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BUILDING A SUCCESSFUL PROJECT CULTURE

BUILDING A SUCCESSFUL PROJECT CULTURE:


THE CLIENT AS THE INDEPENDENT VARIABLE

Prof. John Carlisle, Chairman, John Carlisle Partnerships (JCP), Sheffield,


England.

John Carlisle and his company in Sheffield have been pioneers in the field of
organisational cooperation for nearly twenty years, beginning with win-win
negotiations in the Petrochemical and Electronics industries in the early
eighties, and currently working with strategic alliances and partnering world-
wide. The company advises on relationship development in major projects in
four continents. The railway experience includes the launching of the
Channel Tunnel Rail Link, a number of current Railtrack projects, consulting
with the Department of Infrastructure of Victoria, Australia, and the Mass
Transit Railway Corporation of Hong Kong.

PREFACE

The client is very often the villain of the piece when trying to establish greater levels
of cooperation with suppliers and contractors. This is normally because, at board
level, there is a very simplistic image of what it will involve.
In my introduction to the seminal article on partnering: “Cooperation Works – but it is
Hard Work”, in 1996, I quoted from the Royal Society for Arts report in 1995,
“Tomorrows Company”, in which they quoted the statistics that 75% of directors
questioned thought their company was world class, when actually only 3.2% were!
This is not just arrogance; it is also ignorance, borne of complacency. How many of
these companies have tumbled since then?

The paper will present the case for the client executive to become a good deal more
conscious at what they are asking their organisation to do, and a good deal more
skilled at walking the talk themselves.
The paper will cover:
• Strategy: The right and wrong reasons for partnering.

• Implementation: The right and wrong policies and messages

• Learning: The right and wrong behaviours for credibility.

And how to express the right kind of influence to create the new culture.

INTRODUCTION

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After about ten years of “officially” partnering, the task of establishing a culture of
cooperation still offers the biggest leadership challenge to the construction industry.
It offers that challenge in particular to the Clients and the largest operators. This is
ironic in that the Egan Report seemed to suggest that it is only be the largest
operators who will be the winners in this drive to greater efficiency, while our
experience clearly suggests that the big contractors, by and large, are still struggling
with the fundamental culture change that is vital to their success in partnering. What
has happened, for example, to Laings?

Here is what happened, and it is typical of large organisations: Instead of wrestling


with the softer but more difficult issues of their own values, attitudes and behaviours
they opted to invest in structural change, which always seems to be the first (and
worst) resort, instead of the last resort. As the mother said in the play Cat on a Hot
Tin Roof, “when a marriage is on the rocks the rocks are in the bed!” Changing the
bedroom furniture is not going to help.
For Laings this was fatal.
For Railtrack as a whole it may yet be. (In fact it was. John 2007)

The truth is, the Client sector has a long way to go: in some cases, a very long way!
The UK contractors knew this instinctively as soon as the Egan Report came out,
recommending a reversal of the adversarial behaviour in the industry. The cry from
the contractor’s hearts that appeared in every English construction publication was:
“Tell that to the clients!”. And quite right they were too.
Some clients are still doing what Dr Stuart Green suggested in his 1998
controversial paper, “Partnering: The propaganda of corporatism?”. They are
undertaking a crude exercise in buying power; but fail to realise that lower costs
under this regime do not deliver long term - or even short term - quality in most
cases. Bandying words around like win-win, openness and trust, while exercising
win-lose policies does not make for good partners who will pull out all the stops in a
crisis, or engage in continual improvement.

In a nutshell, the clients get the relationship they deserve, and that includes the very
large contractors who get the suppliers they deserve. They are the independent
variable. These large companies could, I feel, could learn from the smaller and
medium sized contractors like Kier, Llewellyn, Willmott Dixon, Mansell and the like,
who have made the greatest investment in internal cultural changes and are now
able to form effective and profitable partnerships.

BNFL Client Master Class


They could also learn an enormous amount from other clients as well. For example,
BNFL asked me to organise and run a Client Master Class, which BNFL sponsored,
in early 2002, to bring together the wisdom and experience at running successful
partnerships as clients. They wanted to learn firsthand the current challenges and
the latest best practice worldwide. Not for them the illusion of knowledge that wrecks
so many so-called partnerships!
On February 5/6/7 thirty procurement, project, and supply chain executives from all
over the world gathered together in the UK for an intensive symposium on the role of
partnering in organisational success, and its implementation. They represented, for
example, Railtrack, Shell (Nigeria), De Beers, Anglo American, the Health and
Safety Executive, CTRL, Hong Kong Airport, Cathay Pacific, Home Housing, Sasol,
Welsh Water, and nine senior managers from BNFL, headed by the Board member
for Spent Fuel, Chris Loughlin.

