PROJECT MANAGEMENT INCONSTRUCTION

ASSIGNMENT 2HOLYROOD:

STAKEHOLDER ANALYSIS & RISK MANAGEMENT

DATE: 4TH OCTOBER 2013

LECTURER:PROF. Dr. JOHN TOOKEY

BY:

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ANUSHYA RAMASEGAR

FACULTY OF DESIGN AND CREATIVE TECHNOLOGIES

AUCKLAND UNIVERSITY OF TECHNOLOGYTE WANANGA ARONUI O TAMAKI MAKAU RAU

School of Engineering

Master of Construction Management

Name ANUSHYA RAMASEGAR

ID Number 1380633

Paper Name PROJECT MANAGEMENT IN CONSTRUCTION

Assignment HOLYROOD: STAKEHOLDER ANALYSIS & RISK ASSESSMENT

Number of words (excluding appendices) 4202

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TABLE OF CONTENTS

1.0 INTRODUCTION..............................................4

2.0 PROJECT DEVELOPMENT.......................................5

2.1 COMMENCEMENT OF PROJECT.....................................5

2.2 CONSTRUCTION OF THE PROJECT..................................6

2.3 COMPLETION OF THE PROJECT...................................7

3.0 STAKEHOLDERS..............................................8

3.1 STAKEHOLDER MAP............................................8

3.2 STAKEHOLDER ANALYSIS........................................9

4.0 RISK ASSESSMENT...........................................9

4.1 DESIGN...................................................9

4.2 PROCUREMENT..............................................10

4.3 MANAGEMENT...............................................11

5.0 CONTROVERSIAL ISSUES: COST AND TIME OVERRUNS.............13

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5.1 WAS THE SPB CONDEMNED TO A COST OVERRUN SINCE OUTSET?.........13

6.0 DISCUSSION...............................................14

6.1 LESSONS TO BE LEARNED.....................................14

7.0 CONCLUSION...............................................15

8.0 REFERENCES...............................................16

1.0 INTRODUCTION

The Scottish Parliament Building (SPB) in Edinburgh

stands as one of the most iconic buildings in Britain

today. The building which was constructed with the

Scottish land and people in mind was designed to

represent the cultural and geographical aspects of

Scotland. During the inception stages of the SPB it was

decided that the building would symbolise the country’s

past achievement and signal its future aspirations

(Fraser, 2004) and the Catalan architect, Enric Miralles

who was the lead architect appointed for the project

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captured these elements and infused it into the design of

the building. Drawing inspiration from Scotland’s

seashores, mountain, flower paintings by Charles Rennie

and Henry Raeburn’s painting of the skating minister he

developed a design that he described as (Fraser,

2004):“The building should arise from the sloping base of

Arthur’s Seat and arrive into the city almost surging out

of the rock.”

His efforts paid well as to this date the SPB has

garnered 9 architectural awards including the prestigious

Stirling Prize (“Scotland Parliament”). Initially

budgeted at £50 million, the project was scheduled to

commence construction in June 1999 and was to be

completed in June 2001. Unfortunately, this colossal

endeavour was plagued by budget escalation issues, poor

project management, poor procurement methods, and other

construction issues since the beginning. Eventually, the

construction of the project was completed in March 2004

(“Scotland Parliament”) and with a cost of £431 million.

Members of the Scottish Parliament convened for the first

time on the 7th of September 2004 at Holyrood (Fraser,

2004).

Constructed from mix of steel, oak and granite this

magnificent cultural symbol raised a level of controversy

that was sufficient enough to launch a public inquiry

which lead to the birth of the infamous Fraser Report in

2004.

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This report aims to look at factors that caused the

delays and the excessive escalation of cost. It will also

examine the complexity of the design of the building and

examine the risk factors involved in the completion of

the project.

2.0 PROJECT DEVELOPMENT

The objective of the Holyrood Project was to provide

a home suitable for the Scottish parliament. Conversely,

this project of massive scale encountered political

problems which included the selection of an appropriate

site to the house of parliament. It is important to note

that given to proposed estimate of the project, it can be

clearly seen that a poor feasibility study was done prior

to the design of the building which is clearly a recipe

for a financial disaster.

Even though the completed building was built in high

standards and excellent quality, the project experienced

a 20 month slippage (Auditor General, 2004) and was

almost 50% larger than when first designed. The design

team was lead by Enric Miralles until his death in July

2000 (Auditor General, 2004).

The Holyrood Project was not handed over to the

Scottish Parliamentary Corporate Body until the 1st of

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June 1999. The project was an extremely challenging one

in terms of design and management.

2.1 Commencement of Project

From the beginning the project it can be seen that

the project lack a sense of appreciation of plan. This

can clearly be seen with the budget, the procurement

method and the selection criteria of the designer. The

unrealistic budget set up for this elaborate project was

not addressed until it was too late. The selection

criteria adopted for the procurement method and the

handing of the Pre-Qualification Questionnaires (PQQ)

lacked a systematic approach. It is believed that the

project was handed over to the Scottish Parliamentary

Corporate Body (SPCB) by the former Scottish Office

(Fraser, 2004). The conclusions arrived by Lord Fraser

are as follows (Fraser 2004):

The Brief was not up to date (no changes were

reflected since November 1998)

The Brief did not anticipate the requirement of

the Parliament resulting in additional building

added on later, hence increasing the cost of

the project

Insufficient funds were allocated to the

project from the beginning the reason being

that:

Exclusion of budget for risks

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Unable to fully comprehend the complexityof the design

Considerations we not given to blast andsecurity.

