Clients must take more responsibility ensuring they get value for money from their projects, claims consultant Turner & Townsend.
It has reviewed 100 global infrastructure projects and found that only those where the client has a clear vision of what it wants and where it is willing to pay for the best project team tend to deliver the best value for money.
Turner & Townsend head of management consultancy Neil Bullen said clients must take more responsibility for driving change as public spending constraints increase pressure for more efficiency.
“Client leadership is key for the scale of savings that the government will be demanding in the coming years,” he said.
“Clients have got to step over the halfway line. Success should be an issue for all but leadership has got to come from the client.”
“The imperative for change is there. But we are still not seeing significant change,” he said.
“Without assistance, the industry tends towards mediocrity. There are a number of weaknesses in the industry’s approach. Efficiency initiatives where they exist tend to be bolted on, not built in. They are not systemic,” he said.
As a result, we are two years into recession and all the industry has done is the easy wins such as value engineering – or scope cutting - and renegotiating of contracts, he said.
Instead, clients should be incentivising supply chains to deliver the ultimate outcome, he said, citing as an example a supermarket chain that is paying contractors based on actual sales in a store they have built.
“It’s a great incentive because it ensures everyone is focused on opening on schedule and building a high quality store,” he said.
Bullen also criticised clients for their approach to procurement.
“It has gone backwards,” he said. “There is increasing evidence that it has become a completely master-servant relationship that is stifling innovation,” he said.
Bullen urged clients to instead commit to protect margins of firms that work efficiently.
Turner & Townsend studied over 100 major projects and programmes delivered by the firm worldwide and collected evidence of what actions led to efficient delivery and tangible capital cost savings.
It found there to be six key areas that influenced delivery: clarity of scope, co-ordination, capability, controls, collaboration and communications.
Of these, Turner & Townsend found clarity and capability to be as important as the other four areas combined.
“If you have clarity and capability you will have good outcomes,” said Bullen.
“But this is not what clients want to hear,” he said.
Turner & Townsend’s study was used to build its CapE efficiency framework tool that helps clients identify cost savings.
The tool has now been used on 12 projects since its launch six months ago. According to Bullen it has always offered up potential savings.
“It has always delivered potential results and always delivered surprisingly large numbers,” said Bullen. “But it could still fall down and depends on the appetite of the project team to make the savings.”