Project Management: Project Failures Sydney Opera House

PROJECT MANAGEMENT: PROJECT FAILURES Sydney Opera House CONTENTS Introductionp. 3 Historyp. 3 – 4 Stakeholdersp. 4 – 7 Stakeholder classificationp. 5 Stakeholder Power/Interest Gridp. 7 Causes for project failurep. 8-10 Lack of risk managementp. 9 Unrealistic timescale and Cost escalationp. 10 Recommendationsp. 10 – 14 Risk Managementp. 11 Forecastingp. 11 – 12Stakeholder Engagementp. 12 – 14 Conclusionp. 14 Referencesp. 15 – 16 Introduction For this assignment the project chosen to critically analyse its failure is the Sydney Opera House. Critically analysing its failure and its consequences and identifying bad project management procedures made me look into this project intensively and evaluate it as a project failure with a â€Å"happy end†.This assignment will be divided in three main parts which are History where it will be explained what the Sydney Opera house is and what was the purpose of the project, a Stakeholders section whe re the key stakeholders will be identified and discussed, a Project Failure section identifying what bad management procedures were taken and for last there will be a Recommendations section recommending new procedures to avoid an over budget and over timed project, which this is part of.For the architect – Jorg Utzon – it is his â€Å"masterpiece†, to Australia as a country it is their representative monument as World Heritage (Design5 final report 2010). Although project manager and client are now â€Å"happy† with the final product it can still be considered as a project failure due to a huge overrun budget and over timed project with consequences that are still being repaired, almost 40 years later. History In 2003 Utzon is awarded with the Pritzker, the architecture’s â€Å"Nobel†.It was said of Sydney Opera House (from now on in this assignment also known as ‘SOH’) that it is one of the great iconic buildings of the twenti eth century (Murray, P. 2004). It all started in 1957 when Utzon were chosen to be the architect for this project. Everything was going according with the project but two years after the new elected government (not the one that agreed with Utzon’s project) was getting impatient.More and more companies were being put into the project (in the final more than 165 companies, suppliers included, contributed to this project) and the costs were being added and the new government was pressing Utzon as much as the media trying to cut in costs and speed up the project*. They also decided to change the previous project after its construction as started and now instead of 2 theatre rooms they wanted 4*.Utzon was losing control of the situation and had an undesirable pressure under him. The initial cost was (Aus) 7 million dollars and in the end it has cost (Aus) 102 million dollars and a total of 14 years to be constructed, 6 more than it should be*. The Arup, engineers contracted for th e engineering part stayed until the end of the project but Utzon left in the end , after designing the roof but not concluding.It was hard to keep two of the key stakeholders happy, the minister David Hughes and the SOHEC – Sydney Opera House Executive Committee so he decided to quit blaming the first of lack of cooperation but in fact even the acoustic consultants did not agree between each other (Murray, 2004 :66) and as a result of all these changes of plans and misunderstandings the Sydney Opera House – finished by three local architects – still did not had the proper acoustic, which was the first main factor that lead to a new opera house*.Nowadays the Sydney Opera House is already seen as profitable since its cost was already covered by the revenue made from customers (tourists mainly) but further improvements on accessing conditions were taken. Stakeholders Before going back to the subject it is needed to take into account that a failed project is a proje ct that is cancelled before completion, never implemented, or damaged in some way. Other reasons that why projects fail are an absence of commitment, a bad project organisation and planning, a bad time management, lack of managerial control, extra costs among other problems.Among all these reasons the Stakeholders play a big part in the projects that they are involved and sometimes a project can go wrong depending on decisions taken by these groups. To start this stage of the assignment it is essential to identify the stakeholders – all the users that directly or indirectly affect positively or negatively – the project. (Polychronakis, 2011) The analysis will be assisted from the article â€Å"Toward a theory of a stakeholder identification and salience: Defining the principle of whom and what really counts†, determining which of the stakeholders hold which of its three attributes, one can identify stakeholders.Then Stakeholders can be analysed by its salience. Explaining briefly the three attributes power enables to act despite resistance of others, legitimacy is being seen as acting appropriately within context norms and urgency relates to time sensitivity and importance of the stakeholder (Mitchell 1997). Stakeholder Classification| | Power| Legitimate| Urgent| Type| Stakeholder Classification| | Power| Legitimate| Urgent| Type| | | | | | | NSW Government|   | x| x| x| Definitive| Public Works, David Hughes|   | x|   | x| Dangerous| Utzon|   | x|   | x| Dangerous| Arup|   | x| x|   | Dominant|SOHEC|   | x| x|   | Dominant| Design Team|   |   | x| x| Dependent| Engineer Team|   |   | x| x| Dependent| Consultants |   |   | x| x| Dependent| Suppliers |   |   | x| x| Dependent| Contractor|   |   | x| x| Dependent| Hall, Todd, Littlemore (Three architects hired)|   |   | x| x| Dependent| Construction Workers|   |   | x| x| Dependent| Public/Customers|   |   | x|   | Discretionary| Media|   | x| x  | x| Dangerous| There are 14 main stakeholders: NSW Government – Can be considered the client so its type is definitive, has the power to over ask and the project manager has to show urgency on keeping him happy.David Hughes – Having the role of Public Works minister for the new NSW government he has dealt directly with the project having the power to influence it and as a client’s representative has the same urgency status. Is considered Dangerous because although is not definitive (could be replaced for example) he affects directly the project as client representative (pressuring Utzon till he resigned) Utzon – Being the project manager and architect he presented the project and designed it so he has power on the project itself and on the staff.He has an urgent characteristic because he continuously needs to keep on track of the project’s milestones and delivery dates. Arup – as the engineers company they have some power on the project but no urgency at all since they work when it is told to but is legitimated to act within the norms but couldn’t deliberately change anything and was socially accepted. Is dominant because has a key role in the project. SOHEC – Although it has the power to demand certain characteristics and has legitimacy in the project it doesn’t have big urgency since it isn’t a client but a client’s influencer.Good to keep informed. Working staff (remaining stakeholders) – They don’t have great power but they are dependent on milestones so also they have the urgency to meet expectations. They also have their legitimateness since they depend on each other and need to coordinate their designed areas. Hall, Todd and Littlemore, the three architects that replaced Utzon don’t have any power since everything was planned and they only needed to re-design the roof in a way that could match the foundations.Public/Customers – Since the y are â€Å"watching† delays and over costs being paid from their taxes they are on the legitimate attribute because they are on the â€Å"socially accepted and expected behaviours† side (Mitchell 1997). Media – Has the indirect power of showing a project as a project success or failure. Meets the parameters of the legitimate attribute expecting behaviours and has the urgency of being time sensitive (generating news with the project delay). The main stakeholder was the architect, but Utzon was much more concerned with the design aspect rather than time and  costs objectives, which proved problematic.During the project, Utzon collaborated with Ove Arup, who was in charge of the structure and the engineering while subcontractors were in charge of mechanics, electrics, heating and ventilating, lighting and acoustics. There was no real project manager, but rather collaboration between Utzon and Arup. The other main stakeholder was the client, the state of New Sout h Wales (Australian government). A executive committee was created to provide project supervision but the members had no real technical skills.The government eventually became an obstacle to the project team by inhibiting changes during the progress of the operations  and thus contributed to cost overrun and delays. Finally, the public and media was an indirect stakeholder because they were concerned with the project’s success. Defining INTERNAL AND EXTERNAL STAKEHOLDERS. External stakeholders The external stakeholders can be considered as anyone outside the implementing organisations who could be affected by the project’s results.Internal Stakeholders Internal stakeholders are those associated with the process, typically members of the project team or the governance structure. After describing what internal and external stakeholders are, it can be specified what stakeholders need more attention, or in other words, need to be ‘more’ satisfied. It is know n that it’s impossible to keep all the stakeholders happy at the same time so the following picture will show that it was essential to keep NSW government and Mr.David Hughes happy (a reminder to say that the relationship between Utzon and David Hughes wasn’t good). The relationship with Arup should be stronger in order to have a better performance linking ‘departments’. As a result (of not doing it) the roof couldn’t match the foundations created by Arup (the roof was too heavy for the foundation’s material) and the amount of resources would not be so many times recalculated, it would have minimized the time spent and the money wasted. The relation with the media should also be managed better.The relationship between stakeholders was too ‘transparent’ and what was meant to be a huge partner advertising the project ended up pulling down the project in terms of future customer’s point of view (customers would be driven by t he media and associate the Sydney Opera House negatively). Also the relationship with the SOHEC could be better driven since it was the major beneficiated within the project. They did not pay for it (the government did) and they were represented by the ones that would use it the most but what was hope was turned into despair.   |   |   |   |   |   |   |   |   |   | |   |   |   |   |   |   |   |   |   |   | | POWER|   | Keep| Satisfied|   | Manage| Closely|   |   |   | | | SOHEC|   |   |   | NSW Government |   |   |   | | | Arup|   |   |   | David Hughes |   |   |   | | | Media|   |   |   |   |   |   |   |   | | |   |   |   |   |   |   |   |   |   | | |   |   |   |   |   |   |   |   |   | | |   |   |   |   |   |   |   |   |   | | |   |   |   |   |   |   |   |   |   | | |   |   |   |   |   |   |   |   |   | | |   |   |   |   |   |   |   |   |   | | |   | Monitor| Only|   |   | Keep| Informed|   |   | | |   |   |   |   |   |   |   |   |   | | | Design Team|   |   | Consultants|   |   |   | | Engineer Team|   |   | Suppliers |   |   |   | | |   |   |   |   | Contractor|   |   |   | | |   |   |   |   |   |   |   |   |   | | |   |   |   |   |   |   |   |   |   | | |   |   |   |   |   |   |   |   |   | |   | INTEREST|   | | | |   | Causes for project failure A project is a set of people and other resources temporarily assembled to reach a specified objective, normally with a fixed budget and with a fixed time period. Projects are generally associated with products or procedures that are being done for the first time or with known procedures that are being altered (Graham 1985).Sidney Opera house was meant to be the perfect construction that allied Utzon ’s genius and Arup’s structural expertise (Murray, P. 2004) but it is necessary to accept the fact that neither of them were a project manager, that just in the 70’s started to be another person rather than being an engineer or an architect (the project manager), so Utzon’s management skills were based on experience and knowledge in his sector rather than in project management itself (lack of planning and management skills), which changes perspectives.While Utzon had a masterpiece perspective, Arup had a task perspective. If they were project managers they would be more oriented to fulfil the stakeholder’s perspectives and the â€Å"business by project† perspective where they would focus on project investments and bene? ts, which include project results, project success, strategy, pro? t and bene? ts† (Bjorn Johs. Kolltvei, 2005). Another main point is the fact of the allowance for the project changes at any time. The Sydney Opera hous e was supposed to have 2 rooms but ended up having 4 rooms.So it can show some discrepancy between what was wanted (before and after the new government) and what was delivered. In this project particularly the Government has changed so it is hard to say that is someone’s fault but in fact it had an impact, always asking for changes and putting pressure in Utzon. This shows that the agreements between Utzon and the previous Australian Government did not have strong levels of engament with the internal stakeholders (government, Minister, SOHEC).According to the OGC – the UK Office of Government Commerce, it is essential to have â€Å"clear organisational boundaries† and â€Å"clear governance arrangements to ensure sustainability† and it did not happened in this project, where the pressure was horrendous on Utzon to be used as the responsible for this huge cost and time overrun (and he has his fault because of the massive fail when designing a roof not sust ained by its foundations and lack of cooperation with the Arup resulting on a bad choice of the materials for the roof) but Utzon can’t be blamed by the recurrent changes asked on the entrances (still eing re-arranged) and the halls, which had really poor acoustic quality. The Sydney Opera House was meant to be â€Å"one of the six best opera houses in the world†¦with a fine concert hall with perfect acoustics â€Å"(Murray, P. 2004) But at the same time Peter Murray also states that â€Å"(opera) however, was a minor interest. There were some local groups and the occasional tour from an Italian company but it was it†.This shows that a major stakeholder – the public – was not taken into consideration since the attraction was more international than national, but even there it failed(need to bear in mind that nowadays SOH is more profitable with huge concerts and museum and attraction because it was re-oriented for more than Opera concerts) . The (n ew concept) of the halls were against the musical competition rules (being put side by side) and the acoustic were really poor, so even thou the objectives were delivered they didn’t think properly about its benefits.Nowadays the Sydney Opera House had its changes especially in the access areas, parking and acoustics and now is used for the purpose of concerts and as a museum (tourist attraction). Lack of skills and proven approach to Project management and risk management As it is said, Project management was only developed in the 70’s and 80’s so the experience took place over the project management ‘science’ (not really developed during the 50’s) so it definitely lacked during the process. Error Margins completely wrong, years and millions more were used and that is the biggest signal of a Project that has failed, when its error margins do not apply.Fortunately the SOH was â€Å"re-used† in order to have â€Å"Return on Investmentà ¢â‚¬  but not delivering a project oriented to its benefits is definitely a signal of project failure. The pace of the project did not meet expectations, but those 14 years could have been less. Again the roof was the biggest problem. This has to be