Scottish Architecture Building

The Scottish Parliament Building- A report into Project Failure

Introduction

Sitting within the UNESCO World Heritage site, the new home to the Scottish Parliament in Holyrood from its outset has proven to be controversial. Opening in 2004, politicians, the media and the Scottish public have criticised many aspects of the build. Aside from cost controversy surrounded the decision to construct a new building, the choice of site, the selection of a non-Scottish architect and the selection of Bovis as a construction Manager after being earlier excluded from the shortlist.

In amongst its criticisms the building has seven awards, including the 2005 Stirling prize, the Vill Biennial of Spanish Architecture and the RIAS Andrew Doolan award for architecture, and after being shortlisted for the Stirling prize in 2004 was described by judges as a ‘statement of sparkling excellence’.

The building finally opened in 2004, three years after its scheduled opening with a final estimated cost of £414 million, exceeding the originally estimate of between £10m -£40m. In 2003 the former Lord Peter Fraser chaired a major public inquiry into ‘the cost over-run and delays in the construction of the Scottish parliament building’ finally concluding in September 2004, criticising the management of the project. Lord Fraser said his inquiry had been hampered by the unwillingness of those involved in the project to take responsibility for what went wrong. “The ancient walls of the Canongate have echoed only to the cry of, ‘it wisnae me’,” he said. He concluded that there is no single “villain of the piece” behind the Holyrood building fiasco.

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This report looks at the fundementals of what went wrong and to what extent project management could be held responsible. Strategic and Operationall project management actions that could have been taken to better control the project and increase its chance for successful delivery against time and cost targets are discussed. The report finally concludes by indentifying the key lessons that project management can learn from the experience.

I do not wish to pass comment on the subjective viewpoint of the aesthetics of the building yet rather seek to analysis the reasons to explain the delay and cost over run of the project. This report has been broken down into the following sections.

• Delays and Cost

• The role of the Project Management

• Strategic and Operations Management

• Conclusion

• Delays and Cost

There are many factors that attributed to the cost and delay of the building which when added together led to disastrous consequences:

Primary Coast and Brief

The primary cost projection by the Scottish office for housing MPS’s in a new Scottish parliament were never achievable from the outset. The estimate took no account of either location or design of its buildings. Lord Frasier concludes that the figure of £40 million which appeared in the white paper was informed by a range of costs put forward in a minute of 10^th June 1997 which was based upon very general assumptions and for a ‘bog standard and new building’.

£40 million was never a realistic estimate to cover anything other than a basic build, certainly not a complex building such as the building which was finally procured when considered it was based upon a cleared site of 16,000sqm on Brownfield land in either Leith or Holyrood, a basic design and was unclear if this sum included professional or construction fees.

Consequently as the project progressed and the design of Enric Miralles was chosen, the cost projection increased dramatically, being revised to include VAT, acquisition costs, contingencies, site costs, and consultancy fees.

Over the course of the five year build it is reported that 18,000 design changes occurred resulting in a three year delay. There was clearly an inadequacy of the brief and a failure to adequately investigate the size requirements of such a building, with the gross area of the building having to be increased by 35%. The increase of security features such as the incorporation of bomb-proof cladding in October 2002, may have amounted to as much as nearly £100 million. Security requirements envisaged for the new parliament building were contained in the building user brief of 1998, however rather than designing to a security specification, the ‘nature of the concept meant that a realistic assessment of the detailed security requirements could not be undertaken until the detailed design of the building had commenced’. This would have the greatest impact in regards to cost and programme on the project.

Architect Selection

In July 1997, it was announced that a competition would be held to select ‘the best design for a new Scottish parliament’, with the press release stating ‘we want value for money as well as quality. We will be looking at ways in which the cost of the parliament can be kept to a minimum’. The time frame was set with a designer to be in place by early 1998 and for the building to be complete for the new Millennium. As such, it seems the Scottish parliament was unable to decide where there priorities lay with respect to quality, cost and time.

