saying let's

03:04

embrace innovation innovation is the way

03:06

to deal with the uncertain light so it's

03:09

a kind of a really big mind shift for

03:11

people in mega projects where the

03:14

standard way of working was very much

03:16

that have a fixed price let's try to

03:18

identify all of the possible

03:19

uncertainties will and it will account

03:21

for those in a fixed price contract and

03:23

will rely on established techniques

03:25

there's been a big shift in the UK and

03:28

move away from that kind of traditional

03:29

model to a new model which really allows

03:32

for complexity uncertainty and so on ok

03:37

so it's like this is a kind of a

03:38

fundamental shift really that we've seen

03:40

what I want to do is go through I'll do

03:43

a little bit of context I'll give it

03:44

I'll talk a little bit about London's

03:46

mega projects some of the worst I'll

03:48

talk about three in fact we over the

03:50

years we've been involved in about six

03:53

or seven of these projects in different

03:54

ways but I'll introduce three where

03:57

we've had kind of just to give you a

03:58

flavour of what the scale of these

04:01

projects are and it and you have to sort

04:04

of understand that these projects are

04:05

broken down decomposed into smaller

04:07

projects so a lot of the you know you've

04:10

got to think about as a program with

04:11

many different projects and many of

04:14

these methodologies we were talking

04:15

about could apply at the level of the

04:16

individual project within the program so

04:18

you know I think there's a lot of ways

04:20

of thinking about how your your what

04:23

you've been talking about today

04:25

and the research of the work that's been

04:26

done over the last few years could

04:28

really apply to these types of projects

04:30

then I'll talk briefly about the new

04:32

delivery model that I've spoke about

04:34

then what I want to do is identify five

04:36

rules and we talked a bit quite a bit

04:38

about simplicity Pere talked about

04:40

Michael talked about it and others have

04:42

talked about it and what I want to do is

04:44

identify five simple rules for bringing

04:47

innovation into projects and managing

04:49

complexity dealing with uncertainty and

04:52

we'll talk about that a little bit later

04:53

and then we'll end by thinking about the

04:56

implications for projects and how some

04:57

of the things that I've said might apply

05:00

to your projects as well okay so let's

05:03

look at London's large projects the ones

05:06

that I've been involved in just as a bit

05:08

of background in since 2010 there's been

05:12

4500 government projects in the UK in

05:16

the next ten years is going to be six

05:17

hundred billion pounds worth investment

05:20

in projects so the UK is is a site where

05:24

a lot of there's a lot of investment in

05:26

new infrastructure going on and that's

05:28

because in part because of the need for

05:30

any economy to upgrade its

05:32

infrastructure over over certain period

05:34

of time but it's also a particular

05:36

context of the UK where we've got aging

05:38

Victoria Victorian infrastructure and

05:41

there's a real need to replace that so

05:43

there's kind of a real focus on

05:45

infrastructure investment in the UK and

05:48

that's particularly evident in London

05:50

where everything really happens and

05:52

because it's in a major city a global

05:54

city delivering these projects is even

05:57

more complicated because you've got you

05:59

know you're alive living city and

06:01

projects are being delivered in the

06:03

middle of those cities with all the kind

06:05

of the possibilities of disruption

06:07

people get accidents through and through

06:11

numerous lorries been with bringing

06:13

deliveries and so on to these sites all

06:15

of this has to be considered

06:17

as well as the sheer scale of these

06:20

things okay so this look at three

06:24

projects to give you an illustration of

06:26

the kind of complexity and scale that

06:28

we're talking about here this is the

06:30

Heathrow Terminal five project probably

06:32

many of you have been through that that

06:34

is the brita the hub for British Airways

06:37

30 million passengers move through this

06:39

this this terminal and this was a really

06:42

key project a lot of the transformation

06:44

of the way we think about mega projects

06:47

and how they're delivered started with

06:48

this project they spent many years

06:50

planning for the project and recognized

06:52

that they couldn't do things the old way

06:54

this had to be done differently so they

06:56

created a new contractual approach they

06:59

created a way of collaborative

07:00

collaborating and working in integrated

07:02

project teams and they brought in lots

07:04

of ideas from other industries from the

07:06

car industry just in time from the

07:08

aerospace industry digital technologies

07:10

and modeling from the North Sea oil and

07:13

gas industry they brought in modularity

07:16

prefabrication because if you think

07:18

about an airport like this there was

07:21

only one entrance a very limited point

07:23

of access for workers 8,000 workers

07:25

coming in at any particular time and

07:27

it's a bit analogous to a North Sea oil

07:29

and gas platform where you have to have

07:32

you know if the it's very difficult to

07:34

deliver those things and construct them

07:35

on the limited science there was a lot

07:37

of learning from other industries and

07:38

the oil oil and gas industry was really

07:41

crucial because they used a great deal

07:43

of prefabrication modular components so

07:46

that they could easily be assembled

07:47

on-site when this project started there

07:50

was a massive planning inquiry we went

07:52

on for many years and it was the longest

07:54

planning inquiry in UK history and

07:57

during that period when they were

07:58

designing this building

08:01

they basically they do spend many

08:03

several years designing here and there

08:05

weren't all sorts of uncertainties that

08:06

were happening in the airport industry

08:09

the airline industry airline industry is

08:10

a very dynamic industry as we've heard

08:12

to some extent earlier with them the SAS

08:14

the SAS team talking about the luggage

08:16

even at that level these things are

08:18

quite difficult to manage and this was a

08:20

time when they were planning in the

08:22

government approval came in November

08:24

2001 and there were all sorts of things

08:28

that happened 9/11 happened in September

08:30

that year so the the design and security

08:33

regime had to be reconfigured that was

08:35

something they hadn't anticipated during

