Major Projects: What were they thinking?

Cranfield School of Management

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Major Projects: What were they thinking?
By Harvey Maylor, Mark Johnson and Tim Brady

Wrong assumptions behind underperformance in Major Programmes.

Working on major government programmes is a highly complex task. Unfortunately, current management approaches are not up to the task. The result of this is that millions – if not billions - are wasted, projects get out of control and they fail to achieve their objectives.

By our assessment, these programmes get some of the highest ratings of any work we have come across in terms of their structural complexity (size, many inter-connected elements and many stakeholders), socio-political complexity (lack of client coherence, political and individual agendas, power-struggles) and uncertainty / emergence (unclear requirements, high levels of change). Also, as shown by the continuously increasing costs of many new pieces of hardware, this complexity seems to increase every year.

Here we go again...

The Times of London, 14th December 2010, carried the results of an investigation into defence procurement. The results showed that despite all the efforts to improve public-sector procurement, “The ministry’s ineptitude is costing British lives” This is due to the late delivery (or not at all) of equipment to the battlefield, and in these straitened times, the £6Bn of waste is unnecessary.

The Ministry of Defence (MoD) is not alone in being challenged on its role as ‘client’. Report after report notes that the UK government seems to be incapable of becoming what we term ‘an intelligent client’ and spending money wisely whilst achieving the successful delivery of programmes.

Having reviewed both major programmes themselves and the many reports that have analysed them, we are in no doubt that the principles behind current approaches are misguided. Indeed, as we will show, some of these long-held principles might work very well for small projects, but actually contribute to the problems faced when used in complex programmes.

A Fresh Outlook on Old Problems

We have found that paradoxes have been very useful in understanding complex systems and in particular unexpected outcomes from those systems. They are useful because, as we have observed elsewhere:

“Paradoxes are only paradoxes because they are based on a logic or rationale that is different from what we understand or expect. Discovering the aberrant logic not only destroys the paradoxical quality, but also offers alternative ways for coping with similar situations.”

It is this aberrant logic that we have been researching with some interesting results. When we applied this thinking to the problems of government programme procurement we identified seven key paradoxes, where false logic predominates.

False logic 1: the risk paradox

We noticed that the logic of outsourcing was built on the rationale that it was possible for an organisation to pass on all the risk associated with a complex programme to its suppliers. The reality disconfirms this. Nimrod, for instance, demonstrated that risk (all £3.5Bn of it) stayed with the client – leading to an eight year overrun and finally cancellation just weeks before the first production aircraft was due to be delivered. An intelligent client, such as BAA in its procurement of Heathrow’s Terminal 5, ensured that it owned all of the risk, all of the time.

False logic 2: the contract paradox

The prevailing logic on contracts is that outcomes can be identified up-front, and then demanded from suppliers. The logic suggests that the more precise the contract terms and conditions are, the more likely you will get successful delivery. Government has invested significantly in its contracting policies, but the outcomes appear to work to a different logic. Contracting in complex programmes is a paradox because of the issue of emergence, and emergence is generally not handled well by contractual means.

False logic 3: the cost-cutting paradox

Current approaches to government procured projects don’t invest in understanding the problem up-front, select the cheapest supplier, apply rigorous controls and if necessary, apply 'man-marking' in the delivery. Whilst this seems perfectly reasonable and indeed prudent with public funds, it isn’t working. The logic for complex programmes requires a longer-term and wider view of the drivers of costs, both now and in the future on those programmes.

False logic 4: the outsourced problem paradox

When letting a contract for the supply of paper-clips, problems with design, delivery and inventory can be outsourced. Complex programmes don’t work on the same logic and indeed we notice that in an effort to outsource problems, government often creates its own levels of problems and complexities. For instance, in letting major contracts, competitors are forced to become partners and cooperate (Metronet, for instance), or the work that is required to join up requirements within and between government departments is left to the contractor (e.g. NHS IT).

False logic 5: the relationship paradox

Government agencies are prevented from having relationships with their supply chains by a whole raft of legislation, local and European. This is based on the logic that government agents cannot be trusted to be impartial. However, we have also seen that where long-term relationships are established, these can become prone to complicity – the state where neither party wants to challenge the actions of the other. This makes the paradox particularly interesting, as neither distance nor complicit relationships appear to be yielding the results desired.

False logic 6: the process paradox

A mantra for many government departments has been, if there is a problem, fix the process. Indeed, most departments now have so many processes, standards, protocols and standing orders, that it is amazing anything gets delivered. The logic needs challenging here as it doesn’t work – more processes are just costing more, not delivering more. An alternative logic for complex programmes needs to recognise the socio-political complexity of modern programmes, and to develop approaches that match these. Not continuing to live in a simple world.

False logic 7: the learning paradox

Programmes should be ideal vehicles for learning. The learning cycles of plan, do, check and then act to improve what is done – map well to the life-cycles of programmes. However, we see mistakes repeated in so many of the programmes reviewed by the National Audit Office and others. This indicates that this learning is elusive. An alternative logic exists. This clearly isn’t understood well at the moment, but is not based around current approaches which attempt to ‘push’ knowledge from one programme to another. Learning, both individual and corporate, is more successful when it is pulled forward – a future programme interrogating a previous one for useful knowledge.

So what must be done?

The world of public sector programmes is a world of paradox stuffed full of contradictory logic and false rationale. What can be done about it? For a start, government should acknowledge the paradoxes based on false assumptions and make efforts to understand the power of paradox-based thinking to guide the re-design of their approach to programme management. This means acknowledging the strengths of both sides of the paradox and the tensions and contradictions that they express.

For complex programmes there is no case for continuing to apply old, simple non-complex project based thinking. Without such a change of approach the latest revelations about government profligacy will happen again and again, because as the CEO of one of the largest IT outsourcing firms commented, 'the common element in problems in government IT programmes is government.'

Harvey Maylor is Director of the International Centre for Programme Management (ICPM) at Cranfield.
Mark Johnson is a Principal Research Fellow, Tim Brady is a visiting researcher.

Harvey is contributor to: Leading Succesful Projects and Programmes in Fast Changing Environments.



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