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The atmosphere was electric and the learning immense. It was a turning point for
many. Much of the learning has been incorporated in this paper.

COOPERATION AS AN ORGANISATIONAL COMPETENCE

Strategy:
Every major initiative needs to be part of the overall business strategy, and therefore
must be aligned to it with clarity as to purpose and vision. In other words know WHY
you are doing partnering.

THE RIGHT REASONS


1. The supply chain is not yielding enough value, either in production,
procurement or projects.
2. There is a high risk or complex project which has unknowns where you need
the contractors to help mitigate the risk, e.g. signalling.
3. You have decided that something really is not part of the core business, and
you do not have the capacity internally to handle it.

THE WRONG REASONS


1. “Me too”, says the board - as it did with Total Quality Management, Re-
Engineering etc.
2. You want to take jobs off the permanent payroll, so you contract out to so-
called partners, with the naïve assumption that your former employees will
want to cooperate.
3. You are having a problem with this activity, which happens to be a vital one,
so you outsource it to partners, thinking that somehow an outsider will better
solve something which you specialise in. Then you give the partner more
money than you did the original department; but with a complicated and
punitive contract, and little help with the bureaucracy that was the problem in
the first place.
Some aspects of track maintenance come to mind; but the real culprits are
local and national government maintenance outsourcing fads.

In other words do not do what you do not know, so get to know it! Both MTRC and
BNFL did some excellent research on the subject of partnering before they entered
into the practice. MTRC had two of its best younger managers research the area
thoroughly both through the literature and through direct contacts before embarking
on the journey. BNFL set up study group reporting directly to the MD of the
engineering company, which covered both UK and USA best practices.
At the very least you ought to know that you don’t know, then you can get the
appropriate help – which they did. They set off, therefore, reasonably well prepared
for the change process.

Implementation

1. Know Thyself
Good implementation begins with starting the journey from the right place, by
knowing how well equipped you are for it. One of the most effective indicators is one
which illustrates just how secure you are in a cooperative arrangement, i.e. how
prepared you are to let go (take a risk) and to trust.

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Figure One illustrates this point quite clearly. The Oil Operators here were warned
not to rush into any partnerships before they had worked really hard on their internal
behaviours and policies.
2. Best in Class
Choose contractors who are best in class in the field that you need, and who exhibit
partnering potential.
3. Appropriate Selection Process
Design a transparent selection process that judges against all the most important
criteria of relationships and performance. Communicate this to the board.
4. Train the Directors
Do not pussyfoot around. If the directors are the problem then retrain them in
leadership through cooperation. Do not dodge this one. They need to know their
incompetence, and accept the need for their own development, be it in knowledge or
skill. Then coach them and reinforce the new language and behaviour of
cooperation. (Figure Two)
The data are taken from observations of project meetings, and show how, even with
the same experience of partnering, the Client seems to have real difficulty learning
the “Inclusive” skills of cooperative behaviour. Why is this?
Because they feel more powerful, and the more powerful you feel the less likely you
are to learn. Hence the difference is amplified at board levels.
5. Executive Workshop
Launch with a top team client workshop, i.e. directors and direct reports.
Share the relationship journey and their role in it with them, and get their agreement
to the roll-out. Also give them feedback, for example, on their risk/trust profiles.

Again, MTRC, parts of Railtrack and BNFL did this to good effect. CTRL also
launched their partnering in this way with us; but unfortunately some of the feedback
was not appreciated, and, as they say: “The operation was a success; but the
surgeon died”! However, I am pleased that some of the projects we did launch for
CTRL can be considered world class.
6. Top Level Client/Contractor Workshop
DO NOT EXPECT THE CONTRACT TO RUN THE RELATIONSHIP, no matter
whether it is NEC, ECC or PPC 2000!! In fact some of the latest findings are that it
makes it more difficult.
The client will be competent enough by now to not be exposed negatively
(incompetent) at this workshop, and so good work can be done quickly on the
charter, key issues etc. However, one of the most important things the clients and
their stakeholders really want, which emerged from the February Master Class, is
the need for measures. Thus one of the key outcomes of the workshop is a set of
significant measures of improvement in the relationship and a set of measures of
performance improvement, mainly for continuous improvement. There is a positive
correlation between the two; and each can be the independent variable.
Relationship measures include:
Behaviour Changes as illustrated in Figures Three and Four.
Expectations Monitoring (Figure Three)
Questionnaire interviews as carried out for MTRC
The EFQM adapted model

