Partnering on engineering/construction E/C projects
Concerns of Project Managers
Paul C. Dinsmore Feature Editor
Editor's Note: Jim Brown's guest-written column focuses on a yet fledgling trend in the engineering and construction industry: partnering. He pinpoints troublesome areas and describes a not-too-successful case situation. “How to do it right” is then outlined and survey data is given in support of project partnering as an effective way for achieving both business and project goals.
Paul C. Dinsmore
James H. Brown, Maxim, Inc., Greenville, South Carolina
Partnering as a strategy was introduced to the construction industry approximately eight years ago. Since its introduction there have been many examples of “multi-project partnering” where two companies (owner-contractor) established long-term strategic business alliances. There has also been a growing trend in the industry for “single-project partnering” on a project-by-project basis. The major differences between these two variations of partnering is in the duration of the relationship, who initiates it, and the number of organizations involved.
Multi-project partnering implies a long-term relationship between the client company and the contracting party that extends over many projects. It is normally initiated by the client and involves only two organizations (owner-contractor). Even though it is formal, it is not a legal “partnership” with the associated joint liabilities.
Single-project partnering, sometimes referred to as project team alignment, occurs on a project-by-project basis and does not necessarily imply or lead to a continuing relationship among the contracting parties. Many times it is initiated by the client company, but some contracting entities are beginning to introduce it to the client as a process to build project collaboration, communications, and a cooperative project management team. Projects that use near partnering usually involve the major project organizations and their key players.
Both types of project partnering share the following common elements:
- Key persons on the project must view themselves as part of a team.
- All must have a willingness to cooperate.
- Open and honest communication must take place among the project team members.
- All stakeholders’ interests are considered in creating mutual goals and objectives.
- Problems and disputes are openly acknowledged and the project management team works together to resolve at the best level.
- The project team performs periodic joint evaluation and measurement of partnering performance and progress in achieving the project goals and objectives.
Both types of partnering have shown to be successful ways to approach a project. However, they both face the same difficulties in project implementation and can completely frustrate project managers and their respective organizations.
THE PROBLEMS OF PARTNERING ON E/C PROJECTS
The strongest barrier to the partnering concept is a project organizational structure that promotes an adversarial attitude between the parties involved. There are normally two to six distinct management teams, each making independent decisions with the intent of reaching their own goals for the project. These decisions directly affect the path each party chooses to achieve its goals—but they are often made in a vacuum, without regard for the other party's interests and expectations. Conflicts are inevitable as paths diverge and expectations are not met.
A key element of successful partnering is trust. Unfortunately, the E/C project environment has not been conducive to trust among the various contracting parties with the flood of lawsuits associated with the industry. Trust is difficult to build where there is cynicism about others’ motives and a tendency exists to resolve disputes through litigation.
Because partnering is a departure from “business as usual,” individuals and entire organizations often feel a loss of control, being at risk or being awkwardly dependent on others. Working under a partnering concept also places an even greater responsibility on project management to build collaboration among the project entities and manage conflict. Since partnering relies heavily on a democratic versus authoritarian leadership style, many project managers and other key project members become completely frustrated with the effort.
Agreeing to partner on a project does not make these problems go away or keep conflict between organizations from occurring. Partnering is only a concept that the project team, once it agrees to it, has to “own” and successfully manage on a day-to-day basis. This keeps some partnering relationships from ever living through or past the first project.
EXAMPLE OF A FAILURE TO MANAGE THE PARTNERING RELATIONSHIP
A case in point involves a large manufacturing company (client) that used a partnering concept on a major capital expansion project in 1990. When the project was started the client informed the major contracting entities (engineer/design firm, construction management company, general contractor, and major subcontractors) that it wanted to approach the project differently than previous projects they had undertaken together. The client wanted to use a true project team approach where each entity was expected to be a team player and work together as partners to help each other be successful. Since the client wanted it this way, everyone agreed to it.
The typical problems started the third month into the project. Within six months the contracting entities had become entrenched in their protective modes of doing business. There was much “placing blame and finger pointing” by everyone as open communications shut down and project team members started defensive case building with the expectation that litigation would occur.
The following types of project issues surfaced in one-on-one interviews with a neutral third party at the eighth month stage:
- Lack of field cooperation; for example, access to work areas
- Tight oversight by owner's engineers’ second-guessing
- Two review cycles for drawings was cumbersome and slow
- Some team members wanted to “win every battle”
- Too much problem avoidance and defensive justification
- Slowness of client decision making and approval process
- Construction manager (CM) had to work counter to their traditional strengths
- CM controlled subcontractors on paper but client controlled in practice
- Needed to have contractor-to-engineering communications
- Some subcontractors were getting clobbered because of fixed-cost contract
- Project scope was moving target; too much “scope creep” was occurring
While many of these issues are common to E/C projects, the project team failed to properly manage the issues and the partnering process for dealing with them. Although the project was completed there were schedule delays, significant cost overruns, litigation and destroyed business relationships. Three members of the project management team either transferred off the project at their request or were removed from the project by their organization because of the project problems and personal conflicts.
