EP 106

Project Alliancing vs. Fixed Price Contracts - A New Dawn (EP 106)



This week, Paul is joined by Ian Hepstinall, an Associate Professor in Project Management at the University of Birmingham, a coach, an advisor, and the Author of the Executive Guide to Breakthrough Project Management.

Ian is a firm believer in changing the industry. In this conversation, he shares his slightly radical thoughts on changing the industry’s mentality and approach to project management. Einstein said, “Insanity is doing the same thing repeatedly and expecting different results.” Ian thinks that the construction industry is doing just that.

This episode will give you real food for thought if you are a construction professional.


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Paul Heming: Hello and welcome to episode 106 of the Own the Build podcast with me, Paul Heming. In the studio today, we have Ian Heptinstall, who is an associate professor in project management at the University of Birmingham. You guys know I love Birmingham. So at the University of Birmingham, he’s a coach and advisor and author of the Executive Guide to Breakthrough Project Management. This man knows project management. We’re very happy to have him in the studio today. Ian, you’ve been a busy man. Welcome to Own the Build. How are you today, mate?

Ian Heptinstall: Thanks Paul, I’m very well. Thanks. Looking forward to it.

Paul Heming: Excellent, excellent. So one thing I never asked you actually. Now I am from just south of Birmingham. My dad is from Birmingham. You are associated with the University of Birmingham. I know you’re not currently there, but are you a Birmie?

Ian Heptinstall: No, I’m not a birmie. Bit of a Mongol, but –

Paul Heming: Oh, very disappointing.

Ian Heptinstall: North of Birmingham.

Paul Heming: Okay. Whereabouts?

Ian Heptinstall: When I was very young, I had a broad Lanisha accent, but living in living in Northern Derbyshire.

Paul Heming: Okay. So actually now I’m listening, really.

Ian Heptinstall: Living in northern Derbyshire sort of took the edges off it a little bit. So it’s always been Lanisha, Derbyshire, Cheshire other than other bits I may have lived in for a while when I was at university and worked in different places.

Paul Heming: And so to you, Birmingham is the South, I’m guessing.

Ian Heptinstall: Yeah, down south.

Paul Heming: I can’t win because I live in London. I get told I’m a Northerner and I get rolled eyes at me all the time. I come and speak to people like you and you tell me I’m a southern, I can’t blame, can I? Impossible. But anyway. So I’ve given a brief overview, very brief of who you are, Ian, and kind of like your experience and what you do and have done. Just summarize yourself and what you are doing now in the project management world.

Ian Heptinstall: As you said, Paul, now I teach on a master’s program, MSC called Industrial Project Management that’s delivered by distance learning to part-time master students. So, our students are all working in project environments and they want to get to know something different or more about project management in general. But both the main faculty supporting that program were late career academics. So we’ve been in academia, I’ve been coming up for just over, it’s over three years, just coming up to four years now. So most of my career has been working in or around capital projects. My original career was working in the chemical industry, so I learned about managing projects with the perspective of the owner and the owner’s staff had a hands-on knowledge of project management as opposed to an arm length and contracting. So yeah, I see the project as very different from contracts. When I look at some environments today –

Paul Heming: Okay. So you are client based?

Ian Heptinstall: Yes.

Paul Heming: Is that right? Would you say your client base as opposed to contract based? So you’re going to be nice to me cause I’m a contractor based, even worse, I was a subcontractor base, so I really am the bottom of food chain.

Ian Heptinstall: Well, I spent, can’t remember now, six or seven years working for one of the major specialist subcontractors in the UK. So, I’ve worked in all sorts of seats around that table as well as being what you could call a main contractor or a project consultant. So I’ve had different jobs seeing projects from different perspectives. 

Paul Heming: But your mentality is, are you saying that your mentality is the perspective of a client project owner when you consider project management? Is that what you are saying?

Ian Heptinstall: Yeah, when I think about the project, I think about the overarching project that the owning organization has. And that that filters into the program we’ve put together. So, things like constructing is a phase of a project and letting contracts, contracts are parts of projects. They’re not the project. And I think sometimes there’s a bit of conflation and mixing up of those as though an owner would love the world to be as simple as I decide what I want, I contract it and that’s it until somebody says the contract’s finished, now take it over. Yeah, that would be nice. But life isn’t that simple.

