A vital economic engine for the Netherlands, Amsterdam is home to an array of big-name multinational players, including ABN AMRO, ING Group and Philips. There's also that other hard-to-miss emblem of commerce: the World Trade Center Amsterdam, with nine buildings and more than 120,000 square meters (1.3 million square feet) of office space. But let's be honest, that's not what typically jumps to mind when people think of Amsterdam. More often than not, it's the city's notorious Red Light District. Offering its own brand of business, including brothels and coffee shops selling cannabis, the area has long been a draw for tourists. But that may be changing. A proposed project calls for a revamped Red Light District that would shut down many of those infamous retailers and bring in more of the high-end conventional variety.
The project may not be so far-fetched. No stranger to reinvention, Amsterdam doesn't shy away from dramatic solutions to problems. In response to a shortage of residential property, for example, the city council voted to construct six artificial islands in IJmeer, a lake on Amsterdam's east side. Slated for completion around 2015, the new district, called IJburg, will house roughly 45,000 people.
But Amsterdam's problem-solving skills—and those of the project managers working there—are being put to the test. As the global economic slump reverberates, the volatile landscape calls for a far more sophisticated appreciation of business goals as well as a high aptitude for prioritizing in the midst of shrinking resources.
Often upper management wants results fast to stop the bleeding. —Tom Bonkenburg, St. Onge Co., Amsterdam
NEW AMSTERDAM
The Netherlands has shown some resilience in the face of the global economic downturn. In October 2008, it had the lowest unemployment rate of all European Union members at 2.7 percent, according to Eurostat. (Spain, by comparison, ranked highest at 12.8 percent.) But by November, the business community's confidence was low. A survey showed 38 percent of business service providers termed the economic climate “highly unfavorable.” And in December, the Nederlandsche Bank forecast the country's economy would enter a recession in 2009— its first since 1982.
The city's tourist industry looks like it's headed for a hit, too. The Amsterdam Tourist and Congress Board predicted in November that hotel occupancy rates would drop by three percent in 2008 and two percent this year.
Meanwhile, the cost of construction projects has increased. From January to September 2008, total building costs for new, residential and non-residential buildings increased by nearly five percent.
In response, the Dutch government announced in late 2008 that it would spend more than one percent of its gross domestic product (about €6 billion) to help revive the nation's economy.
In the midst of this grim climate, some of Amsterdam's leading companies are cutting back. Philips, for example, announced in November it would shed five percent of its healthcare unit's global workforce of 32,000.
The effects are already trickling down to the project level.
“The recent economic challenges are forcing some [Amsterdam] project managers to work within smaller or non-existent budgets, fight for resources, wear multiple hats and make do with the people that they have,” says Tom Bonkenburg, director of European operations at St. Onge Co., an international supply chain engineering and consulting firm that frequently runs projects in Amsterdam.
And Mr. Bonkenburg doesn't expect the tide to turn anytime soon.
“Often upper management wants results fast to stop the bleeding, and this pressure will only increase over the next six months if current economic projections are to be believed,” he says. “Staff cuts will make things worse, and more project managers will have to start doing the work as well as managing the project. With many capital projects put on hold, many project managers will find themselves being asked to suggest ways to improve existing operations. Reducing cost without spending a lot of money to do so will be the story of 2009.”
Prioritization is the new mantra. Mr. Bonkenburg suggests getting everyone in the room to discuss, rank, and quantify the risks and benefits of each project.
“Prioritizing and fast-tracking projects that will have the greatest impact is something that all companies should be doing,” he says. “The key to making it work is ensuring all of the key stakeholders are involved in developing the roadmap so that everyone has a chance to buy into the new strategy and become part of the solution team.”
THE STRUGGLE TO STAY ON TRACK
Extending almost nine kilometers (5.6 miles), the North-South Metro Line was designed to speed up transportation in Amsterdam.
But the train project is having trouble reaching its destination.
Budget-wrecking problems plagued the effort right from the start. Known as Noord/Zuidlijn, the new metro was initially slated for completion in 2011 with a budget of €1.46 billion. One year after construction began in 2003, that number jumped to €1.55 billion.