Performance Measures include:


Reduction in time
Innovation to enhance value (for the user)
Reduction in claims
Timely settlements

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And anything else the parties agree that will enhance performance

Learning
If there is one thing the board must learn it is that their behaviours are worth a
thousand slogans. Successful partnering requires new policies that reward those
who change, and new behaviours from the top. The trouble is that the bigger a
company is the harder it is to feel the need to learn, and the easier it is to commit
the folly of the illusion of knowledge. Remember the preface to this paper: “. . . .75%
of directors thought their companies were world class, while only 3.2% really were.”
The behaviours these people would exhibit would be classic Unconscious
Incompetence.

It is individual and organisational behaviours that determine the perceptions as to


whether or not a company is partnering. And most often it is the organisation’s
policies and processes that determine the individual behaviour; so analysing
behaviour is as good a measure as any of cooperative competence.
What is needed therefore, is feedback on the appropriateness of their behaviours,
as is illustrated in Figure Four. This normally has a huge impact, because it is “hard”
data and comparative. It is normally the start of some good personal commitment to
change.
Figure Two showed that the Client exercises a far greater degree of “Tell”
behaviours, and only about half the number of the “Inclusive” behaviours.
It is this kind of behaviour at meetings that makes contractors sceptical of the
Clients’ attempts at partnering.
However, Figure Four shows the good news that, with some good coaching the
clients can change. Railtrack’s Dorset Coast project is a particularly good example
of this.

The simple remedy in the first place is to train the top managers in these more
cooperative skills. Then take them down the line. New policies of cooperation will
then have more credibility, i.e. the talk will be walked!
In the end it is what you do that matters; not what your public relations machine
says. Behaviour governs perceptions.

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IMPLEMENTATION OF THE CULTURE CHANGE

Partnering requires, for most companies, a major culture change. It therefore


requires a major investment in a relationship strategy, i.e. time, money, people and,
most of all, changing attitudes and perceptions starting with yourself.
Here are four principles:
1. UNDERSTAND that it is a Journey, the move from controlling to sharing control,
from Hierarchy to System Thinking - amour propre to amour de soi. – not a just a
single step. Be realistic about how little you really know and therefore, just how
much your directors will have to work on themselves, and be humble enough to
admit you need help. Railtrack (especially Dorset Coast and West Coast Main
Line) and MTRC have been outstanding in this regard.

2. TRANSFORM values and attitudes into cooperative behaviours at all levels; most
especially at the top and at the key interfaces with customers and
suppliers/contractors. Create the acceptance throughout the organisation that
cooperative, not adversarial behaviour, will be rewarded by putting in place the
appropriate new policies. Take out those people who find this impossible.
Promote those who embrace the change successfully.
Train in Negotiation Skills. This a vital missing ingredient.
Communicate and celebrate successes.
MTRC are excellent at this, as the article in the Financial Times of September
14, 1999, showed, and as David Avery of MTRC illustrates.
Parts of CTRL have also been very effective, led by such knowledgeable senior
managers as Alastair Cathcart and Rab Brown.

3. PLAN the implementation as carefully as you would a major project, along the
lines of the John Carlisle’s Relationship Journey, for that is what it is. Put strong
people in charge, in a change management group, usually called a Steering
Group or Partnering Board.

4. PDSA (Plan-Do-Study-Act) the partnership. In other words measure the


relationship with behaviour observations and against the Charter, and measure
the process and business improvements. Help each other to succeed. If the
client is not taking significant waste out of their system (and here is where I do
challenge The Egan Report - 10% is far too conservative a target for an industry
that is cluttered with non value-added activity. We would expect to take out at
least 20% in the first phase of partnering) then the relationship is not working
properly. And if the contractors are not increasing their margins significantly,
again the relationship is not effective.
The MTRC in Hong Kong made a strategic decision to use partnering, not
just to get the TKE project delivered on time and to budget; but also to
ensure their contractors achieved a reasonable return in what has become
a very tight market. They understand that you get the contractors you
deserve - and they have put great emphasis on measurement. However, Welsh
Water, a non-rail company, probably produce some of the best measures for
corporate performance measurement, using the EFQM as a base. The best
relationship measures have been carried out by Lewellyns and Mansell on
housing projects.
However, BAA has probably applied all the lessons best on Terminal 5.