Paul Heming: Yeah. So, really interesting. Why labor the point of the difference between the project owner and the contractor and the construction phase. I’m interested here, why that is so important to you, particularly considering you’ve sat in those different roles?

Ian Heptinstall: Yeah, I wasn’t saying the contractor. I was saying the contract.

Paul Heming: Okay.

Ian Heptinstall: So, what I see is often what looks to be an assumption that project management for owner organizations is all about letting a contract. And I see standard forms of contract that try and replace what I would see as project management, aspects of managing the project get sort of built into the contract. So, the contract is not just engaging a third party to help you on your project. It’s also starting to say how we want aspects of project administration and project control to take place. Now it’s important those are –

Paul Heming: Do you think that’s a problem? 

Ian Heptinstall: I do, because I think it’s important. Those are defined, but it’s important they’re defined by the project and the trouble with the contractors, there’s often more than one third party involved in projects. So, to rely on the project, say execution strategy, here’s how we’re going to get do stuff. And if you want to build that into a contract, if you choose to. But when the contract terms start talking in detail about what’s going to happen and when things like the schedule and the program get tied up as contract documents rather than much more useful project management documents, it just seems to get very messy and clunky. And what I’ve seen, and it’s only an observation and I’d love to be able to research it in more detail is when I’ve looked at project teams, there seems to be much more sort of capability. And by that, I mean the higher salaried people are focused on the commercial interests of the participants much more than actually getting the collective project fit sorted. And I do the odd straw poll by talking to people and they say, yeah, that’s the case. We’ve got expensive commercial managers on high salaries and the actual what is termed the project manager, but is the person delivering the work package that the particular contractor needs to deliver, which needs to synchronize and coordinate with other people involved in the project. That’s seen as a lower level responsibility, but that’s where the value, the speed, the cost, the waste of the project gets built in, not at the contract level. So that sometimes seems to be totally the wrong way around.

Paul Heming: Yeah, well, whether or not that is entirely true in every organization, who knows. Right. I know that there’s many QS’s listening to this, many commercial managers listening to this who are getting paid handsomely, I would say. I want to take you back though, I think there’s a good reason why people are paid, but they’re paid. Right. But I do hear what you are saying, like the absolute art of the project management is fundamental, but I think it’s quite interesting. You come from a very operationally led background. I come from a very commercially led background. My background was, I was a QS, I was a commercial manager. Now at my previous companies seven, eight years ago now. So a long time ago, we were working on projects and if you had suggested to our head of legal or our head of commercial, right, we’re going to place this contract and it is going to have, it’s stupid to put the schedule, the program in there because if we put that in there, it’s going to make things more difficult for the project manager in terms of actually managing it. It should be a project file, it can’t be a contract file. They would’ve, I don’t know what they’d have said to me, but it wouldn’t have been very pleasant, Ian. They’d have told me to go and swivel and said I was being absolutely insane. How does that make you feel?

Ian Heptinstall: They’re the sort of conversations I love to have cause my experience working in contracting environment is, and I’ve followed these things up probably about 10 of a dozen times in my career when somebody says, oh no, that’ll never fly cause of the lawyers and, and often it’s the other party’s lawyers. Now, as well as running projects, I’ve also done a lot of work in the procurement field, so I know quite a bit about contract law as part of that. And in my experience, whenever I’ve had a conversation with a lawyer about the substance, they’re much more reasonable than it seems other people expect them to be. 

Paul Heming: Yeah. I’d agree with that. 

Ian Heptinstall: Or internally, I might have had discussions when I worked in the construction industry, say our regional commercial director, and these big companies, we need to do something about them. They won’t accept our terms and conditions. I said, well that’s quite reasonable cause our standard terms and conditions is actually unreasonable. If you read it, there’s unlimited liability. So I don’t mind somebody wanting to come back and negotiate liability, get negotiating, agree something. He said yeah, but our local subbies don’t bother doing that. I said, well, our local subbies are zero asset organization and if you think the contract with them and a signature is secure, then if we try and use that to reclaim something from them, one, the legal entity we’ve contracted with has got no assets, so what are we going to go after? And two, it’s no skin off, it’s very easy to close one company down that’s being sued and just transfer the people to a new company and keep working. And you must have seen that happen a number of times.