08:37

the planning period low budget airlines

08:39

were coming in these are all things that

08:41

would affect the way in which they

08:43

manage this this project and and they

08:45

fortunately they thought about this a

08:47

lot and they really worked hard on this

08:49

and actually said that we've got to do

08:51

this differently so this was I think

08:53

that an interesting project 4.3 billion

08:57

sorry I should have said this was a 4.3

08:59

billion pound project and it was it was

09:02

constructed from 2002 to 2008 it was

09:06

talking about you know the idea of

09:07

focusing on particular projects the way

09:10

they run these projects is they run them

09:11

a single project organizations so the

09:14

team is dedicated they only work on that

09:16

project with a project director for the

09:18

duration of that project so they get

09:19

focus they not distracted at all than

09:22

they ever have overall corporate kind of

09:26

support as a separate organization and

09:29

this body was the BAA British Airports

09:32

Authority set up attempt a separate

09:34

temporary project organization just for

09:36

the duration of this project to deliver

09:38

it there were it was the project was

09:41

just to give in sense of the scale there

09:43

were 16 major projects one of those

09:45

projects alone was 300 million the the

09:48

Piccadilly line to the airport so that

09:51

in itself was almost a mega projects is

09:52

a program of almost mega projects in

09:55

scale really fascinating and then it was

09:58

divided in 247 sub projects baa was the

10:02

main client body there was 300 people so

10:04

this is a big client organization

10:05

working in that to manage that and they

10:07

had anything between 60 and 80

10:10

first-tier suppliers so that just gives

10:12

you a sort of flavor of one

10:13

project and the kind of uncertainties

10:16

there was things that happen during the

10:17

project like heavy rains that delayed

10:19

construction these things are sort of

10:21

predictable but when they happen it's a

10:23

it's a nightmare it really kind of

10:24

messes up the project okay the second

10:27

one this is the second one that we

10:28

worked on and we were as a team we I was

10:31

working at Imperial College and then I

10:32

moved on to UCL but work with the same

10:34

people we were deeply involved in the

10:36

senior level with these projects and

10:37

here you see a project similar in

10:41

uncertainty it was a 6.8 he came in it's

10:44

6.8 billion construction project for the

10:48

London Olympics it wasn't just for the

10:50

Olympics and the Paralympics it was also

10:52

for leaving a legacy in London so this

10:55

area is one of the poorest boroughs and

10:57

regions of London and the idea is to

10:59

leave have an impact to limit impact by

11:01

having a leaving a legacy so right from

11:03

the beginning of the project they were

11:05

talking about how do we leave a legacy

11:07

here and you see many of the venues are

11:10

on this photograph here we have the in

11:16

addition see at the Olympic Stadium

11:18

you have the Aquatic Centre the

11:20

velodrome and other things and one of

11:22

the things about big projects is not

11:23

just uncertainty things that you can't

11:25

predict it's actually how you manage

11:27

complexity there were multiple

11:29

subsystems and systems that had to be

11:31

integrated this is all of these projects

11:33

or systems of systems projects and and

11:35

because you've got to deal with multiple

11:37

interfaces they had to have interface

11:39

management between all of these

11:40

different systems to fit it together and

11:42

that in itself generates uncertainty as

11:45

well when you try to fit these things

11:47

together it's difficult and they had 17

11:49

major projects each project and its own

11:51

contractor and its own supply chain and

11:53

then there was an overall client body

11:56

called the Olympic delivery authority

11:58

working with a delivery partner and a

12:01

new way of delivering these models is to

12:03

have a client fairly big client body

12:05

which is got lots of capability in-house

12:07

working with delivery partners and the

12:09

delivery partner manages the overall

12:11

program whereas the individual systems

12:14

if you like the stadium the velodrome

12:16

and all of those will have their own

12:18

contractor so they're kind of a loose

12:20

tight management across the overall

12:22

programme

12:23

in this way the key thing here unlike

12:26

the other projects is time and pace was

12:28

really important to the Olympics so this

12:30

was driven by Anna moveable deadline and

12:33

that meant let's set the culture the

12:35

tone everything about this project why

12:37

someone would go and that's the

12:41

stakeholder map we've been talking about

12:42

stakeholders this is from the there were

12:45

700 stakeholders that they had to manage

12:47

of course they had to bear in mind that

12:49

the main stakeholder is the was the

12:52

department responsible for the project

12:54

and the International Olympic body

12:56

overseeing it but you at the same time

12:59

as well as managing multiple interfaces

13:01

internally there's all these external

13:03

interfaces and that's partly connected

13:05

to the idea that you're doing these

13:06

projects in in a city in a company in a

13:09

very busy area okay third one anybody

13:13

heard of that project

13:15

cross rail so that one was six point

13:18

eight this last one the first one was

13:19

four point three this one is fourteen

13:22

point eight billion and at the moment

13:23

this is the biggest civil engineering

13:25

project in Europe and it has a similar

13:28

kind of structure it's got a client body

13:30

cross rail limited with it which is you

13:33

know about two hundred and fifty people

13:34

they have two delivery partners helping

13:37

them manage the program because it's

13:38

such a complex set of activities and

13:41

this is the breakthrough this is though

13:42

this is their big moment in these

13:44

projects tunneling it really matters

13:46

this is a business their technology

13:48

their baby and they celebrate these as

13:50

like a you know looks almost like a kind

13:52

of a painting from the Middle Ages to

13:54

some extent but but this is the

13:56

breakthrough this is Liverpool Street

13:58

this is the tunneling machine going

14:00

through at Liverpool Street alright I

14:02

just wanted to give you a flavor that

14:03

before we get into the details of the of

14:06

the projects and that's that's that's

14:08

what it is it's basically goes east-west

14:10

approximately across London and

14:12