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Finally, it is important early on to measure the win/win, and to act fast to


correct it if it is not emerging as such. If that means removing people,
then remove them. This includes legal and other advisers.

THE ROLE OF THE EXECUTIVE

Again this is quite simple. Their role is leadership, and the first responsibility of
leadership is to have a strategy and to communicate it. You cannot have a strategy
unless you understand the nature of the task and set a goal. In BNFL these are
quite clear. Partnering is a key plank in the organisation’s safety achievement and
cost reduction programme. It is clear.

The second responsibility of leadership is support, support, support - BUT intelligent


support! Amongst the most important beacons of effective support are changed
policies about recognition and reward.This is known as constancy of purpose and
requires courage.
Sasol are demonstrating a dogged endurance from their General Manager of
Sastech here, as is parts of Railtrack through some courageous leadership by a few
senior managers. MTRC has made the clearest statement through public
presentations by David Avery, Henry Lam and, most significantly the Project
Director, Russell Black, at high level conferences like this one.

What does this require from leaders? I will leave you with some key messages.

KEY MESSAGES
1. Humility
a. Leaders must learn to learn, and this means taking time off
to review.
b. Leaders of client organisations must accept that they are seldom as
cooperative as they think they are, mainly because they lack
understanding of what cooperative behaviour really is, and because
their competitiveness probably got them where they are today.

2. Interdependence

a. Leaders must understand their organisation as part of a


larger system, i.e. interdependence.
b. Leaders must accept that trying to control the system causes
waste, while working cooperatively within it brings surplus.

4. Courage

a. Leaders must begin to change their behaviour from directing and


demanding (Telling) to seeking and understanding (Including). This
means changing their beliefs through changing their behaviours, and
changing their minds will follow.

b. Leaders must take the risks consciously to set up conditions


for sustained change which they lead from the front as role
models.

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4. Care
Take a real human interest in your managers’ partnering initiatives.
Good relationships are, after all, the glue that holds organisations
together, and radically improves performance. Defend your troops
especially against ambushes from the disaffected.

5. Constancy of purpose

Always go back to the relationship-building commitment, especially


when there is a crisis. Treat every crisis as an opportunity to
demonstrate the strength of the relationship - as opposed to the
negative power of penalty clauses. The Heathrow Express tunnel is a
good example.

6. Zero Tolerance (This advice for the followers)

Partnering is a strategy. It is not a programme, or a “me too”


activity. It is a dramatic re-positioning in the market place designed to
get your most important customers and suppliers to give you preferred
treatment because they want to. It means a totally different way of life
at work, and is hard work, because it renders many people near the
top incompetent.
People who feel incompetent are dangerous, as they feel
uncomfortable, and are liable to regress to old behaviours. However,
the really dangerous leaders are those who are incompetent and don’t
know it - unconsciously incompetent. They are like those drivers on
the 70 mph motorways who drive at 50mph in the middle lane, causing
chaos on either side; but blissfully smug in their own paradigm.
The answer is “zero tolerance”, which means they must be challenged
every time they get it wrong. Thus the key skill that has to be
developed is that of giving feedback, upwards. I call this “CTB” -
coaching the boss. Project managers, procurement specialists and the
contractors themselves need to have the courage and competence to
do this, and the data.
We can provide the competence and data. The courage is a particular
gift only you can bring – an act of leadership in your own right.

John Carlisle, Brussels, March 21st 2002 and 2007

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Figure 1

RISK-TRUST – Some Oil and Gas Operators

TRUSTS QUICKLY
Adventurous Team Player

X XXX
RISK WILLING

RISK AVERSE
X
X
X XX X XX
XX X
X X XX XXX XX X XXX X XX
XX
X X
XX XXX XXXXX X XX
XXX
X XX XX XXXX XX X XX
X
XXXXX XXXX X

X XX
XX X X
XX X XX

Individualistic Evaluating

TRUSTS SLOWLY

The diagram shows:


TRUST Only 13% thought Trust was encouraged.
RISK Only 10% thought RISK-TAKING was advisable -
with the unusual situation that 50% are very averse to risk (extreme right)

This compares with an equivalent sized successful USA computer company:


TRUST 35% thought TRUST was encouraged
RISK 31% thought RISK-TAKING was advisable
They are making great strides with their alliances.

