By Marc Giget
Many innovative capital projects to build major new facilities and infrastructure such as cargo planes, nuclear power stations, buildings and defense systems, are currently experiencing significant fluctuations in terms of costs and performance.
Even the Olympics run vastly over budget.
So what’s happening? It seems that in the past, major projects such as these benefited from better management and planning.
These fluctuations can be attributed to four main reasons:
1. The leading edge technology used in these projects has grown vastly more complex, involving ever increasing numbers of interfaces and complicated inferences.
2. The disappearance of a clearly specified “prototype” phase. Previously, the serial production of operational systems only began after tests, trials, optimization, approval and full certification.
Using initial operational facilities as prototypes, along with supposedly money-saving concurrent engineering have instead proven extremely costly, because of the numerous modifications made during the serial production phase.
3. Lack of team continuity. The increasing mobility of young engineers makes management continuity for this type of project extremely challenging.
4. Increasingly complex regulations. Often justified by inconsistent precautionary principles, regulations from a variety of organizations have required an unprecedented flood of descriptive and compliance documentation.
Illustrating this is the Finnish EPR, whose administration costs have almost exceeded those of the nuclear reactor itself.
These difficulties come at a time when the global market of major infrastructure is shifting irreversibly towards performance based contracts, forcing designers to embrace a genuine revolution in terms of managing these complex projects.
But it’s not enough for modern collaborative design software tools to provide the solutions; the structure of partnerships also needs to be reviewed. Nowhere is this more important than when a prime – subcontractor relationship becomes a collaboration between innovation team partners working as a risk-sharing partnership.
Main contractors are to adapt in order to remain competitive and avoid the risk of colossal losses on operating agreements for several decades.
Marc Giget is the Founder and President of the European Institute for Creative Strategies and Innovation. Every year a Conference for Innovation Executives is held in Paris. The next one is on 25-26 May 2010 on The Challenge of Designing a Legend . Learn more at www.rencontre-innovation.com
