Carillion’s collapse is at least partly down to contracts failing badly. But if firms were better at analysing why projects went wrong, it would be less likely to happen, writes Sarah Fox.
The shock news of Carillion going into liquidation will have made January a more sober month than usual for the many staff and suppliers who worked for Britain’s second biggest construction group.
The full facts behind the failure will come out in due course, but clearly several mitigating factors were the major contracts that were behind programme and haemorrhaging money. One obvious question that might be asked is – after the first project started going wrong, why were lessons not learnt?
Generally, people learn more when they fail than when they succeed – and that should be true of construction as well. Only they clearly don’t. Success is always celebrated and attributed to the right mindset, a great team or a clear plan, even if it is actually down to luck or good weather.
But fail, and the project team will usually want to walk away as quickly as possible without analysing why.
After Carillion’s experiences, and ultimate collapse, not to mention the Grenfell tragedy last year – perhaps construction should be more willing to face up to failure and why it happens, rather than shy away from it.
Although our industry is delivering performance improvements and better client satisfaction, we can’t be complacent. In fact, the UK Industry Performance Report 2017 confirmed that for construction projects:
- One-tenth resulted in poor client satisfaction;
- One-fifth suffered defects which adversely affect the project quality (nearly half with housing projects);
- One-third failed to meet their projected project costs (a quarter for housing);
- One-third were completed late; and
- Half were hampered by late design information.
So although projects fail quite frequently – by not meeting their aims – the industry seems reluctant to learn from its mistakes.
Contracts can be the tool by which we manage the relationship across the supply chain to encourage everyone to learn from, report, assess and embrace failure. A bit like the reinforced NEC4 early warning procedure. We should recognise the role of emotional intelligence: unless we start introducing processes to learn from failure, we won’t consistently create project success.
Sarah Fox is author and founder of contracts business 500 Words
Comments
Comments are closed.
I believe Carillion accepted failure too quickly because failure is not fatal: it is the courage to continue that Carillion lacks. It could have measured failure as profit and introduce Failure Modes and Effects Analysis [FMEA] which is a structured approach to identify the process before failures. By estimating the risks associated with the failures, and the likelihood of realising risks, there could have been a way to prioritise functions with stakeholders so as to reduce the risk of failure.
Immediately from the boardroom, a coexisting FMEA should be the light of the day to identify the potential risks of a new process in order to tighten up believes of failures. To kickoff new resolutions, the question of what could go wrong? What can be done to mitigate the most likely & most severe things that could go wrong? These alarming questions should prompt the Analyst. To understand potential risks of a change or improvement to a process, Carillion needs to understand the effectiveness of a risk mitigation plan. I pray all buyers will make Carillion failures as steps to success.
Late design information is often a problem, I’ve seen it enough myself. But often where I have had to deal with it (and been nominally responsible) you find yourself stuck between demands for a job done quickly, and one done right, while you also have other plates spinning in the background.
Projects also tend to be started too early, with design incomplete, as gung-ho project managers and clients (neither of whom are likely to be from a design background) think it can all be sorted out on the way, and quickly; it isn’t as if design work is so difficult is it?
Anyone could do it, and if we weren’t so lazy, fussy, or busy sipping our lattes, we could easily do it in half the time.
That seems to be the attitude, anyway.