Paul Heming: Yeah.

Ian Heptinstall: So, having a signature, if your mindset is I need to comply with our procedures, then you get a signature on a document. If your mindset is, I need to manage commercial risk for my employer, then the signature might not give you the security you think it is. If you know how the law works.

Paul Heming: It’s funny because, well, yeah, I completely hear what you’re saying in that example. Going back to my example, if you like, and you know, I was employed to commercially manage risks for that business effectively, but thinking about what would actually have happened and you know, actually there is far more nuance to the conversation, right? Because in many cases, you would argue that you don’t necessarily want a detailed scheduled program in there, but you do want your start date and your end date or your start date and your duration rate as a QS. That’s actually what I started.

Ian Heptinstall: I’ll agree with that.

Paul Heming: Yeah. Oh, that’s actually something which it’s not that you wouldn’t have a program in the contract. You would have start date and we agreed this would take 20 weeks, but then you wouldn’t include the 300 line schedule or program, whatever you want to call it, because that would be more of a fluid document. What is the reason, Ian? Going back to that very minor point that you made of I don’t want a program in the contract. What is the reason you don’t want a program in the contract?

Ian Heptinstall: One thing for the slowing down, I have in mind the NEC process, where it isn’t actually in it on day one that the contract term say basically, yeah, the contractor needs to produce one which will get agreed. And then if there’s ever any changes to it, that’s got to go through a contractual agreement process. Now, if a project decides to put a control and approval process in like that for good reasons, do it. I’m not saying don’t go through that process. I’m saying why make it an integral part of the contract when some organizations say, well, you know, any modification to the contract needs to go up the hierarchy and get signed off. And then when approving it becomes a contractual matter, then it often becomes a bit tortuous and slows things down. Particularly, if you are using methods of scheduling, planning, coordinating work that are much broader and flexible and mixed, then a program, you know, almost the mindset of a single program makes a project reliable. I would love to see the evidence of that cause I don’t believe there is any, so it’s actually –

Paul Heming: I agree. 

Ian Heptinstall: And it’s much easier to be flexible if the contract says something like, within a month there must be an agreed execution strategy that details who will be doing what and what the things are. But the project management team, like any project document will have change control on that and will manage it as part of the project’s rigorous change control processes. I’d prefer to leave those out of the contractual change control because again, go into construction, you use the term change control by itself and people think contract money. In my head, change control is a tool of project management cause if I’m thinking back to when we had a chat early on, we talked about project alliance contracting a different approach. And my first experience with that, I can remember we had about 250 to 300 documented project changes. We had three contract changes that changed the nature of the contract, the obligations, the payments targets, blah, blah, blah. So I wasn’t saying let’s not have rigor. I’m saying, why do we have to put that rig? And I think I know where it’s come from. In environments where owners didn’t really know how a project should be managed, it was convenient to use a standard industry contractor that blended the two. You know, with things like Project 13, identifying the fact that large organizations that have an ongoing need for projects have maybe diluted their own in-house capability too much. The idea of the intelligent client is something that large organizations have always maintained, and I believe should maintain the ability to manage projects in-house. And then the need to have it embedded into a contract reduces. And when you get large companies that know what they’re doing, it makes it very difficult for them to use standard forms of contract because all these little details are weedled in there and you’ve got to, it takes a lot of red ink to tidy up a standard form if you’re being forced to use it when you’ve already got good project management practices.

Paul Heming: That resonates for sure. It’s interesting talking to you about that. And you’ve mentioned project alliancing, and actually we’ve kind of detoured, haven’t we? But an interesting detour, I think. But right after the break we’re going to talk about project ing and we’re going to talk about fixed price contracts and how you think the world should be different, and I’m looking forward to that. But we’ll do it right after this break in.

So Ian, you did a post a few weeks ago, maybe. I can’t remember exactly when it was, but it tickled me, let’s say. It was a quote that is usually attributed to Einstein. I’m going to misquote it because that’s just what I do, I’m afraid, but insanity is doing the same thing over and over again and expecting different results. Hopefully, maybe I’ve got that right. I felt quite good. But you attributed that quote to a couple of stats and I’ll probably misquote the stats now. But it was that fixed prize contracts in construction are something that we go to over and over and over again. I think it’s 75% of contracts are fixed price in construction according to your post. And 80% of those contracts go over budget, which is the insanity of doing the same thing over and over again and expecting a different result. Talk to me about that post. What did you post it to start with?