underneath London this is an urban

14:14

railway system and so there's 21

14:17

kilometers of tunnels going underneath

14:19

London and at the closest point one of

14:23

those one of the crossroad tunnels is

14:24

only 37 centimeters from a London

14:27

underground tunnel the Northern Line so

14:30

this is a live tunnel and they had to

14:32

manage and coordinate that and they've

14:33

obviously done this with digital

14:34

technologies and techniques and

14:37

so it's essentially two tunnels of 21

14:40

kilometers to twin Bourque tunnels

14:41

running underneath London and this is

14:44

these are my photographs actually when I

14:45

was on site and because it's quite near

14:47

where we work and we had a site visit

14:49

this is Tottenham Court Road so this is

14:52

the you know the West End near Totten

14:54

Court Road junction with Oxford Street

14:55

very very busy imagine all of the ish

14:58

the challenges that the the men that the

15:00

constructors had on this site they're

15:02

building us you know building a new

15:04

station and below ground and the station

15:06

itself is 250 metres so it's the length

15:09

of Wembley Stadium Wembley football

15:11

stadium below ground 24 meters below

15:13

ground they have to bring all of the

15:15

workers in all of the materials all the

15:17

techniques under grandeur that at that

15:19

level so that just gives you another

15:21

flavor of of kind of what what we will

15:27

be looking at in that station alone when

15:29

the when the cross rail opens they'll be

15:31

two hundred to two hundred thousand

15:32

passengers a day going through that

15:34

station and and the actual air crush

15:38

rail as an urban railway system will add

15:40

10 percent to London's transportation

15:43

capacity

15:43

overnight when it opens in 2018 2019 so

15:47

what we've been talking about a mega

15:49

projects and this is again these 1

15:51

billion pound 1 billion dollar projects

15:55

they're important in general not just in

15:58

London globally McKinsey estimate that's

16:01

57 trillion is going to be invested in

16:03

infrastructure between 2013 and 2030

16:06

much of that the delivery model for

16:09

doing that is a mega project so make it

16:11

getting mega projects right is really

16:14

important as an activity and I actually

16:17

think I mean haven't listened to what

16:18

I'd heard I've heard today they could

16:20

really benefit from the method or after

16:22

half half double Miller methodology

16:24

particularly in the in the different

16:26

levels the different when you break them

16:27

down decompose into their different

16:28

parts this methodology could really

16:30

apply perhaps also a kind of program

16:32

level as well but that's something we

16:34

can think about right so the systems of

16:39

systems they're uncertain you know

16:40

there's there are certain things at the

16:42

beginning of a project you can you can

16:43

predict in work out in actually do a

16:45

risk register but there are many things

16:47

you can't predict and that's really what

16:49

I wanted to

16:49

today what we found in these projects is

16:52

that they are trying to be adaptive

16:53

trying to address embrace uncertainty

16:56

using your using the half-double

16:58

methodology and and take that on board

17:00

in the past that didn't really happen

17:02

this is a new way of thinking for big

17:03

projects the bigger the project the more

17:05

risk-averse they are they really are and

17:08

it's very difficult to change the

17:10

mindset of people in this I've talked

17:14

about the busy urban context their

17:16

transfer transformational they change

17:17

cities so they are really important in

17:21

the in the UK they you know the

17:22

government talks about them being too

17:23

big to fail and yet this is the figures

17:27

from bench leesburg nine out of ten so

17:29

only ten percent success rate so the

17:32

opportunities to improve productivity to

17:35

improve performance in this sector is

17:37

enormous and that failure rate applied

17:40

particularly badly to the UK until

17:43

recently we've you know in the UK with

17:44

I'm very very poorly and I just want to

17:48

give you a bit of that so let's look at

17:50

the list sorry just go back there so

17:53

let's look at the new delivery model but

17:55

in order to explain it I just wanted to

17:57

say a few words about what it was like

17:59

before so that you've got a sense of

18:01

what we're moving from what was the old

18:03

model and where we're moving to and then

18:05

you can see how the innovation is being

18:07

brought and the new approach has been

18:09

brought into this kind of thinking so

18:11

these are just four projects and I could

18:13

have given you many more the Channel

18:15

Tunnel was one year late and one billion

18:18

over budget so this is a poor poor track

18:21

record wembley football stadium it

18:23

depends when you judge the original bid

18:25

and that what they originally planned

18:28

for but that was over 300 million over

18:30

budget and three to four years late yeah

18:34

it was - the original bid the original

18:39

bid was sorry it was came in about 700

18:41

million so the original was just under

18:42

three it was under you know three around

18:44

three hundred but it's three four

18:46

hundred but it kind of very you know it

18:47

depends on what baseline where you take

18:50

the baseline for the actual bid if you

18:51

look at the big documentation of weeks

18:53

here

18:53

it's it goes back a bit yeah Scottish

18:57

Parliament building that the original

18:59

estimates cuz yes they vary the

19:01

estimates with between 10 and 40 million

19:03

that came in over 400 million so that

19:06

was one thousand six hundred percent

19:08

over budget so we Houston we have a

19:11

little bit of a problem here and we have

19:14

to start getting this right the Jubilee

19:16

Line is another one which there was a

19:17

lot of learning from cross rail that

19:19

came in about 1.5 billion over budget

19:21

that was just about on time it it was

19:24

delayed by three years but it only came

19:26

in he was it was supposed to be ready

19:29

for the Millennium celebrations linking

19:31

it to the Millennium Dome and it was

19:33

just about on time she asked about on

19:35

time it should have been three years

19:36

earlier so these are projects just about

19:39

on time okay don't just give you a

19:43

flavor so government reports have really

19:46

investigated what was going wrong people

19:48

have thought about this in projects

19:49

deeply studied what's going on at a

19:52

National Audit Office the Egan review

19:55

the Latham report these are industry

