Better Together

Innovation has become a team sport. When projects are too complex and challenging for one organization to handle, joint ventures can spread out responsibilities. A case in point lies in the shipping industry, which is ripe for disruption. A.P. Moller-Maersk and IBM in January announced a joint venture to develop a blockchain-based digital platform that aims to move global supply chains beyond paper manifests. Before forming the new—and still nameless—company, the two organizations combined their respective logistics and technological expertise on a successful pilot project that laid the groundwork for the new platform.

Joint ventures let companies overcome their own gaps to corner a new market, strategically bringing together talent and resources to deliver a project otherwise out of reach. Many business leaders view joint ventures as growth drivers. According to a PwC survey published in January, nearly 50 percent of CEOs plan to pursue strategic alliances in 2018 as part of their organization's growth plan.

Global engineering and construction firm Jacobs views joint ventures as a strategic imperative. “We're much more likely to come up with a number of different innovative solutions for our clients with a diverse room of people who have different skills, experience and perspectives,” says Andy Leigh, vice president of operations and head of nuclear cleanup U.K., Jacobs, Cleveland, England. “You have the ability to build a single team of the most appropriate capabilities and personnel from several organizations to provide diversity of expertise, knowledge and track record across the whole project life cycle.”

—Andy Leigh, Jacobs, Cleveland, England

But joint ventures also can be treacherous territory for project leaders. Project management cultures and practices vary across organizations, and establishing clear roles and responsibilities can trigger conflicts. Potential obstacles must be addressed upfront for the partnership to succeed, says Mr. Leigh. He believes before organizations partner, they need to think long and hard about the challenges of working together as a team—and where the collaboration might fall apart. “There has to be cultural alignment across critical aspects like safety, business ethics and corporate commitment.”

Creating that alignment is one of the most important roles of the project manager, says Dan Dye, CEO of Ardent Mills, Denver, Colorado, USA. His organization is a joint venture among ConAgra Foods, Cargill and CHS to mill flour and develop new flour- and grain-based products and services. “The project manager has to instill a sense of shared values, a clear vision and a project management process that aligns with the goals of the venture and drives accountability,” he says.

—Dan Dye, Ardent Mills, Denver, Colorado, USA

PHOTO COURTESY OF A.P. MOLLER-MAERSK

To support all of this, Mr. Dye's team created an enterprise project management organization (EPMO) at the outset of the project in 2014. “The EPMO works across functions and with the interests of the overall business in mind, which has been key to the effectiveness of our project management efforts,” he says. The office has helped manage both capital projects and ongoing business initiatives, such as a program to implement and optimize an enterprise resource planning system. “It's been essential in setting up Ardent Mills for success in our first four years.”

NEW FRONTIERS

Not all joint ventures are only about innovation. They also can be a strategy for entering new geographic markets. When a joint venture spans not just multiple organizations but different countries, particular project management challenges and risks arise, says Michael Zhu, vice president of joint venture strategy and operations for computer data storage company Western Digital Corp., Palo Alto, California, USA. He's leading Western Digital's joint venture with Unisplendour Corp., a Chinese information technology company.

The joint venture's goal is straightforward: grow Western Digital's data center storage systems sales in China. “We provide the technology and solutions, and Unisplendour supports the business on go-to-market,” says Mr. Zhu, who splits his time between Beijing, China and San Francisco, California to manage the project.

Cross-border joint venture challenges include managing time zone differences and language and cultural barriers, he says. Project decisions often are made quickly in China, he says, to keep pace with dynamic markets. “They tend to follow an 80/20 rule for decisions,” he says. Rather than wait for 100 percent consensus on a team or all pertinent information to be in hand, a project leader often will move forward when he or she is reasonably confident, Mr. Zhu says. In contrast, teams at U.S. organizations tend to have more collaborative decision-making processes, including lots of analysis and group buy-in.

In a joint venture project environment, such differences—even when different companies are in the same country—can spell trouble if unnoticed. “If the team in China doesn't understand why a process is in place, they may not follow it,” he says. Instead of waiting for this to happen and then troubleshooting, Mr. Zhu encourages his joint venture teams to define decision-making processes upfront. He also encourages project leaders to be mindful of cultural differences and how they impact communication practices. For example, they avoid calling someone out in public about a mistake and are mindful that team members might agree to deliverables that aren't possible because it is inappropriate to say no. “Understanding these differences can help avoid problems.”

—Michael Zhu, Western Digital Corp., Palo Alto, California, USA

Regardless of the joint venture's purpose, having a dedicated project leader who creates a collaborative project culture and formal management structure is key. “The project manager has to be equipped with the right people skills and processes to manage a complex team,” says Brett Baker, associate vice president and project manager, Black & Veatch, Overland Park, Kansas, USA. “It's about creating a team culture where everyone is invested in the project's success.”

—Brett Baker, Black & Veatch, Overland Park, Kansas, USA

OLD ACQUAINTANCES

Black & Veatch frequently launches joint ventures to tackle complex projects that partners could not compete for or execute on their own. The company often turns to organizations it has partnered with on past projects, because pre-existing knowledge of other partners can help facilitate a more seamless collaboration, Mr. Baker says. “Joint ventures don't happen spontaneously.”

Black & Veatch recently leveraged a long-standing relationship with Kiewit Energy Group to launch the joint venture KBJ, which also includes JGC US Projects. KBJ is working on design and construction planning for the proposed Jordan Cove liquefied natural gas (LNG) export terminal in Coos Bay, Oregon, USA. The joint venture works because each partner brings complementary assets. “Black & Veatch brings the proprietary LNG technology, JGC brings its mega-module experience in Asia, and Kiewit brings world-class construction capability,” says Mr. Baker. The project is slated for completion in 2024.

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Although KBJ was awarded the Jordan Cove contract in 2017, the three joint venture partners have been working together since July 2015 to define the terms of the partnership and jointly develop the project plan and bid. Mr. Baker notes that their relationship was already well established through past joint ventures. He believes that most productive joint ventures emerge from long-standing relationships with peers who take a similar approach to planning and management. “That's why first-time joint ventures struggle more,” he says. “It takes time for everyone to get aligned.”

Nonetheless, joint venture megaprojects often require significant upfront project management. Well before the sponsor, Pembina Pipeline, selected KBJ in July 2017 to execute the project, project leaders worked together to define roles and establish how the project would be managed. It is a good practice to have the joint venture agreement finalized prior to bidding and contract signature, Mr. Baker says. The team chose a “best athlete approach,” meaning team members were assigned positions based on who had the most experience and talent to fill the role—regardless of their employer. Co-locating everyone in Overland Park during the design and bidding phases helped to gel the team, he says.

Creating a culture and project management hierarchy that integrates the joint venture team can ease potential conflicts and ensure team members focus on what's best for the project rather than what's best for their own company, says Chuck Mitchell. He is vice president and project director, oil and gas division, Black & Veatch, Overland Park, Kansas, USA.

“If you create the right project management structure and culture, you are more likely to make the right decisions,” he says.

As an example, he points to decisions the Jordan Cove team made to manage the large-scale fabrication of the facility's mega-modules. (In the oil and gas sector, a module is a collection of processing equipment and associated pipes, valves, instrumentation and cabling—all installed in a steel frame and delivered to the project site as a single unit.) The original project plan called for limited modularization, but JGC's participation increased the project team's confidence that a broader, more advantageous program could be utilized.

“There has to be a level of trust in this kind of decision because we are all responsible for the outcome and risk,” Mr. Mitchell says. “In the end, we aren't judged on what Black & Veatch delivers. We are all responsible to deliver the best work.” PM