Ian Heptinstall: Well, for the general idea to keep chipping away that fixed price contracting does not give us the confidence that people seek to assume it does. The actual data I shared came from a series of guest lectures I did for the business school at the University of Stellenbosch, where I’ve joined one of their MSC project management programs for the last three years. And during that presentation, I ask their students what their experience is. And like ours, their students are studying part-time, so they’re working in project related environments. And that’s where the data came from. So I say, how prevalent are the following methods on projects you’re involved with? And definitely fixed price lump sum is very much the preferred and most commonly used. And then I said, the actual question was how often is the final contractual payment the same, less or more than the one that got the contractor selected? And as you saw, the vast majority of people said, well, most of these fixed price lump sums ended up costing, and I can’t remember the numbers, it was 25, 35%, at least more than the original fixed price. And that to me is both what most people say they see. And there is actually, for me, a bit of a theoretical underpinning as to why that should be because fixed prices are great if I’m buying a Starbucks or a car. But for something that’s unknown and unknowable –

Paul Heming: So complex, so varied, so many stakeholders.

Ian Heptinstall: To me, it seems bonkers. And I know some theoretical principles that seem fairly well grounded and some frameworks that underpin the thinking as to why it is inappropriate. It’s not just the amount of money you’re spending, it’s the inherent nature of the supply related risks that you’re taking don’t make much sense in contracting in that way.

Paul Heming: Yeah. Which I’m looking forward to hearing. And I can imagine the theoretical nature of it, the challenge many people listening or many clients or projects will face is that the funder, the finance for that project often drives for clarity and cost, definitely as you go further down the food chain, I’m talking about the developments where it is like sub 100 units, it’s like, I don’t know, 10, 20, 30 million pound build, the funding for that is pretty much only given on the basis that we know exactly what the construction costs is. Obviously, plus or minus.

Ian Heptinstall: Exactly. So why are those funders being lied to, to say, I’ve got some fixed price bids. That gives me certainty. 

Paul Heming: That’s very true. 

Ian Heptinstall: That is actually a lie. If you’re telling finances that, you’re lying to them. Now, it might be –

Paul Heming: I agree, I completely agree. Well, it’s not a lie, is it? It’s kind of, it’s the stupidity of the process, isn’t it? Because as I said there, I said, let’s say it’s a 10 million pound build, plus or minus whatever percent you decide for the reality. But that is how it gets driven down, that’s how I believe it then seeps into the consciousness of everyone below it.

Ian Heptinstall: It can do. And I’ll admit, I’ve not got experience talking to financiers, actually I did once and they were quite reasonable when you spoke to them. But that’s another story for another day, involving a trip to the Ukraine just after the Cold War ended. 

Paul Heming: Oh, really? 

Ian Heptinstall: Around 2000. But other than that, I can’t speak for them, but if they want cost certainty, I can show them data that shows you’ll get much more cost certainty using a project alliance based target cost. Then you will from a collection of fixed price lump sums that somebody’s just added together. In addition to certainty, you should be expecting to see a better return on investment because of a couple of things, one of which is your investment should be less. Now, this does depend upon how the alliance is put in place. Just read some recent research on that topic that says Alliance is [inaudible 24:00]. And I’m saying, “hmm, maybe they’re not done well.”

Paul Heming: Before we get to how they’re set up, Ian, please just very simply distill in a few sentences what Project Alliance is and how it’s different to fixed price contracting.

Ian Heptinstall: Okay. There are a few different elements. If I look at the contracting element, the Archetypal Project Alliance is a multi-party agreement. One owner under small number of the project supply chain. So archetypally, it isn’t the owner main contractor subbies, it’s in effect the biggest subies and whoever would’ve been the prime become at the same level. They’re alliance partner members. So it will often be, doesn’t have to be, you can work around it multi-party agreement with the biggest contributors where each of the supply partners profit margins is aligned to the success or failure of the overall project from the perspective of the owner. It is not aligned to how well they each do their bit. So that simple payment mechanism –

Paul Heming: It’s aligned to the entirety of the project.