19:58

industry and government reports in the

20:01

UK have all found that these this we

20:03

could all know why these projects are

20:05

going wrong I'm going to start getting

20:06

it right and so fixed bias contract all

20:09

of them use a fixed price contract and

20:11

that assumes that the uncertainties that

20:14

you are likely to face can be embodied

20:15

in a contract at a particular moment in

20:18

time and imagine in 10 years time how

20:20

can we possibly predict everything

20:22

that's going to happen in the contract

20:24

and so a lot of were in the early days

20:26

was done on the contract but it's not

20:28

just about the contract a lot of the

20:30

original model was because of the Kapali

20:32

part because of the contract but was

20:34

adversarial it there was a arm's length

20:37

you know this is your responsibility

20:39

we've given you mr. prime contract or

20:41

miss Barham cantata the risk here

20:44

it's your responsibility when it goes

20:46

wrong but none of the contractors have

20:47

got the kind of you know kind of

20:50

resources to pay for the kind of

20:51

overruns that are likely to happen in

20:53

these projects and do happen and there

20:56

was a big issue around avoiding

20:57

innovation innovation simply was not

21:00

seen to be the thing to to focus on

21:02

innovation as I said earlier

21:04

to be a cost something to be avoided and

21:06

this is some Andy Mitchell program

21:08

director who's very in favor of

21:10

innovation by the way says when it comes

21:12

to no innovative ideas on major projects

21:14

the natural state of mind is to control

21:16

risk spray using the tried and tested to

21:18

actually just let's rely on existing

21:19

routines let's fix the price and maybe

21:22

we'll be lucky but you know ninety

21:25

percent of the times so there are two

21:29

things that happened in the UK that

21:30

really started to change the rules of

21:32

the game the first one was a new

21:34

contract and this was on the terminal

21:37

five project contract was developed in

21:39

the late 1990s the current the actual

21:42

construction worked in started in 2002

21:44

but they decided to have a completely

21:47

different type of contract they said

21:48

actually we'll have a flexible

21:50

contractors cost reimbursable so the

21:53

team's would be reimbursed their costs

21:55

and there was an incentive pop to you

21:57

know to incentivize them and if they

21:59

actually perform very well they would

22:00

share that money that you know part that

22:02

was set aside and so there was all sorts

22:05

of efforts to work out what the target

22:07

costs were and what kind of incentive

22:09

pot they should be so they were

22:11

encouraged to identify risks actively

22:15

encouraged and and and supported when

22:18

they did to develop them and they would

22:19

be rewarded for doing that

22:21

and they were also it wasn't just about

22:23

risk and risk registers they had an

22:25

opportunity rested registers so they

22:27

would recognize opportunities you know

22:30

they would look for opportunities that

22:31

might happen new materials new

22:33

technologies and so on during the life

22:34

of the project new techniques and many

22:36

new techniques as said earlier were

22:38

brought into this project from the from

22:40

other industries like just in time and

22:42

the car industry and so on this project

22:44

was really transformational it has

22:46

started the tape reshaped the way people

22:50

on projects thoughts about how we

22:51

deliver projects and that learning was

22:55

transferred to other projects her

22:56

learning began to be carried forward

22:58

other people people senior people on

23:00

these projects moved on to other

23:01

projects major contractors moved on to

23:04

other projects so for example Laing

23:06

O'Rourke and mace were the two biggest

23:08

contractors on this project they moved

23:10

on and became the delivery partners on

23:12

the Olympics they've played the the the

23:14

t5 card we've been on this project this

23:16

project

23:17

test it and they went they they became

23:19

the clients preferred delivery partners

23:21

on the Olympics and then we've seen it

23:23

further on the the the project director

23:27

was an to Rosslyn home on this project

23:28

he became a chief executive on Crossrail

23:31

you see a kind of circulation of people

23:33

so the learning starts to transfer

23:35

across and between projects so and one

23:39

way they they kind of talked about this

23:41

in the in the in in in the in the

23:44

company was just a way of characterizing

23:45

it under the traditional arrangement the

23:47

client dumps the risk and expects that

23:50

contractor to actually deal with the

23:52

risk that's been transferred so you see

23:54

these kind of relationships traditional

23:55

contracting that I've already spoken

23:57

about under the new relationship and

23:59

this is very unusual this hasn't

24:00

actually been repeated the client said

24:02

we're going to bear the risk ultimately

24:03

if the airport's late

24:05

it's our risk so how can we possibly

24:07

transfer the risk onto a contractor we

24:10

have to own that risk and it but it's

24:13

the it's the working relationships that

24:15

are so different here now under the t

24:17

p-- what was called the t5 agreement

24:19

because it's an agreement to work with

24:20

the contractors and the supply chain in

24:22

a new kind of way in a new collaborative

24:24

way you've got these kind of

24:26

partnerships different kind of contracts

24:27

but it was very difficult to do so on

24:30

the Heathrow Terminal five project the

24:33

project director said you wouldn't

24:35

believe the kind of the change program

24:38

that we had to implement here to change

24:40

behaviors it was like he said it was

24:42

almost like a hundred years of behavior

24:44

that we had to change and that was the

24:47

construction industry was very you know

24:49

adversarial it's your risk this is not

24:52

our risk and so on and he reckoned even

24:54

though they weren't really hard on this

24:56

project to change behaviors only at one

24:58

third got the changes one third thought

25:01

they got it so when one third will

25:03

really did work win the new way

25:05

ylang-ylang O'Rourke and mace for

25:08

example to contractors one third thought

25:10

they got it but they didn't and once one

25:13

third of the contractors other supplies

25:14

trained just didn't want to get it so

25:16

changing behaviors and these big

25:17

projects is really difficult especially

25:18

in this industry

25:20

and I wouldn't underestimate that I mean

25:22

