Review of the Defence Sector – Part 6
Patchwork management = patchwork collaboration
This post and the next one cover reviews of three relationships between engineering design and build companies and public Defence sector programme management organisations working on 3, long-term, major multi-billion pound, advanced technological projects. First we concentrate on the challenges the partners faced trying to work together collaboratively. Unfortunately a range of cultural and systemic influences resulted in a number of difficulties that strained relations and inhibited their development.
Defence Engineering Design and Build Services 2007 – 2010
Background
This report reviews 3 relationships between engineering design and build companies and public Defence sector programme management organisations working on 3, long-term, major multi-billion pound, advanced technological projects.
Although the customer’s procurement policy advocated competition in order to achieve value for money, the consolidation of the industry had resulted, in this instance, of only 3 suppliers capable of undertaking these projects. As a result in 1999 the UK Ministry of Defence introduced a collaborative working strategy and since that time the project teams had been working to implement this policy. Relationships #77 and #78 were valued at £6.5bn and the projects began in 1997 with predicted end delivery in 2024. Relationship #79 was a 25 year contract that commenced in 2000. The value was £248m per year with price re-negotiation every 3-5 years. Two of the projects were related to the delivery of a common product.
The chart below shows the performance of each relationship in rank order – best on the left, worst on the right. Only one was considered to be a Successful Collaborator. The others appeared to be wrestling with the technical difficulties associated with new product development and thus joint relationship management was not very effective.
Negative Dynamics
The customer had introduced a new initiative in 1999 depending heavily on the concept of partnership with industry. A range of cultural and systemic influences resulted in a number of difficulties that strained relationships and inhibited their development.
Resistance to Change
Although central guidance was provided, the responsibility for adoption was devolved to individual project teams. As a result there was varying success.
Attitudes and practices – It was clear that after several years of ‘working together’ there was still considerable resistance and reluctance to adopt new attitudes and practices. Indeed in some cases progress was reversed
“There was resistance and people were taking a stance.”
“We don’t like it so we will play games”.
“The pilot project makes sense, but it is counter cultural. The norm would be to take a poorly performing contractor and hit them with a big stick.”
“There is enormous baggage in the customer’s organisation.”
“Lack of trust in, and openness on the customer’s part has always made it a difficult working relationship.”
“Whilst not universal amongst the customer’s team, there is a lack of willingness to drive through something novel that they did not invent. This has resulted in a reversion to standard/typical adversarial contracting behaviours.”
Patchy implementation – The change initiative was not implemented uniformly across and within the projects, often manifested by ‘them and us’ attitudes
“At the most senior levels the commitment is there to develop the relationship, whereas at the grass roots level things are still difficult.”
“While goals at working level are often aligned, this is not always true at corporate level where it appears that the customer is still regarded as a ‘cash cow’.”
“The attitude to the relationship is not universal. Inevitably there are differences in behaviour across both organisations with a lack of consistency.”
“The relationships vary ranging from the highest respect for scientific and engineering excellence to no respect whatsoever for programme management.”
“There are good examples of them going the extra mile but this is not widespread or consistent in the organisation levels.”
Poor communication and information flows
“The intent of the leaders is NOT always promoted by the team beneath and this inconsistency can be damaging. We need to keep promoting and communicating the strengths of the partnership and what it delivers.”
“Information on the programme is subject to spin and joint, top-level objectives are not always communicated to the lower/working levels.”
“Work is being done within our partner’s organisation but they are not currently discussing it with us. It would be easier to help answer the question if we understood why it was being asked.”
Shared environments and team working
The concept of joint team working was an original requirement. However, the creation of shared, stable, collaborative environments was still problematic.
Constant re-organisations and staff churn
“Constant re-organisation by our partner weakens accountability and, combined with centralisation of decision making authority, can make it very difficult to resolve issues. In fairness, much the same is true of our side.”
“Reorganisation in our partner’s HQ has resulted in poor leadership, cramped working conditions and low morale.”
