Editorial: Megaprojects are a team sport
August 1, 2015 by JIM BARNES
The steady procession of billion-dollar projects rolling down the Canadian construction pipeline these days has to give one pause for thought. How are the contractors who bid on these jobs different from the rest of us? What special tactics do they use in approaching them?
You might find that they are not as different as you think (apart from the balance sheet, of course!)
Certainly, the level of risk they get involved with takes you up into nosebleed territory. That means that the science of allocating risk has to be followed strictly. With at least a decade of history, “There’s a lot more clarity around how risks are being allocated,” noted David Bowcott of AON Reed Stenhouse Inc., in Toronto. “It’s scary how serious some of these risks are.”
Partnering is one part of the solution. The large firms have become adept at managing and allocating risk. “People are definitely getting a lot better at picking their partners,” says Bowcott. “The joint-venture agreements are getting more sophisticated and there is clear allocation of risk. The person best able to manage a risk is given that risk.”
The evidence seems to argue in his favour. When you look for catastrophic failures in the P3 arena in Canada, you don’t find too many lately.
But there’s another element besides picking good partners. Owners are looking for firms that have invested in internal departments to help manage risk.
In many cases, those teams didn’t exist 20 years ago. Even at larger contracting firms, they often didn’t have legal, risk-management, business development, QA/QC department or even an HR department. Today, they are common, notes Bowcott.
The benefits of these teams are many. The knowledge gained from each job is retained in the company by the team, instead of walking out the door when an experienced project manager decides to retire. The benefit goes way beyond managing each management task effectively. “The beauty of it is that these departments can connect as vehicles to gather information – collective intelligence,” he says. They have a stronger sense of what is possible when they are looking at big deals.
It’s hard to believe that a contractor any size would not have a strong QC/QA team, but we see it over and over. There have been more than a few notorious cases recently where obvious errors were made in construction. “The bigger contractors have a whole QA/QC team that does nothing but make sure they don’t make those catastrophic mistakes,” notes Bowcott.
The team approach is something the market is looking for.
Companies with these teams are comfortable taking on high levels of risk, “while the mid-sized firms are still struggling to figure out how to aggregate the knowledge of those risks that they have taken on,” says Bowcott. “A mid-sized contractor usually doesn’t have that kind of team. They rely on their project managers to handle the job. A lot of those contracting firms are being passed by because they haven’t figured out how to manage some of those risks or how to partner with other mid-sized firms on big jobs.”
So do teams make a contractor bulletproof? Not really. “The best contractors are the ones who say, ‘I wish everyone could see the work I’m doing and tell me what I’m doing wrong,’” says Bowcott. They welcome scrutiny. They want to find out about any mistakes they might make up front – rather than afterwards, when things start to get litigious.
The market seems to be pushing contractors toward more transparency and less ego.