that's the kind of experience that we

25:23

we've got okay and the other big check

25:26

ruled the change in the rules of the

25:28

game was Andrew Wilson

25:30

when he went from t5 to Crossrail he

25:32

said actually what we need to do in this

25:34

project instead of just you know

25:35

assuming that we've got this best design

25:37

specifications right at the beginning

25:38

this actually have a strategy for

25:42

innovation during the life of the

25:43

project so we can actually actively

25:45

encourage people within the project from

25:48

the different teams to submit ideas to

25:51

improve the performance of the project

25:52

so there's this is a world's first this

25:54

didn't happen and this was something

25:56

that I worked with them doing action

25:58

research you know we've talked about

26:00

this before where universities actively

26:02

work with the projects in a more engaged

26:03

way to actually solve problems that they

26:06

face and they hadn't done anything like

26:08

this before and they turned to us and we

26:09

helped them do it but with the team of

26:11

people in the project and you can see

26:13

there's a McKinsey report on this the

26:15

message was sent out to the industry we

26:17

must innovate we must bring innovation

26:19

into these types of projects the new

26:21

thinking has started to spread one thing

26:24

I should say about their new thinking is

26:25

that it really in this kind of industry

26:27

it really does depend on a licensed big

26:30

client organization that leads the

26:32

process so the clients in the UK have

26:35

taken a big you know role in actually

26:37

driving innovation and driving their

26:39

narrative of change of doing something

26:41

differently you know and this is you

26:44

know the Department for Transport the

26:47

major projects I cross rail and the

26:49

Olympics and so on okay the key thing

26:52

though is what and all of these reports

26:55

talk about it how can we bring

26:56

innovation new ideas new practices new

26:58

technologies even new organizational

27:00

forms new ways of working new contracts

27:02

into these projects to to deliver them

27:05

more efficiently and effectively and

27:07

that's something that we'll talk about

27:09

now ok so what I want to talk about and

27:13

this is what you've I think you've got

27:15

the sheet of paper on your seat are five

27:18

rules for managing large complex

27:20

projects and one thing that we learnt

27:22

from when we were doing the work was a

27:24

book and and several articles by Kathy

27:27

eisenhardt don't sell where they say

27:29

when you're in a kind of fairly stable

27:32

environment

27:35

now it's kind of factory Neil's your you

27:37

know the old days of the stable you know

27:39

we're going to do these things under a

27:40

factory conditions this is a stable

27:41

environment you can actually have quite

27:43

complicated strategies which you know

27:46

could take a little bit of time to

27:47

implement but when you work in a project

27:49

society in a world of driven by multiple

27:52

projects rapid change and uncertainty

27:54

you need simple rules things that are

27:56

kind of easily distill able which is

27:58

again why I like the half double one

27:59

page because it's kind of a no and what

28:02

I heard about just breaking it down into

28:03

the three core components actually

28:05

really does is helpful and they argue

28:08

that this is the way things get done

28:10

under very difficult conditions where

28:12

you need to make sharp judgments will

28:14

need to have things that can help you

28:16

see clearly through a lot of mess of

28:18

different challenges different pressures

28:21

and so on especially which happens so

28:22

often in a project environment so I want

28:26

to distill five roles and we've looked

28:29

we've broken that up into and you know

28:32

so the rules kind of connect to each

28:33

other and you'll see that as I talk

28:34

about them but these are rules that we

28:36

identified from working with the the

28:38

major projects in London over ten year

28:40

over a 13 year period and we actually

28:42

work with the senior managers in the

28:44

projects to solve see have we distilled

28:46

the rules correctly we went back to them

28:47

and they gave us feedback on what the

28:49

rules are so they've been kind of fairly

28:51

worked through okay did you miss the

28:56

program oh sorry I'll go back okay yeah

29:02

the first rule and there are all rules

29:04

for dealing with large complex projects

29:05

but we think they may have applica

29:07

applicability to all types of projects

29:09

is assess what's worked before

29:10

very simple didn't happen in the past

29:13

the people were simply weren't doing

29:15

this so learn externally learn

29:17

internally from your own experiences

29:19

evaluate risk and uncertainty during the

29:22

life so it could be during the planning

29:23

phase but it's an ongoing process it can

29:25

be through execution as well and the

29:28

practices they take it takes investment

29:30

takes time so you know you have to go

29:33

and do this but it will pay off it will

29:35

be worth while so site visits and this

29:37

meant literally going around the world

29:39

in this case they look at other airports

29:40

to recruit the relevant expertise very

29:44

very important I just wanted to give you

29:46

an example what happened at Terminal

29:47

five when they in

29:49

before they deliver it and they said we

29:51

need a new delivery strategy because if

29:52

we do it the old way it's simply going

29:54

to be late it's gonna be over budget so

29:56

they they took learning from the North

29:59

Sea oil and gas industry the car

30:00

industry and just in just-in-time

30:02

techniques the aerospace industry

30:04

nuclear power they had their own

30:06

projects where you know the Heathrow

30:08

Express project which went badly wrong

30:09

and that used it that used the

30:11

fixed-price contract all that made all

30:12

the traditional mistakes they thought we

30:14

can't do that again we've got our own

30:16

internal experience what went wrong

30:17

other airports they actually did

30:20

actively did and then meant free book

30:22

free book would be very happy because

30:24

they did reference class forecasting the

30:27

form of that they looked at every

30:28

International Airport that had opened

30:30

over the past 15 years and they looked

30:33

at every major project in the UK every

30:35

mega project in the UK over the past ten

30:37

years and they found out that if they

30:39

did it the traditional way which is

30:42

fixed price risk transfer the project

30:45

would be 1 billion over budget