related with the lack of processes in place to ensure that all parties have a â€Å"clear understanding of their roles and responsibilities, and a shared understanding of desired outcomes, key terms and deadlines†( Office of Government Commerce, CP0015/01/05).Furthermore the integration of such a big supply chain and still Utzon couldn’t estimate the right amount of the right material for its foundations and roof (10%, 20% more resources on the overall budget is what it should be as part of the total budget and those 20% ‘extra’ would be used for any emergency) shows no scope and interaction with other participants (stakeholders). The entire novel cited before shows lack of understanding. Utzon designed a roof that couldn’t match with Arup’s foundations. Too many â€Å"tiers†, which goes against the prioritisation that is essential in a supply chain.So it crossed over three main causes for a project failure: Cost escalation, time escalation (error margins) and disturbance of the core processes (politics). Unrealistic timescale and Cost escalation? In the case of the Sydney Opera House incomplete plans, drawings and a lack of information about the material and the structure of its now-famous roof all added dramatically to the cost. The estimators (consultants, accountants, auditors) didn't make those errors; other members of the project team did (Utzon, Arup).When the construction started there was no clear  concept of how the roof might be constructed. It’s not that the estimates were wrong; it’s that there was nothing to base the estimates on in the first place. Much of the delay and cost overrun was caused by iteration on roof design and lack of Dat a, eventually landing on a solution that constructed the roof out of interlocking tiles, but this solution was only discovered after a lot of time and effort. PM effort is coordinated to reach a particular goal or perform some speci? c function. The ? eld demonstrates‘‘. . . means-end paradigm with a strong emphasis on discipline, goal seeking and end-item accomplishment’’ (Pollack, J. 2006) – this is why Utzon was a great architect and a bad project manager, because in this particular project he missed all these premises. Because of the time (the 50’s) some major knowledge can’t be used because it is unknown but it can be identified as lack of agile project management, a major failure to engage stakeholders, inappropriate leadership style (Utzon resigned before the project was completed), insufficient procedures (as it was said before relating cost and time escalation).Recommendations Field tells us that â€Å"projects fail too often because the project scope was not fully appreciated and/or user needs not fully understood. † The meaning of a project can be materialized in the Sidney Opera House, but although it was a project, it failed by several reasons. RISK MANAGEMENT The ‘‘. . . traditional thinking behind a project risk management (PRM) framework is essentially centrist, authoritarian. It . . . assumes that the central project manager knows best’’ (Williams 40, p. 219).Williams suggests that in Project Management participation and empowerment may actually increase risk by reducing centralised control. Without an agreement that could make Utzon stick on the project agreed before his risk management couldn’t fit in new perspectives from the client like more rooms (halls). Demanding more and asking to reduce time due to the existent delay that was not expected in Utzon’s margins based on the project’s milestones it shows that the pressure pretending to take power from Utzon (led to his resignation) ‘helped’ to make of this project a failure.So, Risk Management would be one of the main focuses if I was the Project Manager. Achieving milestones, regular monitoring, evaluating and updating risk management plans and risk registers and maintain risk management processes for the duration of the project. FORECASTING ; DEALING WITH EXTERNAL MOTIVES Essentially, projects are like organisations. They have project governance, internal management systems, a number of staff, external stakeholders, an external environment and goals, objectives and deliverables.However, project delivery in the construction industry comes with a higher degree of uncertainty due to Industrial factors, complexity and changing technologies and uniqueness of projects where time, cost and quality need to be managed, sometimes equally, sometimes differently. Time Quality Cost In this particular case I would set up a standard of quality and add 20% margin error on the budget for resources. With a focus on quality I would make sure that the project would stick on the agreed and every change emanded would have a new budget and time escalation so the Government would think twice before demanding. With a focus on quality and the cost already decided (with 20% for resources) the two main problems would be solved (the roof problem and the 50 million (AUS) dollars of cost overrun). Furthermore the time problem would be solved with an exact check point on milestones any delay would be due to external motives like a tropical catastrophe or any alteration decided by the government but they would know in advance the cost and time waste of their decisions straight away instead of ‘just’ demand alterations.STAKEHOLDER ENGAGEMENT Strategic approach Stakeholder Engagement is designed to take account of all the individuals and groups impacted by the proposed