The panel selected designer Enric Miralles with the work being awarded to EMBT/RMJM (Scotland) Ltd, a Spanish-Scottish joint venture design company set up specifically for the project. The two practices found the two different cultures and ways of working difficult to adapt to, especially since they were also working from two different locations and communicating mainly via fax. In 1998, Bill Armstrong, Project Manager to the project, resigned from his position due to not receiving the support necessary to enable him to carry out his job and heavily criticising Miralles saying ‘a stand must be taken to either bring Miralles to heel or to accept his inadequacies. He does not believe he has any. The programme will drift, the cost will increase, the design team will make claims, the contractors will make claims and the project will become a disaster.’ Project communication was also hindered by the multi-headed client comprising of the SPCB, the presiding officer and an architectural advisor. The project was also further complicated by the deaths of the architect Miralles in July 2000 and Donald Dewar, first minister in October of the same year.

Procurement path

The decision to procure the building under Construction Management is said to be ‘one of the most significant, if not the most significant decision taken during the course of the project’. The choice of procurement was chosen rather than under a Private Finance Initiative for its speed in construction by overlapping design, tendering and construction. The Holyrood Inquiry criticises that the choice of procurement was not properly identified or evaluated, describing it as ‘beggars belief’ that ministers were not ask to approve the proposal to adopt construction management.

The Scottish office publicly declared that they would be working to a fixed budget and where highly ‘risk’ adverse, yet they followed a procurement path which had no fixed budget and also a route where a high degree of risk lies with the client.

In an attempt to achieve early completion the management contractor produced an optimistic programme from which the flow of design information was destined to fail to meet expectations. As such, construction cannot proceed in accordance with the programme and cost entailed. While some failures have been attributed to the architect arising from co-ordination and communication in differences between Edinburgh and Barcelona the client should have been made aware that high quality design work takes time and that the programme was un realistic given the complex nature of the design.

The appointment of the Construction Manager

Although initially rejected on tender price, Bovis were readmitted to the selection on the basis of past performance on the Museum of Scotland.

On finalising the contract the Scottish Office left themselves open to large construction fees if the project over ran by not processing Bovis’ agreement in regard to their fee. Bovis proposed a Construction Management Fee of 1.25% to be converted to a lump sum on agreement of the Project Cost Plan. A formal letter of intent was issuedby the Scottish Office of their intention to enter into a contract with Bovis on 19^th January with the formal legal Memorandum of Agreement not being signed until October of the same year. Although Schedule 1(J) confirmed a fee of 1.25% it failed to make provision for conversion of that fee to a lump sum on agreement of the cost plan.

Had a lump sum value been stipulated, it would have have acted as a powerful incentive for Bovis to complete the project on time . The Auditor General in his 2000 report makes the point that a tapering percentage scheme could have been implemented in that the percentage fee would reduce as a proportion of construction cost as that cost increases, although Lord Frasier also makes the valid point that this would not have been as significant as the possible conversion to a lump sum upon agreement of the cost plan.

As demonstrated above the project was a catalogue of errors resulting from a number of decisions at a relatively early stage of the project that were ‘fundamentally wrong or wholly misleading and it was those decisions that caused massive increases in cost and delays’. The next section in this report looks at to what extent the project manager be held accountable.

• The role of the Project Management

Brief

After the identification of the requirements of a new parliament building by civil servants in June 1997, a project manager was engaged for the specific task of developing a brief for a parliament building.

The project brief is a comprehensive statement of the requirements of the project which enables construction professionals to understand the scope and extent of the project and quality requirements. The outcome of any project relies on the quality of the briefing provided. The project brief in this instance had many failings, proved by the fact that it was necessary to increase areas due to under estimating the actual requirements of the parliament and its end users.

The Auditor General was complementary about the user brief in that it presented a ‘clear vision of the requirements of the new parliament,’ however it failed to address the potential conflict between cost, time and quality.

More time should have been spent developing the brief at an early stage taking into account risk and requirements which would have reduced the likelihood of changes later which could have direct cost implications and knock-on effects with regard to programme.