30:46

and one ELA and there'd be six deaths

30:48

and that this is a private company

30:51

because it'd been privatized remember

30:52

and they said we can't be we all go out

30:54

of business if we're 1 billion you know

30:56

cuz they can't rely on the government

30:57

anymore to bail us out so they had to

31:00

they simply couldn't do this and that's

31:02

why they invested so much in the

31:04

delivery strategy in creating this more

31:06

collaborative innovative approach ok so

31:10

thank you I mean and this is learning

31:11

applies to in every you know under many

31:14

of the rules you'll see learning as a

31:15

kind of a subtext ok bill to organize

31:19

for the unforeseen and this is where I

31:21

think it really hits resonates with

31:24

half-double you embrace uncertainty and

31:28

certainty will happen so rather than

31:29

hide it and ignore it and think it would

31:31

happen try to wish it away as happened

31:34

in the past you need to create adapt

31:36

adaptability an adaptive organization

31:38

flexible processes for dealing with

31:40

things when they happen so that you can

31:41

deal with those events and uncertainties

31:43

and so on and what we identified were

31:46

certain practices associated with that

31:48

like the flexible contracts which I've

31:49

already spoken about where you sharing

31:51

risks and rewards so you if you want

31:54

people to be incentivized to identify

31:57

risk in a project

31:58

and identify opportunity you need to

32:01

reward them for that as well and they

32:03

shouldn't be penalized for spending time

32:04

doing that and then working

32:06

collaboratively and here you've got this

32:10

is the so the the you know there was a

32:12

there was a contract but it really the

32:15

contract wasn't the key thing it was

32:16

actually the process is the way in which

32:18

people collaborated and this is just

32:20

some words from the 85 agreement that

32:23

there was a handbook going alongside the

32:25

the contract which talks about many of

32:28

the things we've talked about today

32:29

flexibility and adaptability are key

32:31

objectives these oh these were kind of

32:32

things that couldn't be said in the past

32:34

conventional processes and solutions are

32:36

simply not tenable

32:37

we need a reflects ability or approach

32:39

flexibility of solutions this is in a

32:41

mega project you know 4.3 billion pound

32:44

project and they're saying actually we

32:45

need we must recognize the kind of world

32:48

we face is something that we can't

32:49

always anticipate and we simply can't

32:51

pass off the risk I'll give you an

32:53

example here this is the air traffic

32:56

control tower which is all part of the

32:58

project in itself was a big you know

33:00

it's a very big you know sub project

33:03

within the overall within the overall t5

33:05

project and when they looked at that

33:07

they said well this is a busy airport

33:09

it's a live Airport so we can't have you

33:13

know the conventional way of building a

33:14

net Rafic control tower is to have

33:16

deliveries and supplies continuously of

33:18

concrete port you know coming in so you

33:20

pull they may look at the construction

33:21

they said we can't do that we'll have to

33:23

do a cut learning again this is the

33:25

another rule learning from the

33:27

petrochemical industry

33:28

process plant industry they said we'll

33:30

do it we'll have sections prefabricated

33:32

sections and we'll screw them together

33:33

effectively and we'll Jack them up in

33:35

Azeroth so that you know they can be

33:37

done without having concrete they also

33:39

had they you know they realized that

33:41

they couldn't rely on cranes because

33:43

there was only a five hour window at

33:45

night when there were no aircraft so

33:47

they had to do that again there was

33:48

another reason for doing this but when

33:50

they did it it didn't work fit together

33:52

so the sections didn't think together so

33:54

normally under the old adversarial

33:56

situation the client would say that's

33:58

your responsibility you sort it out

34:01

it's the client they worked out it'll

34:02

cost about five million and they would

34:04

have ended up in court debating these

34:06

issues but this for the client is a

34:08

bigger risk because for the client if

34:10

that's delayed that means they've

34:13

they've got one is one year of training

34:14

for air traffic controllers and there's

34:16

a big fit out period with for that and

34:19

it's regulated as well so it would have

34:20

delayed the opening of the airport so if

34:22

they went in under the old contractual

34:24

approach they would have ended up

34:25

delaying the airport so the risk was the

34:28

clients you have to look at the bigger

34:30

picture and so and they went they used

34:32

the t5 agreement the teams got together

34:35

collocated working in offices finding

34:37

out a solution they found a solution it

34:39

was it cost around I think something

34:41

like two an additional two million which

34:43

is tiny when you think about the

34:45

possible delay of that opening of the

34:47

airport and actually they did it in a

34:49

quest period of time and that was very

34:51

much working you know using the

34:54

contractual approach which is about you

34:56

know when things happen we have to deal

34:58

with it and we have to collaborate and

34:59

work together solve problems and that's

35:01

what they did

35:03

so rule 3 rehearsed for rehearse first

35:07

so it's not that you can't introduce new

35:09

technology on a project you can

35:11

introduce new technology but on these

35:13

big projects new technology often is

35:16

what is a source of problems in the

35:18

Jubilee Line they introduced as the new

35:20

the world's most advanced signalling

35:22

system and that delayed the project in

35:25

SWANA air traffic control they they

35:27

introduced the world's most advanced air

35:29

traffic control system they had a fixed

35:31

price contract that delayed the contract

35:33

because when you're introducing new

35:35

technology there's all development

35:36

periods as risks the cycles that have to

35:38

be known and in these big projects

35:40

unless you've calculated for that

35:41

properly that can really have a

35:42

significant effect on these projects so

35:45

before you introduce new technology what

35:46

we found from our of the people we were

35:48

working with what you do is identify the

35:50

risks explore options prototype prove

35:52

tests trial and do all of these

35:55

practices of Celt rights on-site tests

35:58

simulation many things can be done in

35:59

simulation and another forms of