change and achieve a deeper understanding of their various interests. So, as a proje ct manager I would make sure that the 6 principles below would be the ‘foundations’ of my relation with the stakeholders. Significance: deal with issues of significance to stakeholders and the agency. Completeness: understand the concerns, views, needs and expectations.Responsiveness: respond coherently and appropriately Communication: open and effective Transparency: clear and agreed information and feedback processes. Collaboration: work to seek mutually beneficial outcomes where feasible. Inclusiveness: recognise, understand and involve stakeholders in the process. Integrity: conduct engagement in a manner that fosters mutual respect and trust. (Australian Handbook for citizenship, Stakeholder Engagement Section, Strategic Policy Group, Implementation and Stakeholder Engagement Branch, 2008).Identifying the project’s stakeholders, assessing them, and determining how they should be managed is a part of that process. When engaging stakeholder it is needed to ide ntify, prioritise, understand and plan communications with stakeholders. When engaging stakeholder it is needed to identify, prioritise, understand and plan communications with stakeholders. The first and second points are already done with the stakeholder identification and classification above and also the Interest/Power grid designed before. As a reminder, Walker states that, 2003, p. 261).Apart from the stakeholder groups identifiable by their more obvious connection with projects there are clear and major groups that are invisible but whose cooperation and support is vital for project success(2003, p. 261) so I would manage my ‘tiers’ (in supply chain for materials) having three (tiers) for different specific materials instead of dealing with hundreds. Understanding stakeholders would be another important thing to start from. Apart from forecasting I believe that is one of the best concepts that have to be incorporated in a project manager preparation to start a pr oject.Asking himself â€Å"what†, â€Å"who†, â€Å"when† is really important and the understanding of the project’s deliverables leads to a better understanding of stakeholder’s needs. That leads to a better collaboration between manager and stakeholders. Mitchell states that â€Å"making collaboration between influential stakeholders and the project manager happen depends on personal behaviour changes by knowledge workers to not only work collaboratively but also to share knowledge. (Mitchell 2002, p. 59). Understanding Stakeholders leads to good communications.Following its key concerns and follow the Power/Interest grid leads to a good understanding between stakeholders and project manager so all the four steps has to be co-related. Conclusion Sydney Opera House is considered a project failure, failing on the time scale and cost overrun and the quality of it is still being refurbished but it is an international attraction and no tourist wants to miss it when they go to Sydney. Utzon delivered his masterpiece but in a project manager’s point of view he had his limitations.Bad forecasting, bad planning skills and lack of stakeholder engagement were the main reasons for this project failure and I would have focused on milestones, identifying stakeholders, prioritising necessities and having a clear cost/time perspective and also having a clear risk assessment. References Mitchell, K. (2002), â€Å"Collaboration and information sharing: an ROI perspective? †, The Public Manager, Vol. 31 No. 1, pp. 59-62 Lock, D. , Project Management, 5th edn. Gower, 1992. Nicholas, J. M. , Management of Business and Engineering Projects. Prentice Hall, 1990.J. K Pinto, J. E Prescot, Variations in critical success factors over the stages in the project life cycle Journal of Management, 14 (1) (1988), pp. 5–18 Kerzner H. , In search of excellence in project management. Journal of Systems Management, 1987, 30–39 Davi d I. Cleland, Lewis R. Ireland (2006). Project Management: Strategic Design And Implementation. 5th edn. McGraw-Hill Professional. pp. 17-35. A RETROSPECTIVE LOOK AT OUR EVOLVING UNDERSTANDING OF PROJECT SUCCESS Kam Jugdev; Ralf Muller Project Management Journal; Dec 2005; 36, 4; ABI/INFORM Global pg. 19 J.N Wright, Time and budget: the twin imperatives of a project sponsor. International Journal of Project Management, 15 3 (1997), pp. 181–186 Peter Murray (2004). The Saga Of Sydney Opera House: The Dramatic Story Of The Design And Construction Of The Icon Of Modern Australia. Bedford Park: Taylor ; Francis. p3-18. Bjorn Johs. Kolltveit et al. , Perspectives on project management, International Journal of Project Management (2006), doi:10. 1016/j. ijproman. 2005. 12. 002 Julien Pollack, The changing paradigms of project management, International Journal of Project Management (2006), doi:10. 016/j. ijproman. 2006. 08. 002 Williams T. Assessing and moving on from the dominant p roject management discourse in the light of project overruns. IEEE Trans Eng Manage 2005;52(4):497 Office of Government Commerce, CP0015/01/05, 2004 Field, Tom. (1997). â€Å"When bad things happen to good projects†, CIO magazine, Oct 15, 1997, Vol. 11, 2; pg. 54, 6 pgs. Lynda Bourne and Derek H. T. Walker Visualising and mapping stakeholder influence RMIT University, Melbourne, Australia (2003) Project Management Lectures from week 2 (1st semester) to week 7 (as of 2nd semester)