But compare this with another British industrial segment – Construction -below

Figure 2 (continued)

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Risk/Trust - Construction Company

TRUSTS QUICKLY
Adventurous Team Player

x xx
RISK WILLING

RISK AVERSE
x xx xx
x x x x xx x
x x x x
x x x x xx x
x xxx x
x xx x xxx x x x x x
x xx xx x x x x
x x x
x x
x x x
x

x
Individualistic Evaluating

TRUSTS SLOWLY

There is a greater openness in this sector as a whole.

The big emphasis here must be to improve the team skills.

The construction industry is notoriously under-skilled in group activity.

It also lets itself down by the lack of negotiation skills in the initial phase of the
relationship.

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Figure 2

COOPERATION: AN ORGANISATIONAL COMPETENCE I


Experienced Client & Contractor Behaviour

CLIENTS CONTRACTORS

17% “INCLUSIVE”
31% - Asking Questions
- Building On Others’ Ideas

“TELL”

- Giving Information 83% 69%


- Making Proposals

Source: Three major strategic alliances and project partnerships in the UK


Relationship sample : 118 Senior Managers

DISCUSSION

Construction meetings are a source of great frustration for most of the time.
The two columns above indicate, partially, why this is so, particularly when
a majority of engineers are involved.

The blue/green ratio indicates that at the project meetings the Clients give
information and their own ideas (blue) five times more often than they seek
information/ideas or develop ideas of others (green)

This contrasts with the Contractors, who, in these meetings, have a ratio of
slightly over 2:1.

Who is exhibiting “Partnering” behaviour?

The answer, at the level of ideas and information, is the Contractor.

However, at another level, which we shall come to later, the Contractor may
also not be partnering. Hence an additional degree of skill is needed by both
parties. The trouble is that, without a behavioural model of effective Partnering,
there is no way to know that, and, therefore, no way of knowing how to improve.

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Figure 3

Project Expectations as at 21.3.01


Client of MC 1 2 3 4 5 6 7 8 9 10 10 9 8 7 6 5 4 3 2 1 MC of Client
Disappointed Fairly Treated Disappointed
Awareness of project 1 23 3 2 1 Clear requirements
Track record for delivering
on time etc. 21 3 3 2 1 Co-operation
Communication 1 23 32 1 Prompt payment
Confidence / trust 2 13 3 2 1 No surprises
Solutions 1 2 3 32 1 Continued working relations

Local labour 1 3 2 3 1 Feedback


Draw in outside expertise 1 23 32 1 Recognition
Economy's of scale 1 3 3 2 1 1 Proactive problem solving
Social partnering in long term 2 3 3 2 1 Understanding budget constraints
Teamwork*(due to attendance on
Use initiative/problem solving 2 13 3 2 1 16/5/00)

Win / Lose Win / Win Feeling Win / Lose


Low Trust Optimum Quality of Low Trust
Low Risk Relationship Low Risk
1 2 3 4 5 6 7 8 9 10 10 9 8 7 6 5 4 3 2 1
Low Satisfaction High Satisfaction Low Satisfaction

1 = First Workshop 16th May 2000


2 = Second Workshop 28th September 2000
3 = Third Workshop 21th March 2001

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Figure 4

TOP TEAMS
GROUP BEHAVIOUR RATIOS
COMBINED MEETINGS

9% 10% 13% 15%


11%
24%
72
70%
81 48%

#
NON-PARTNERING MEETINGS PARTNERING MEETINGS
# Railtrack 48
Best
= Giving information
Practice 27 CLARIFYING
= Asking questions
16
3:1 = INITIATING
9 = REACTING
Copyright John Carlisle Partnerships, 1997

Discussion

The two key differences here, apart from the green area of
Clarifying behaviour are:

• The increase in Reacting, the red area, by 44%. This, in


Fact, largely represents an increase in challenging behaviour
(disagreeing) by the contractors, i.e. honesty.

• The 50% increase in Initiating behaviour (blue) is largely due


to an increase in building behaviour – developing the ideas
of others, i.e. productive cooperation, vital for successful
Value Engineering.

These second meetings were vastly more enjoyable and productive.

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