Communication

The relationship between the project manager and architect and also the project manager’s relationship with his employer is vital. From reports submitted to the Holyrood inquiry it is concluded that the project manager did not succeed in developing constructive dialogue with the architect. Indeed from the time of the architect’s appointment the project manager had reservations and serious misgivings about the appointment and subsequently resigned in 1998.

Although the project manager had been praised on an earlier project Victoria Quay, for his commitment, organisation, single mindedness and attention to systems and detail which had served the project well, these qualities which carried with them rigidity and inflexibility were not enough to develop and sustain a productive relationship with the EMBT/RMJM design team. Again this recurring theme was echoed in late 2000 when the Project Director also commented that he found it difficult to develop a constructive relationship with the architect.

Procurement Choice- Construction management

The Holyrood Inquiry notes that while the timetable was developed by the project manager ‘using his considerable experience of project management’ the tight deadline was undoubtedly driven both by the political objective of an early completion and the occupancy of the parliament building. While the programme may have been a given factor which dictated a ‘fast track’ construction method, greater investigations and evaluation should have taken place to appropriate the best procurement path.

Construction management is a procurement option for high quality, potentially high cost projects if the client is fully engaged and has a clear goal. The Holyrood inquiry however found that the project managers were not fully engaged and failed to appreciate cost downsides and risks involved with managing 60 contractors according to an everlasting brief.

The project manager should have given better understanding and advice to both the client and non construction professionals involved in the project about the significantly higher client risk and cost uncertainty that both construction management and management contracting entail over traditional procurement methods. Risk could have been passed to the contractor under another route. Although tender prices are likely to have been higher there would have been a greater degree of cost certainty.

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Sir Michael Lathem believes that full partnering should have been used to share the risk between client and contractor. The conceptional design work could have been complete by Miralles than novated to a major design and build contractor to work out construction drawings as part of the construction team. The client could have had proper cost control while bringing in value management at an early stage to design out things that adds cost but no value. Prime contracting could possible have been another option. Although still evolving in the late 1990’s it benefits from joined up team from inception with the supply chain on board.

Project Execution Plan

There was a failing by project management to finalise the draft Project Execution Plan, as highlighted in the Auditor Generals September 2000. The Project Execution Plan is a key document governing the project with fundamentals such as project strategy, organisation, control procedures and responsibilities. The HM Treasury describes this document as ‘a live management document, regularly updated to be used by all parties both as a means to communication and as a control and performance measurement tool’.

The Auditor General’s main findings in his 2000 report highlights there should have been change control procedures based on a detailed cost plan agreed between all parties at an early stage. Cost reporting was also deficient in a number of areas, such as an absence of an arrangement requiring project management to provide full cost information on regular and systematic basis and also in a departure from good practice in the failure to identify and quantify a separate allowance for the major risks potentially affecting the project.

• Strategic and Operations Management

For project management to be effective, it must incorporate both strategic management and operational project management techniques. Strategic management planning at its simplest produces both primary goals for operational plans and also the framework within which they can be realised. Cole (1997) describes strategic management as being much about vision and direction as about mechanisms and structures.

At strategic level, project management is concerned with the provision of the organisational and integration structures while at operational level, project management is concerned with how particular processes common to all projects should be executed and controlled. With the application of a clearly defined Body of Knowledge, project objectives can be appropriately defined and objectives successfully delivered.

When looking at the Scottish Parliament project there are a number of strategic and operational management actions that could have been undertaken to better control the project and increase its chance for successful delivery against time and cost targets..

Project Organisation

Burke (2005) comments that projects are performed by people and managed through people. Therefore it is essential to develop an organisation structure which reflects the needs of the project (task) and the needs of the project team, just as importantly as the needs of the individuals. Central figures within the Holyrood project organisation were the project owner, the project manager and the project sponsor. The project owner sat within a steering group of senior civil servants who took strategic decisions on behalf of the client.