Ian Heptinstall: Yeah, the payment mechanism means that all the supply parties make more profit together or less profit together, and that’s dominated by the achievement of the client project objectives or at least those project objectives that are linked to the contractual arrangement from the contractors.

Paul Heming: Fascinating. And this is, as I have understood it through this conversation in previous, something that is really prevalent in kind of offshore projects or gas project, oil and gas projects as a way, is that correct?

Ian Heptinstall: No, I think that’s where in history it became prevalent or more well-known in the UK oil and gas sector in the early nineties, 1990s, where the sector was under severe pressure because the oil price had dropped. They wanted to exploit the reserves in the North Sea, but they couldn’t make a return on investment using their conventional methods and project costs and project times. So, there was a whole industry initiative that looked at how the heck can we do without compromising safety or operating quality, how can we get rid of the waste and the friction? And they did many things, one of which was they started using project alliancing. So, it started there. If you look at the journey since as the oil price took off probably being totally unfair, you know, running projects in the oil and gas industry became like sort of shooting fish in a barrel. Anyone could do it. So, nobody worried about cost design efficiency. 

Paul Heming: I don’t. I think you are being a bit, maybe in touch unfair on our friends in the oil and gas sector, but I hear you. But I think the question I wanted to ask though is –

Ian Heptinstall: If I can come back to the trail, infrastructure projects, primarily public sector in Australia used it quite extensively around the first decade of the 20th century over, I know a report that cited 50 billion Australian dollars’ worth of infrastructure projects. Finland copied the method for its infrastructure projects and has been using the method in the public sector for about 15 years. And then primarily over in the states, linked to the lean construction community, they started to adopt the same methodology, which goes under the name IPD or integrated project delivery from the mid to early two thousands, which is more private sector construction. Many hospital firms and offices have been built using it over in the states. So, sorry for cutting in, Paul, but that’s the sort of history between oil and gas. So definitely been used in more conventional construction and in the public and private sectors.

Paul Heming: Fine. No, that’s really interesting. The reason I wanted to ask is, so my experience is founded in construction projects in the UK. Typically, private investment have been involved in some public projects and always building as opposed to infrastructure civils. But I was interested because, you talk about the Einstein quote, insanity is the same, doing the same thing over and over again and expecting a different result. And the results for the kinds of projects that I know about, and I’m going to talk about not the smaller projects, when we talk about like the bigger companies, the bigger main contractors, the bigger subcontractors is that the main contractors are operating on margins of anywhere between 1 and 3, 4%,. 5, if you have the luckiest main contractor going and the subcontractors are probably operating on project margins of somewhere between 10 and 30%. But I’d imagine right now somewhere between sub 20, right, is probably where they’re at. And my question was, in the context of fixed price contracts and where things are going, it would be really interesting because it feels to me like a little bit of a leap of faith to say, for some people in mentality wise say, right, we’re go all in with project alliancing because we’re going to get better project outcomes. I was interested to understand if there’s anything around, you know, thinking about that, even that main contractor margin, which is so poor at the big main contractors, but cause they’re going for volume. How is that different when you are doing a profit share effectively, based on how the project performs, how is it different in project analyzing? Is it now 10% for instance? I know that might be a difficult question to answer.

Ian Heptinstall: My first example, the archetypal main contractor at the mid-nineties. And that was AMEC, when there was an AMEC construction part. They were nominally targeting 4% return on sales. So, they made about 9% on the job. I worked for more of a sort of professional services, engineering, consultancy type organization, where we did design and our return on sales target, we didn’t measure it exactly the same, was nominally 8%. And we made about 19, just short of 20%. But we measured our profit based on the fees, the people cost, not on the accidental asset costs. Even though we raised orders on behalf of the client, we didn’t put those through our books in same way. Now we’ve not got enough time for me to get on my other soapbox, which is about the claimed low profitability of construction companies. But I think that’s also a very misleading, red herring, a bit like productivity. There are some flawed arguments around construction productivity and manufacturing productivity in my view. But we haven’t got time. If you look at the main construction contractors and measure their profitability percentages as return on assets, which is actually what the government statistics do. Mace makes more higher return on assets than Apple does. The only reason Mace’s return on assets are less than 50%, is if they have a bad project. Now I’ve only looked at about four years’ worth of Mace’s annual reports but the return on assets is fantastic. The return on their commitment, say that’s the annual salary of their staff is well over 10, 15%. The only reason for measuring profit relative to the nominal cost of the client’s project is return on sales is interesting. So what if it’s 1 or 2%? Amazon had 1 or 2% for decades and it never stopped them innovating.