“The almost complete change of the customer’s team resulted in a reversion to old behaviours, evidence of a lack of commitment to the partnering principles and a feeling that the level of trust, particularly among the commercial people has been reduced.”
“We are going to cover integration, where the teams become one in our next workshop but for corporate governance reasons we can only take this so far.”
Haphazard information sharing
“IT connectivity is one of the biggest communication issues as there is no shared working environment.”
“Our new business system will have a huge impact but as yet we have not told our partner about it.”
“We are open in sharing information but this is not reciprocated by our partner. I believe that the volume of data is sometimes provided at the expense of quality. We suspect they are manipulating the information.”
“Recently we have had to be pushy to be included.”
Scattered teams
“Geographical separation and people not working together is a big issue.”
“There is a difference between the collaboration of the project teams depending on geography. Our engineering teams work together at the manufacturing site but the management site is not close enough to the decisions.”
Staffing woes
The relentless pressure to cut costs had a negative impact on the workforce, efficiency and collaboration. Furthermore retention and recruitment of good quality staff became more difficult.
“Our partner is under huge pressure to reduce manpower. More junior members are uncomfortable and uncertain and have concerns about the future. They are thinking seriously about jobs being lost.”
“Their key experts follow the problems but the trouble shooters overwork the capable people. Lack of supplier resources causes friction and difficulty delivering to agreed programme. “
“Lack of support lower down especially admin grades and we have 10% vacancies which we can’t fill.”
“We have an aging, knowledgeable population but there is a gap. People need to be fed in at the bottom.”
“They don’t take risks due to lack of experience in engineering.”
“They generally have best intentions to improve output, including ‘review and learn’ but, incompetence, stove pipe communications and a lack of good quality people consistently hinder progress.”
“Where personal relationships are weak, the default position is to fall back on process with its inherent, less pragmatic outlook.”
Lack of joint governance
Frustration over the lack of a joint approach to managing finance, commercial and approvals resulted in a range of relationship disconnects.
“Need to be more creative at setting stretch targets and defining the transfer of risk. We need to impose that regime.”
“Some artificially hard deadlines have been set that we can’t possibly meet. Management are not setting and agreeing realistic targets.”
“Our forecasting ability is not good. We are not good at profiling costs. We end up roughly where we say we will but there is little confidence in how we got there.”
“They gave us responsibility for design and now are trying to unpick some of our decisions.”
“What drives the management team is telling our partner what he wants to hear in terms of on time and on programme delivery. They don’t negotiate for delivery of an affordable product.”
“The 2 parties work fantastically well together if it is a technical problem, but appallingly if it is contractual.”
Stakeholder interference
Relationship management was over complicated by interventions from external stakeholders that circumvented the project communication channels.
“The relationship is complicated by the involvement of other stakeholders which are not well integrated by either party.”
“A constant issue is the interference of our end customer in this relationship that undermines our position.”
“I have observed them going to other departments within our HQ if they do not receive the answer they desire from us.“
“There is poor alignment of the main stakeholders with the relationship objectives.”
“Main stakeholder personnel include secondees who are not providing sufficient strategic leadership.”
“There is a mistaken view by them that if the main stakeholder agrees to a change, it will be funded.”
“Our head office’s motivation is massively complex and there are different ways of adding value. Scrutinizers believe that you add value by rejecting or criticising things.”
Profit share wrangling
The gain-share policy was designed to incentivise the parties to achieve a win-win situation. Continuous improvement would result in joint time, cost and quality benefits. Unfortunately the approach became a bone of contention and wrangling over details which impacted collaborative working.
“The customer’s new members only see the risk to themselves as important and fail to recognise the risks to us.”
“They have given us everything we have asked for and therefore have scored high on profit but we believe they can do it for less money and pass the cost savings back to us.”
“Their culture is to see profit as a bad thing. It needs to be switched to ‘there is no problem with profit as long as it is earned’.”
“We are fed up of doing nothing but make cuts year after year.”
“In some areas the current contract does not provide enough challenge either the fees should be reduced, or the targets made harder.”
“The commercial view is that profit is bad, and to get them to change you have to be extremely strong.”