The project manager was responsible for the day to day management of the project and reported directly to the project sponsor and acted as the interface between project sponsor and the supply chain. It is the project sponsors role to act as the client’s representative and act in the client’s interest in the project. In the case of the Holyrood project the project sponsor was not familiar with construction or sponsorship of major construction projects. On a project of such complexity and playing such an important link within the organisation structure the project sponsor should have had sufficient knowledge of both. In my opinion this ultimately had a impact on both the projects successful delivery against time and cost.

Decision making mechanisms of the project structure were criticised during Lord Frasier’s summary of the Holyrood inquiry. Frasier recommended that where independent advisors are retained, their views should not be filtered by civil servants but put to ministers alongside any disagreement officials may have with the judgements expressed by those advisors. Ministers did not have any formal indication of the apparent threat to the agreed budget of £50 million during late 1998 and early 1999 when officials were aware of the ‘evolving situation’.

Forecasting the future, Scenario Planning

Cole (1997) describes forecasting in a strategic context as referring to ‘any attempt whether qualitative or quantitative and usually based on past performance, to predict future outcomes and trends in the internal and external environments of an organisation in order to limit the risks involved in devising and implementing strategy’

Forecasting at an operational level may be focused on the next few months to a year and need a considerable level of exactness, whereas on a strategic level a reasonable level of predicted trends is required in the longer term often on the basis of a 3 or 5 year plan.

There is a number of techniques that can be used when forecasting the future such as such as Delphi technique, brain storming and scenario development. Scenario planning, essentially provide a framework for formulating strategy under conditions of uncertainty. Porter (1985) comments that when combined with ‘substantive conceptual tools for understanding industry structure, competitive behaviour, and competitive advantage, the scenario tool can be an important part of the strategists arsenal’.

The most important difference between rational approaches to strategic planning and scenario planning is that the past is not always representative of the future as continuity cannot be assumed. By challenging assumptions and questioning things that we sometimes take for granted, the Holyrood project team could have been provided with the flexibility it needed to cope with the uncertain times ahead such as the death of the architect and factors such as the 9/11 terrorist attacks in the United States of America which has been suggested had a direct effect to the increase in security requirements including bomb proof cladding at Holyrood.

• Conclusion

Although the choice of construction management was heavily criticised in Lord Frasers report many of the decisions that contributed to the massive costs and delays attached to the project were made at a relatively early stage due to the project not being managed properly.

With an unrealistic estimated budget and programme the project was destined to fail from the outset. It would be unfair to compare the end cost figure to the original £49 million cited in the white paper because as previously discussed this was not an accurate figure. Had these estimates derived from final designs and contingencies for the variations then a more realistic comparison for the end cost versus the estimated cost could have been made.

It would be fair to say that during the project there were a number of unforeseen circumstances that were unavaioidable which had an effect on both time and cost of the build, notable the deaths of Miralles and Dewar in 2000 and the existence of a multi-headed client (consisting of the Scottish Parliament Corporate Body, the Presiding Officer, and an architectural advisor), who took over the project from the Scottish Executive (formerly the Scottish Office) while it was already under construction.

Although events like these cannot be predicted they can be properly managed if the correct contingency measures are in place to effectively manage the risk.

It seems that project management can be successfully implemented as seen in other industries such as aerospace and manufacturing, however as both the Latham and Eagn reports outline, the construction industry is behind in terms of performance improvements. In order to be successful project management must implement management at both strategic and operational level. If systems and tools that are used at an operational level to implement project management are not used in conjunction with corresponding integration and organisational aspects of strategic management, then problems are bound to occur.

6.0    References

Books

Burke, R (2003) Project Management, Planning and Control Techniques. Wiley

Cole, G, (1997) Strategic Management, Letts Educational

Porter, M (1985) Competitive Advantage- Creating and sustaining superior performance, The Free Press

Reports & Journals

Lord Fraser, 2004.  Holyrood Inquiry, Final Report.  Available from: http://www.holyroodinquiry.org/FINAL_report/report.htm [7 Nov 2006]

R. Bayfield, 2004.  Insights from Beyond Construction:  Collaboration – The Honda Experience.  Available from: www.scl.org.uk [15 Nov 2006]

Websites

http://scottish.parliament.uk