36:03

testing and trials ok so there's three

36:07

examples here

36:09

the one the first one is the roof this

36:12

is a very risky thing so it's a new

36:13

practice 150 meter freestanding spam

36:17

roof I'm not an engineer so don't ask me

36:19

any complicated questions yeah so they

36:24

tested that they said we'll do this in

36:25

sections and they went up to Yorkshire

36:27

and they actually spent a million pounds

36:29

testing this thing before they did it on

36:31

site because if you imagine they did it

36:32

on site and it went wrong you'd have all

36:35

these delays all these problems it was a

36:36

contested site anyway there's only one

36:39

point of entrance you know that of

36:40

just-in-time deliveries of supplies

36:42

together things work so they tested it

36:44

off-site and they identified 140 lessons

36:47

that they then brought into the the

36:49

project which they you know and then

36:51

actually made sure that they addressed

36:54

them general - I don't know if many of

36:57

you know it but in the UK terminal 5 is

36:59

famous not for being a brilliant project

37:01

which it is in the construction and the

37:03

infrastructure world but for most other

37:05

people its famous for being the lost

37:07

luggage again SAS we need their help

37:11

actually probably you know I talked

37:13

about them before but what they said was

37:17

so turn off I was only 12 days delay and

37:20

actually compared to some airports you

37:22

know your six Denver International

37:23

Airport I think was six months at least

37:25

the Hong Kong Airport was something like

37:27

six months delay with software issues

37:29

and all that the when you integrated the

37:32

baggage handling system into the thing

37:33

it just didn't work and familiarization

37:35

is to be a big issue people really

37:36

matter we do a lot of work now and at

37:39

UCL on on the what we call the back end

37:42

the opening of big projects it's so

37:44

noticed it's a really significant and

37:46

complex thing especially when you're

37:47

pulling together all of these systems

37:49

and users and you bring in users in and

37:51

users have to be engaged in the whole

37:53

process it's very difficult to do

37:55

terminal to they said right we're gonna

37:57

learn from some of the five where we try

37:58

to open an airport in as a big bang in

38:00

one moment it was in the least busy time

38:03

of year but it was a real problem they

38:06

said we'll do it in progressively in

38:07

stages so they had 170 proving trials

38:13

they had 1,000 well 1800 uses passengers

38:18

coming in volunteers coming in to test

38:20

it they did a

38:22

a test on the life flight people arrived

38:24

they didn't know but they were kind of

38:25

they were a test you know they ran

38:27

through this son terminal in order to

38:29

gather information to find out what

38:31

would work and that and that's really

38:33

important and the Olympics their key

38:35

lesson was from other Olympics but also

38:38

from Heathrow a tone of 5 is we need to

38:40

finish early and so often with Olympics

38:43

and footballs events you see the the

38:47

whole thing being constructed and

38:48

frantically at the end last minute here

38:52

they finished one year early so that

38:53

they could test on life on the ice show

38:55

you live events so again bring users in

38:57

early in so that they can they can do

39:00

that um ok the the fourth rule is

39:03

calibrate the risks and the uncertainty

39:06

appropriately so I've talked about these

39:09

big projects and they've got multiple

39:11

sub projects but these projects vary in

39:14

uncertainty some are more or less risky

39:16

they're more predictable elements within

39:19

a project there's some elements kind of

39:21

a very very unpredictable so and this is

39:24

unlike the t5 project so many other

39:26

projects you can actually have you can

39:28

decompose in it's called targeted

39:30

flexibility so you say well what how do

39:32

we deal with the different degrees of

39:34

uncertainty we need different contracts

39:35

different approaches different to

39:37

actually you know address this you know

39:39

remember the t5 Ben 147 sub-projects 16

39:43

major projects you could have different

39:45

contrast different approaches for those

39:46

different so it's it's a it's really

39:48

about dealing with that and on the

39:51

Olympics they did that very carefully

39:53

they said actually they had a menu of

39:55

contracts and associated approaches for

39:58

dealing with the different levels of

39:59

uncertainty and on this side here so

40:02

this is the temporary venues and the

40:04

broadcasting center this was largely

40:06

kind of standardized components some of

40:09

it reusable components and and modular

40:13

components and they felt that actually

40:15

these could be a fixed price you know we

40:17

can transfer the risk it's been done in

40:19

the past the learnings relatively

40:20

straightforward but on the other

40:22

projects or they decided to do was say

40:23

ok with these projects we can have a

40:25

different type of contract and a

40:26

different approach this was the the

40:28

velodrome here which is the cycling

40:30

track and the Aquatic Center was still

40:32

with the wings on it which are now

40:34

you know the Saha deed architectural

40:36

iconic building and so these were the

40:39

more iconic difficult tricky elements of

40:42

the of the project so they said that

40:44

will have a different approach for those

40:45

and one and one and the way it worked

40:49

was that that approach allowed them for

40:52

example with the the velodrome they were

40:54

originally going to have steel

40:55

stretchers and they said actually this

40:58

is going to be you know we're going

40:59

price of Steel's going up there's a

41:00

potential you know problems with

41:03

delivery of steel so the contractor

41:06

under that contractual arrangement is g

41:08

actually came up with an alternative

41:10

solution said well this let's use a

41:12

cable net roof they had a change because

41:14

it went to the change control broad

41:15

which meant very frequently so they were

41:17

actively involved the sponsor was

41:19

actually involved in the project and

41:20

they said yes would will approve this

41:22

and they went ahead and they they saved

41:25

money time and you know so the project

41:27

was you know decomposing this way and

41:29

they had the elements that they could

41:30

you know bring in new ideas and it

41:32

brought in new ideas it was a way of

41:33

bringing in new ideas again to the

41:35

project the fifth and final rule is

41:39

harness innovation from start to finish