The project's official website blames “a large amount of unforeseen work [that] was required as a result of extraordinary circumstances and developments.” The most prominent included a large number of underground obstructions (such as the remnants of foundations and quay walls), legal issues and technical complications.
Many of the project's main technical glitches stem from the 3.8 kilometers (2.4 miles) of the metro line that must be constructed underground.
Space constraints prevent the two metro tunnels from running parallel. Instead, they must be built on top of each other and buried 20 meters (66 feet) and 35 meters (115 feet) below the city's streets and sewers. To reach those depths, a tunnel-boring machine must be used, which can carve out about eight meters (26 feet) in a day.
But what's beneath the ground is only the beginning. Above the construction, there are many historic buildings with unstable foundations. Johan Bosch, the metro's project manager, had to come up with a plan.
“The politicians told us: ‘We want a subway, we're prepared to pay for it and accept some disruption, but the one thing we absolutely don't want is any damage to the city,’” Mr. Bosch told the Associated Press in July 2007. “We need a system so that if things don't go as expected, we don't find out after the damage is irreparable.”
So the team developed a detection system, hanging roughly 7,000 mirrors on buildings along the underground route. Infrared beams are reflected off the mirrors, which allows sensors to collect information about building shifts and relay it to a central computer. If a building moves more than 0.5 millimeters (0.02 inches), the computer alerts authorities and construction is halted.
All that planning isn't preventing building shifts, however. A number of monumental buildings have sunk—some of them several centimeters—as a result of the metro construction. Work in the area was stopped while contractors and the city sought possible solutions. Among other tactics, contractors have inserted support beams underneath the houses. They've also injected grout, which, in the process, raised the buildings to a level that makes it possible to start renovation work.
Those issues not only cause schedule delays, they affect the community's opinion of the project. A local broadcast station survey found that 34 percent of residents are against the metro line.
Opposition or not, the train project is chugging onward. Recent estimates put the project's cost at €2.2 billion, with a possible completion in 2013.
200,000
Number of passengers expected on the Noord/Zuidlijn line
PHOTO COURTESY OF RICK VAN HEMERT/FLICKR.COM
With its winding cobblestone streets and historic 14th century architecture, Amsterdam's Red Light District, or the Rossebuurt, holds plenty of visual interest. But the area is better known for its illicit, rather than its architectural, offerings. What mainly catches tourists’ attention in this area are the brothels where women pose provocatively in windows and the coffee shops where it's legal to sell small amounts of cannabis.
Today, the city council would like to see a more subdued glow from the Red Light District—one that makes the area more palatable to a broader swath of tourists and addresses concerns about money laundering and other local crimes.
Enter Project 1012, named after the area's postal code. The city has allocated between €40 million and €50 million for the effort aimed at sprucing up the Red Light District and shutting down some of the less family-friendly businesses in the centrally located area.
The proposed project would entail upgrading streets and public lighting, constructing a bicycle-storage facility and building an underground parking garage for cars.
Project 1012 suggests closing half the coffee shops that sell cannabis in the district, creating a 17 percent reduction in the number of the shops city-wide. The project plan also recommends cutting the number of brothel windows in half, restricting their presence to two streets.
The business community is ready to lend its support. According to an Amsterdam government website, several large corporations, including ING Real Estate and Fortis, “are all involved in the [Project] 1012 strategy or have shown an interest therein.”
The project is expected to take 10 years, but the city council vows not to make changes to the district without more community input.
“Official public participation will follow in the first half of 2009, when all interest groups and other interested parties will have the opportunity to contribute their views,” according to a government statement. Plans call for a definitive Project 1012 strategy paper finished by the second half of 2009.
TEAM OF ADVERSARIES
The gloomy economic forecast may force businesses to explore new strategies— possibly creating some strange bedfellows.
“The next great cost reduction will happen when competing companies start to work together,” Mr. Bonkenburg says. The fashion industry, for example, tends to compete on designs and price point in the marketplace, but rivals could share warehousing and transportation to reduce project costs.