MANAGING THE PARTNERING PROCESS
The example illustrated above can happen on any project, whether or not apartnering concept is used. Partnering can be an effective way to prevent certain organizational problems from occurring, deal with those that do occur, and build a collaborative relationship among the project team-but as shown above, it has to be managed.
A review of why project partnering sometimes fails to achieve its potential and intended goals points to the following key requirements:
Start early and devote adequate resources to establishing the partnering relationship. Most project teams (client and contracting entities) rush to the technical side of the project at the beginning and focus all their resources there. The partnering/team side is often left to happen on its own or to be addressed after everything else has been settled. Since things rarely “settle” on a major project, the “ox cart is in the ditch” before it is addressed.
Get sponsorship and commitment from the top of the partnering entities. The commitment must be from the top down. Because of the additional efforts and up-front costs required for partnering, top levels of management in each organization must be fully committed to the concept and the process. Without visible commitment through partnering actions the process will have little chance of success. A partnering leader must be identified in each organization to champion and support the effort. Top management and partnering leaders should attend a workshop to gain abetter understanding of their roles, develop a partnering vision and execute a partnering agreement for the project.
Conduct partnering workshop with key project team members. Successful partnering requires a “leap of faith” that is difficult for team members and their organizations. The workshop should strengthen the skills and ability of team members to work together and jointly manage conflict, solve problems, improve communications, identify potential problems, and clarify roles and responsibilities. The partnering leaders should introduce the partnering concept and outline the products to be developed in the workshop. Some of the workshop products should be a partnering charter, a dispute resolution model, project success criteria, an implementation plan, and an evaluation process.
Clarify expectations and parameters of what partnering means for the project. E/C projects are contractual. Partnering does not automatically change the contract or project scope. It has to be managed within the legal framework of the contract(s) and the specifications of the project. Ambiguity of what partnering means on a specific project has led many contracting parties to perform work that was not reimbursed.
Roll down the partnering concept and what it means to the lower organizational levels. The work of E/C projects gets done in the field and at lower organizational levels. These individuals must also be brought into the process. The project team must have a plan of action for rolling down the partnering concept to the people performing most of the work.
Jointly evaluate progress and conduct periodic follow-up sessions. Formal, periodic evaluation is necessary to keep the project management team on track, review team performance, and assess opportunities for improvement. Follow-up sessions and workshops have proved essential to the maintenance and continuous renewal of the partnering commitment. Without follow-up, the tendency is to revert back to the traditional adversarial relationships and business-as-usual.
There is a feeling among some that partnering means “all relationships and no substance,” and that the benefits are intangible and not worth the extra effort and cost. Although there needs to be additional data collected and analyzed regarding the benefits of partnering, initial indications are that the benefits far outweigh the costs and effort. A Construction Industry Institute (CII) Task Force that studied E/C partnering identified the following benefits based on survey data from existing partnering relationships :
|Partnering Benefit||% in Agreement|
|Total project cost reduced||8%|
|Improved contractor profitability||10%|
|Improvement in schedule||7%|
|Improved resource planning||85%|
Frank Carr, chief trial attorney and chief labor counselor for the U.S. Army Corps of Engineers, summarized the Corps’ project partnering experiences in a 1991 address to the American Arbitration Association by stating:
Where partnering principles have been utilized, we have experienced better cost control, a reduction in cost growth, a significant reduction in paperwork, and successful attainment of our value engineering objectives. However, most importantly, none of the Portland District contracts using partnering have outstanding claims or resulted in litigation! Also, other positive byproducts have been no late deliveries, no fatal accidents, a reduction in lost-time accident rates, and a reduction in the amount of rework. We do not think these results are coincidental. We firmly believe that this success is directly attributable to a new attitude that we hope will spread through the Corps in the coming years .
Project partnering has potential benefits and payoff for all entities involved in a major E/C project. However, the success it attains depends on the support of the organizations and the management of the process by the project team.
1. Construction Industry Institute. 1991. In Search of Partnering Excellence, Special Publication 17-1. Austin, Texas.
2. Carr, Frank. 1991. Partnering: A New Corps of Engineering Effort to Avoid Disputes. 1991 American Arbitration Association Proceedings.
James H. Brown is a partner in Maxim, Inc., an organizational development and training firm located in Greenville, South Carolina. He has an MEd degree from the University of South Carolina and advanced graduate study in instructional design. Mr. Brown has 17 years of experience in the engineering and construction industry and has held training and project management positions with one of the largest E/C firms in the U.S. His area of speciality is helping organizations build multi-party project teams and assisting troubled teams realign for project success.