41:41

and this is where we really learn from

41:43

Crossrail and my involvement in cross

41:46

rel as a project established with these

41:48

big projects establish an innovation

41:50

structure strategy for bringing

41:52

innovation in you've got a supply chain

41:53

you've got dozens of you know usually

41:56

dozens of the major contractors often

41:58

working in joint ventures they have

42:00

hundreds of subcontractors bringing in

42:02

new ideas potentially where these

42:04

sources of ideas clients don't usually

42:06

have the ideas it's the it's the it's

42:09

their supply chain this is what the

42:10

people in the industry tell us so we

42:12

want to pull out those ideas from the

42:15

supply chain and you and and what they

42:17

did was created a digital platform where

42:21

people in the in the project could

42:23

submit good ideas and I'll show you this

42:25

in a minute and that they can evaluate

42:27

where those ideas were effective and

42:29

would help to deliver the project more

42:31

efficiently and effectively so the the

42:34

innovation program was governed by the

42:37

need to finish that project effective

42:40

efficiently was subordinate to that the

42:42

overall objective was to get the project

42:44

done and have an impact that's the

42:46

innovation strategy was to bring those

42:49

ideas in and support that and what they

42:51

did was to create a kind of an open

42:52

innovation and program so an idea for on

42:55

this side would come in if it was

42:58

already available

42:59

it'd just be shared across the program

43:00

some ideas were just mature they're

43:02

proven they can be used others need a

43:05

period of discovery and there's a

43:07

competitive entry where they developed

43:09

the ideas there was a kind of a

43:11

governance structure which had used

43:14

experts within the project to a value

43:16

evaluate those ideas and the ideas that

43:19

got supported would be taken forward and

43:22

they would receive funding to implement

43:24

them within the project and I'll show

43:26

you some of those ideas in a moment and

43:28

within the first this was the first in

43:30

the world by the way it took a long time

43:31

to get the teams into that kind of

43:34

mindset and it helped them be an

43:35

innovative also helping to be

43:36

collaborative it was a side benefit from

43:40

this but within the first but just over

43:43

a year there were 800 ideas submitted

43:46

improving for improvements to the

43:48

project and there were things like new

43:49

materials and I'll show you I'll show

43:51

you now things like you know it said

43:54

this was a civil engineering project

43:55

right so a lot of the ideas worth kind

43:57

of obviously of that nature low carbon

44:00

concrete and there were collaborations

44:02

between different between sometimes with

44:04

contractors and sometimes with research

44:06

laboratories sprayed concrete lining

44:08

using digital images safety gloves

44:11

this was seem like a trivial thing but

44:13

you know in these big projects as a real

44:15

issue of safety and so they printed

44:18

messages in different parts but in

44:19

different times on the gloves so people

44:22

just continuously think safety

44:25

project and some more all of these came

44:27

through the Innovation Program and you

44:30

can read level look at them so obviously

44:31

they experimented with things that

44:33

didn't quite work the Google Glasses

44:37

you know they couldn't develop it in

44:39

time to implement it on the project they

44:41

had some more radical things like using

44:42

extracting the heat from the tunnel to

44:45

warm buildings adjacent along the route

44:47

of the of the Cross rail system and

44:49

things like that so we developed this

44:53

innovation strategy and what we've seen

44:55

since Crossrail is that the idea has

44:58

moved on to the other big projects in

45:00

the UK so Tideway is the new sewer

45:02

system in the UK 4.2 billion pound

45:05

project they have an Innovation Program

45:06

and in fact Andy Mitchell who was the

45:09

throwback robe program director on cross

45:11

rail said I want when I move on he

45:13

became chief executive of Thames Tideway

45:15

he said I want to have an innovation

45:17

program on Hinkley Point C they have an

45:19

innovation program on high speed -

45:21

that's the biggest project now in the UK

45:24

forty two billion estimates going up

45:28

upwards all the time but they have an

45:30

innovation program as well and it's

45:34

quite interesting and so a lot of the

45:35

team have moved on from from this and

45:37

that's there's a digital platform so

45:40

what's happened now is the cross role

45:42

originally they created their own

45:43

digital platform what kind of hopper for

45:45

putting ideas in that has now been used

45:48

across the industry so the industry

45:50

because their public government projects

45:52

and infrastructure projects they're all

45:53

sharing that platform so this platform

45:55

you can go looking at yourselves they

45:57

can share ideas so they are you know

46:00

they've moved from one project to

46:01

multiple projects whether they've got

46:03

these kind of you know

46:03

really embracing innovation as a an idea

46:08

so that really summarizes what I wanted

46:15

to say I just wanted to say that you

46:16

know I think something interesting is

46:18

happening or has happened and is still

46:20

happening in the UK in mega-projects you

46:23

know there's a kind of new delivery

46:24

model which is complete shift from what

46:27

has happened in the past where

46:29

innovation the idea of recognizing that

46:31

the uncertainty it will happen recognize

46:33

it and deal with it when it does

46:35

happen and having the right structure

46:37

but recognizing the other side of

46:38

uncertainty

46:39

the upside is opportunity opportunities

46:42

will happen in crossroad for example the

46:45

when they designed the whole thing the

46:47

iPad didn't exist and then soon after

46:50

the project was underway they realized

46:52

they could put the whole project on an

46:54

iPad without everybody walking around

46:57

the site fourteen thousand people you

46:59

know workers many of them looking at the

47:01

project on an iPad something that I

47:03

hadn't recognized at the beginning so

47:05

it's a pretty impactful thing so I've

47:09

been talking about these projects

47:10

they're large they're complex they are

47:11

decomposed into smaller projects and the

47:15

activity the real activity the real

47:16

action that level is very much what

47:19

we've been talking about today

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