Paul Heming: Yeah, but I guess the question being, what would it do to shift to project alliancing where we’re talking about the fact that you are now going, we’ve talked about 75% of contracts fixed price industry is stuck in its way clearly. We’re saying people moan about this red herring that you’ve just referred to it as project margins. What you are saying with project alliancing is we are all going to work for the greater good. We are all going to achieve the client’s goals. If we do that, we’re all going to share greater profits. If we don’t do that, we’re all going to share lesser profits effectively. What do those, for the owner, for the project owner, when they are choosing between fixed price and project alliances? Like what is the decision that they are making financially? Because you’re saying operationally it’s going to be a lot better, it’s going to be a lot more collaboration. But what is it to them? Like how does it impact them? You said it’s actually going to drive the cost down, right?

Ian Heptinstall: I expect the cost to go down and I’d love to do some proper research into it. Because there’s examples where it hasn’t been a lower cost project and I’m thinking, well, why not? My own experience, it certainly was. The actual cost of the project was much lower to the owner. That for me is the benefit to the owner. They’re investing for return on investment. The investment should be certainly over the portfolio significantly lower and the assets should be coming online, generating positive cash flow much sooner. So why wouldn’t you?

Paul Heming: Is there numbers around that, Ian, just to ask you about program, like what the positive impact it is program wise?

Ian Heptinstall: Yes, but it’s not the complete picture yet. I did some simple modeling when I wrote my book on the topic to show, well, what might be in it for the owner and the contract to want to join and how might that compare to other scenarios. I did some simple modeling. I’d love to do some more robust and rigorous modeling because as you said, Paul, a sensible large company will say, well, hold on. Well, what if? Now projects take too long to do one ifs for real. You can’t do little experiments. So a good simulation model that’s representative of the real world is a great way to give you confidence whether it will work to bend bad ideas and to sort of tune your implementation so that you significantly reduced risk. So, it certainly can be, if you’re taking the contractor’s perspective, the opportunity is to make more upside, but to manage the risk on your downside. You are no longer betting the company on a fixed price lump sum. If you’re not careful, you wipe out the profitability across your whole business if one project goes wrong just because of the leverage and the fact that it’s all the costs. With an alliance, you lose margin, which is painful but not lethal. It reduces the risk to the supply organizations, you know, they can see the carrot and they can realize that to mix some metaphors, if they fall off the tightrope, they won’t hit the deck, they’ll bounce up and down. It’ll scare them, but it won’t kill them.

Paul Heming: And so if you were to give a giving advice today to a client about to execute a project or forecasting future projects, what would that advice be as to the procurement process with project alliancing?

Ian Heptinstall: I would have my defaulter’s project alliancing. I would look to select my delivery project team before the preparation, before the front end work is completed. They may even be the organizations doing that, but they would certainly be a part of it. The so-called early contractor involvement, early supplier involvement. But I say that as a generic method, not as the often tortuous and bureaucratic process adopted in construction. But the idea is I’d select the parties early, I would select them on the basis of competence and commitment. Maybe a little bit of commercial, but not the same sort of commercial risk that they might not –

Paul Heming: You don’t want the QS’s in commercial anywhere near it.

Ian Heptinstall: Exactly, as we were triggered here. You know, is it dinosaurs and extinction? You need somebody who understands that commercial project environment, but who can facilitate it? Cause if you get the commercials wrong, and I’ve seen many examples called alliances that had payment mechanisms that to me were not aligned, not in line with the principles. And there were mechanisms where the right decision for the owner commercially harmed one or more of the participants and vice versa. And that to me should be nowhere near something you’d call a project alliance.

Paul Heming: Absolutely not. And on that topic of extinction, we talked on the show a few months ago now, quite a few fair months ago, and we’ve talked about it, the extinction of the QS role. Now you’ve got a big wry smile on your face beaming from ear to ear. What is your view on the extinction of the quantities surveyor? You view it differently to others, right?

