Pmnetwork      December 1993    p. 32
Concerns of Project Managers
Paul C. Dinsmore -- Feature Editor

Editor's Note: Jim Brown's guest-written column focuses on an as 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.


PARTNERING ON
ENGINEERING/CONSTRUCTION E/C PROJECTS

James H. Brown
Maxim, Inc., Greenville, South Carolina

Introduction

Partnering as a strategy was introduced to the construction industry approximately eight years ago.

Since its introduction there have been many example of "multi-project partnering" where two companies (owner-contractor) established long-term strategic business alliances. There has also been a growth trend in the industry for "single-project partnering" on a project-by-project basic. 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.

  1. 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.

  2. 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:

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 norrnally 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 col]aboration 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:

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 a partnering 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:


CONCLUSION

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 re- garding 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 [ 1 ]:

Partnering Benefit

Total project cost reduced
Improved contractor profitability
Improvement in schedule
Less adversarial
Improved resburce planning
Increased openness
Increased trust
Improved safety
Fewer errors
Improved quality
% in Agreement

8%
10%
7%
85%
85%
83%
78%
90%
82%
96%

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 by-products 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 helieve that this success is directly attrihutable to a new attitude that we hope will spread through the Corps in the coming years [2].

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 sup- port of the organizations and the man- agement of the process by the project team.

REFERENCES

  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 Arbitra- tion Association ProceedinRs.




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 ElC 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.