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ations were beginning to face problems with the rise in new communications technology, there remains the major

challenge of the rise of small networking and virtual companies with much lower overheads within some sectors. Some companies are ghting back by reducing costs in the supply chain by ordering supplies and services via the internet. Companies such as Cisco Systems now conduct most of their business over the internet. Today the established business sector is facing major challenges from new technology that is empowering individuals and small businesses to trade at lower costs. This book provides useful information for organisations to become better workplaces, contributing to a sustainable and fairer world and, in that way, become more successful. This is a well-researched book based on a wide-ranging study of management literature plus practical experience. It also includes many helpful diagrams but I had the feeling that much of the book dealt with the problems of large organisations. However, it should be of particular interest to LRP readers, because of its strategic, long-term and global perspective, and its emphasis on the important role of the internal consultant in helping to develop, enlighten and empower leadership.

Reference
1. F. E. Kast and J. E. Rosenzweig, Organisation Management: A Systems Approach, p. 655. McGraw Hill (1970).

Brian Burrows Fairlawn, Swindon, UK


doi:10.1016/S0024-6301(02)00169-3

The strategic management of large engineering projects


Roger Miller, Donald R. Lessard et al, MIT Press (2000) 237 pp., $34.95 hb

The predictability of large engineering projects is notoriously problematic. They often turn out to take far longer, and cost far more, than initially planned - consider local UK examples such as Eurotunnel or the West Coast mainline modernization. They are often highly political and the fate of such large companies can hang in the balance with the high stakes. Any work, such as this book, which can throw light on improving this predicament, is to be welcomed. If it could also give us some guidance on when large-scale engineering projects might be appropriate, and when a large number of intermediate scale projects might be more appropriate, it would be even more valuable. For example, should a single large scale dam be produced instead of a large number of smaller scale dams and alternative energy projects, each of which is inherently more predictable with a smaller scale of risk? When is Large Scale Engineering appropriate, and when should we adopt the wisdom of E. F. Schumachers famous dictum Small is Beautiful? The international IMEC research programme, begun in 1995 laid the foundation for the book. It aimed to benchmark sixty projects and identify best practices to be shared between industry, government and academia. The sheer number of current large-scale projects is daunting. The authors estimate that in 1999 there were more than 1500 projects of value greater than US $1 billion across the world. This is indeed a signicant subject, and important strategically. It will come as no surprise to readers of LRP that the authors identify front end engineering and strategic systems to be a far greater determinant of the success or failure of large engineering projects than are the more tangible aspects of project engineering and management. The main part of the book consists of ten separate essays, each by various authors involved in the research programme. The rst essay describes the research methodology. The framework
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devised for analysis includes elements such as the institutional context, project-specic context, project architecture, managerial regulation, governance structure, project execution, nancing, and project performance. The sixty sample projects came from the elds of electric power, oil production, urban transportation and roads, from most of the main regions of the world. Research data was obtained through interviews and questionnaires. This essay also mentions some of the main conclusions of the research useful to be aware of, as there is no simple overall summary. The following indicates some of the main themes within the rst essay. The difculties with large engineering projects arise from their complexity, irreversibility and dynamic instability. Technical difculties, social disturbance and size are not statistically linked to performance. The biggest problems are managerial, hence: The presence of coherent and well-developed institutional arrangements is without doubt the most important determinant of project performance. Political and social considerations are particularly signicant. Precise regulation and rules of the game are needed from governments. Often these large projects are operating at the limit of current laws and regulations, so a close relationship with government is necessary (this breaking of new ground also brings the potential for higher returns). Consultation frameworks are also important: Successful sponsors will not start a project until its legitimacy is no longer challenged. The question of public versus private ownership is also discussed, with the conclusion that competency in multiple projects is more important than whether ownership is public or private. The second essay covers the changing nature of arrangements for shaping and delivering engineering projects. The history of such arrangements is traced through the entrepreneurial 1800s to the public ownership of the 1900s to the new collaborative approaches going into the 2000s. By the late 1960s, in almost all countries, railroads and electrical utilities, operators of highway networks, and other project operators were predominantly private regulated monopolies or stateowned entities serving large geographical areas. In the mid-1980s, partnerships of private entrepreneurs, engineering rms and nancial institutions became increasingly common. This global trend is reected by PFI in the UK. The authors ask whether one approach is better than the other? The best answer is that large engineering projects involve characteristics that make it difcult to design institutional arrangements that will remain optimal in the long term. Of course! It is suggested that the allocation and sharing of risks is what distinguishes modern governance from 19th century entrepreneurial approaches. Value is created by mutual problem solving. Essays 3-5 are about the critical front end shaping of projects and the management of risks. Project shaping gives competitive advantage. The front end is a messy and chaotic stage, primarily a managerial challenge when politics and power are more important than analysis. Understanding risks and strategizing about ways to cope is the starting point of effective project shaping. Risks may be technical, market related or social/institutional. A clear distinction is made between a managerial approach to risk, assuming that the future is indeterminate, and the more traditional decisioneering approach to risk, which assumes that the future is probabilistic. The ability to frame risks and strategies is a core competence of lead sponsors. Essays 6-9 are about project governability and the coalitions needed to bring project success government and institutions, nancing and partnering and related social, capital and personal relationships. For example, 29 devices are given to address the art of designing governability. Institutions dene rules by which the players interact. However, Institutional changes need to be managed, and may cause problems. For example, some PFI bidding requirements may have forced developers to bear high front-end costs that could only be partially recuperated by the winner. The nancial architecture has the dual role of allocating risk and making effective renegotiations possible; it aims to maximize value and minimize the cost of renegotiations. Four very different congurations are identied for partnering project development and execution. Things may be done solo or in coalition, and relationships can be integrated or at arms length. Techniques such as team building, frame agreements, integrated project teams, sticky informal networks, etc. are discussed. It is noted that there is no best way of structuring all projects and best practice for one type of project could be detrimental to another.
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2003

In the nal essay the lead authors aim to encapsulate what is involved in rising to the challenge of large projects. Here are some of the key success factors: accepting ambiguous goals, sponsors tied by dependencies, review gates, risk seminars, stress testing of collaborative arrangements, collective institutions, use of scenarios and options decision analysis, and, recognizing windows of opportunity. The golden rule is to reduce risks before making major investment and keep exposures under control. Planning is for the journey, rather than of the journey. Interdependency and shared governance is embraced, but too early lock-in is avoided (or too late). Innovation comes through trust seeking win-win solutions for a range of stakeholder interests. The aim is to stretch the front end and squeeze the back end. Has this thrown any light on my earlier question of scale? In one sense, yes, it has placed it rmly where it belongs, in the political and institutional domain. For example, undoubtedly the current oil- and gas-based economy involves more large-scale engineering projects than will the future solar- and hydrogen-based economy predicted by many commentators. Currently leaden footed governments will dictate the pace of this necessary evolution. What is clear is that these large projects are likely to remain inherently difcult to manage because of their sheer complexity and scale. But we can certainly get better at it! This book helps to disseminate the lessons of experience. Is it worth reading? On one hand, perhaps most of its insights are documented elsewhere in more specialized works. On the other hand, this is a useful distillation of real experience, which gives good pointers to the successful strategic management of large engineering projects. If this is what youre involved in, and you dont yet have sufcient scars of real experience, this book could give you good insights into the issues involved. It also provides a comprehensive bibliography for further reference. Barry Hopewell Strategy Consultant, 130 Grove Park, Knutsford, Cheshire WA16 8QD, UK
doi:10.1016/S0024-6301(02)00170-X

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