Ian Heptinstall: Yeah, I don’t see them being freed up by automation because if you automate the current processors, then that’s not going to help anybody. And also, freeing up people who liked doing something that’s being automated doesn’t mean that those actual people can do so-called value added, whatever that means. What I think though is I would love to feel that the part of the QS’s work that has evolved into contract control, contract administration, loophole identification, loophole closing, depending which side of it you are on, and the sort of the tortuous, time consuming commercial negotiations that are associated with big contract. I would love to feel that that becomes orders of magnitude less because we get our minds around how to make collaborative contracts work properly. In my experience, if once they’re put in place, then administration is much simpler less controlled, and you can focus on the project, not the contract. So, but if that happened, you’ve got lots of people whose skills are no longer wanted. What are you going to do? Now, I think there’s plenty of things that individuals could and should do because in a –

Paul Heming: Don’t send us to all to the job center, Ian. 

Ian Heptinstall: No, cause if you know about projects, there’s lots of opportunities to make project workflow much better. You know, and that’s often closely related to project control, time and cost. Mixed it all together with things like earned value. Now, one of my views is that projects, if we have a shift today, the mindset says get the plan right, follow the plan, the world will be brilliant. And as Deming said, if we keep having problems, there’s probably something wrong with the system we’re using. But the trouble is we’re blaming the people. No. There are alternative approaches that say get a good enough schedule that’s good enough to guide the teams and then have better execution methods. When projects get underway, there’s lots of work flowing. You need things like early warnings, the right early warnings, and yet new capabilities in data will help to speed those things up. But also new, different so-called thought-ware, not software. Different methods will say, well let’s look for some different things. Let’s use different KPIs that give us a different insight rather than seeing a variation from the baseline as a bad thing. I think we need first, well let’s separate that variation. Is it bad or is it just inherent noise and uncertainty so that we act early on the things we should act on, but more importantly we don’t act early on things that we shouldn’t be acting upon or else the whole system will go out of control. And I think that needs different performance measures, not just faster ones. Faster like the feedback you get with microphones. 

Paul Heming: Do you think the QS’s should be involved in that?

Ian Heptinstall: Well, projects will need it. And QS’s, they’re normally bright, well educated, they know the project environment. 

Paul Heming: Always buttering us up now, isn’t it?

Ian Heptinstall: There’s no reason why people with that capability, if they’re no longer needed to do Job X cannot shift into job Y. And, and I think facilitating the setup of a collaborative project takes expertise. Facilitating collaborative working, even if you’ve got a contract, it doesn’t mean people will work differently cause we’ve all got habits, we’ve got used to that can be shifted and then, you know, it only delivers value to the organizations involved. If that collaborative team can adopt some excellent ways of working, maybe some better ways of working, that really exploit that collaborative environment and all those things. There’s a dearth of knowledge and expertise including the expertise to manage a project holistically. By chopping projects up into functional bits and contracts, we’ve got people who know how to manage their bit, but bringing them together is, so there’s loads of potential there if people want to get stuck in. And I personally find that much more exciting to help deliver a project well than to find a loophole that somebody’s not spotted and I can get 300 grand. And I’ve done that as well by the way. I’ve found contract loopholes and fill them. I’ve done enough of that.

Paul Heming: I think that many people listening, many QS’s listening, that will resonate with them as well. The thing that you like to do is deliver intelligently, deliver good projects and get things moving and deliver for the client as opposed to finding loopholes and stitch people up. But that’s really interesting food for thought, to be honest, Ian. And we’re at the end of the show. It’s been great to have you on the show. There’s been lots to take away and think about there. And I will believe in your details on the podcast description, including your LinkedIn so that people can follow some of those amazing posts that you do. And yeah, thank you very much for coming on the show. When you’re in Switzerland and you could be skiing instead, but you’re probably going to do that tomorrow.

Ian Heptinstall: If I do some work tonight when it’s dark, I might free a bit of time. Let’s see. 

Paul Heming: Indeed. Well, it’s been such a pleasure to have you on the show, Ian. Thank you for coming on

Ian Heptinstall: And thanks for asking the questions. I’ve enjoyed it. Cheers, Paul.

Paul Heming: No problem. All my pleasure and everyone, I will speak to you again next week. Have a great weekend. See you later.

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