“Ideas like these are beginning to gain momentum, and the next generation of project managers will very likely be working in some form with their competitors,” Mr. Bonkenburg says.
And Amsterdam is at the forefront of the trend, he says, because of the proactive efforts of the Netherlands government to provide incentives aimed at encouraging companies to collaborate.
The move toward alliances will certainly alter the role of project managers who “will now need to negotiate and manage partnerships as well as projects,” says Mr. Bonkenburg.
That means a greater emphasis on people skills, as project managers work with an increasingly diverse group of clients, colleagues and stakeholders. Mr. Bonkenburg himself is a trained mechanical engineer, but these days he often refers to himself as an “engineering social worker.” Many of his projects involve multiple cultures, geographies and disciplines as well as many strong individual personalities. “I spend less time solving engineering challenges than I do on communication challenges,” he says.
And in today's global project environment, that translates to a need for cross-cultural savvy. But Mr. Bonkenburg sees a distinct advantage for Amsterdam's project managers on that front.
“The city of Amsterdam has always been a key center for multinational corporations, causing these skills to be in high demand,” he says. “Historically, the Dutch have excelled at international business, so this kind of thinking is a natural fit. When working in an internationally focused city like Amsterdam, I often see the need to be less [former GE chair] Jack Welch and more Dr. Phil [TV psychologist] .”
GREENING THE CITY
Amsterdam is officially up for the European Green Capital 2010 title. And project managers are doing their part to green up the city.
“Project managers around the world are all being asked to add carbon footprint reduction to their growing list of project objectives,” says Tom Bonkenburg at St. Onge Co. “Due to pressures from the government and the environmentally friendly culture, project managers in Amsterdam have been ‘thinking green’ for many years and are often on the forefront of this revolution.”
One of his clients, CityCargo, is trying to reduce the carbon footprint of inner-city logistics by using cargo trams and electric delivery vehicles to bring goods to local restaurants and shops.
“This has great appeal within Amsterdam since traffic, noise and exhaust are constant complaints,” Mr. Bonkenburg says.
PROJECT MANAGER BE NIMBLE
As companies adjust their priorities in dynamic markets and challenging economic times, project managers must be able to swiftly shift project plans, says Peter Barnes. He is Europe, Middle East and Africa marketing manager for IT giant HP's project and portfolio management center in Amstelveen, a southwest suburb of Amsterdam.
A veteran of the sector since 1984, Mr. Barnes sees a trend toward enterprise project management and says it reflects the fact that there is no such thing as a “pure IT project.”
“All projects are business projects, yet IT underpins all of them,” he says. “Project managers need to be aligned to the business and provide a bridge between business demand and IT supply. Demand management is essential to allow IT to get a grip on the full scope and range of business demand.”
Project managers working in the city need a more informed perspective on business goals, says Remco Meisner, project and program manager at Andarr, a project management and security management services provider.
With a client list that includes some of the biggest players in Amsterdam—Tele2, ABN AMRO, Nissan Europe, Borg Warner Chemicals—Mr. Meisner has a bird's eye view of the city's project needs. And what he's seeing is an increasing need for project managers to connect the business goals of their employer with those of their customers.
“This change, in my opinion, is caused by the project management profession moving upwards in quality level, while the organizations involved … are running behind,” he says.
Mr. Meisner also reports a tendency to deal with organizational issues through projects that “cross the borders of the value chain, including suppliers, customers and sometimes even other organizations.”
A certain portion of such large projects should be regarded as “programs” rather than “projects,” he says, but many companies are reluctant to change the language.
Could semantics suggest something about organizations’ prevailing attitudes?
“Perhaps organizations consider ‘programs’ equivalent to ‘extremely large and hardly under control’—I don't know,” says Mr. Meisner. “The large projects are the most interesting ones, as they involve many new skills.”
Bigger projects emphasize the ability to understand organizational maturity, and also imply a link between project (or program) management and change management, he says.
“One might claim that today large projects or programs are in fact frequently about the actual implementation of organizational change,” says Mr. Meisner. “That is quite a development.” PM