A seemingly high profile project like this without a

contingency for risk clearly states poor foresight and

decision making ability by the project team. Moreover,

the process in which the designer was chosen and

subsequently appointed was done in a highly

unprofessional manner.

Also, a project of this significance requires a

project sponsor of sound calibre. Due to the demanding

nature of the project, the project sponsor is required to

understand the needs of the project and be able to convey

the client’s requirements clearly and decisively to the

construction manager, project manager and design team.

However it is clear that Mrs. Doig the Project Sponsor,

lacked these skills and to a large extent proceeded to

make poor management decisions. This is clearly seen in

the method of procurement adopted for the project.

The overall impression given during the onset of the

project is that the project scope was not clearly

defined, risk assessment was not given enough thought or

consideration, the complexity of the design was

underestimated and lack of reflection was given to the

requirements of the building.

2.2 Construction of the Project

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It was after the commencement of the project where

crucial changes and discoveries were made. Paul D.

Gardiner (2005) described it as the phase where new

information from other phases can lead to change, and a

good project manager should know that some changes are

inevitable; therefore there is a need to maintain control

over these changes to the project plan. Unfortunately,

that was not the case with the Holyrood project. There

were since detailed design variations and late supply of

information during the construction process until 2000

(Fraser, 2004).

The design variations that kept arising for the

debating chamber was one of the reasons why there were

delays in construction and additional costs. In the

Holyrood Inquiry, there were many references to the

“complexity of the design” highlighting that as a factor

causing both cost and time overruns (Isobel and Iqwinder,

2005).

Then in August 1999, there was a request by the

architect, Enric Miralles to increase the area of the

project by 4000 sqm (Fraser, 2004). Strangely, the report

by the Auditor General in 2000 stated that there were no

appropriate explanations given by the architect as to why

this increase of area was necessary (Isobel and Iqwinder,

2005).

It can be seen that it was during the construction

stage; the most crucial stage of this project that there

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was a significant increase of cost overruns and time

delays. Even with the establishment of the Holyrood

Progress Group in 2000, the project was only completed in

2004.

2.3 Completion of the Project

The Scottish Parliamentary building was completed

successfully amidst the controversy that surrounded the

project. The last tower crane left the construction site

in March 2004 and in August 2004 the Scottish Parliament

met for the first time in Holyrood (“Scotland

Parliament”).

However, at the time the Holyrood Inquiry was opened

in June 2003, the project stood at £373.9 million and

construction was forecasted to be completed in November

2003 (Isobel and Iqwinder, 2005). By September 2003, a

progress report by the presiding officer of the SPCB

stated that figures have risen to £401.2 million and

subsequently again in February 2004 to £430.6 million

(Isobel and Iqwinder, 2005).

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3.0 STAKEHOLDERS

Bearing in mind that this is a public sector

project, the stakeholders involved in this project are

numerous; ranging from the project owner to the public.

However, separating the stakeholders and categorising

them will be beneficial terms of analysing project

management issues and problems involved in the line of

communication.

3.1 Stakeholder Map

Figure 1: Stakeholder Map

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Interest of Stakeholders

P o w e r / I n f l u e

GROUP A

MINIMAL EFFORT

GROUP B

KEEP INFORMED

GROUP C

KEEP SATISFIED

GROUP D

KEY PLAYERS

3.2 Stakeholder Analysis

List of Stakeholders According to Group:

Table 1: Stakeholder Analysis Table

No. Group Stakeholders

1A

(low interest / lowpower)

Legal Team NGO’s

2B

(high interest / lowpower)

Suppliers Members of Parliament

(MSP) Media City Council (Edinburgh) Secretary of State

(Scotland) General Public

3C

(low interest / highpower)

Insurance Company Audit Advisor to the

Scottish Parliament Project Financial

Controller Private Finance Unit,

Scottish Office

4D

(high interest / highpower)

Project Owner (SPCB) Architect Consultant

(EMBT/RMJM) Project Sponsor (Barbara

Doig) Project Managers Construction Manager

(Bovis) Quantity Surveyor (DLE) Design Team (Ove Arup &

Partners)

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4.0 RISK ASSESSMENT

One of the major blunders recognised in the Holyrood

Project was the lack of attention to the risk factors involved

in the project. The 3 prominent risk factors that will be

discussed in this report is design, procurement and

construction management.

4.1 Design

The Parliament Building comprises of several

buildings representing different aspects of Scotland and

spanning over an area of 31,000 sqm (312, 000 sqft)

(Fraser, 2004). The entire building comprises of 9

separate building including accommodations for the MSP’s,

a media tower, garden lobby and the debating chamber.

There was no doubt that when Enric Miralles designed the

building, he took used poetic approach and incorporated

many of the Scottish cultural and geographical symbolisms

to illustrate the connection between the Scottish land

and the Scottish people. Needless to say, his efforts

paid off well and today the SPB is an important icon of

Scotland.

However, the design of the building has been

identified to be one of the causes of delay of the

Holyrood Project. According to Auditor General, Robert

Black’s report, the main cause of the 20 month delay

since September 2000 was the production of detailed

design variations and late supply of information during

the construction process. He also mentioned that thereAnushya.R 13

were difficulties associated with the construction due to

the complexity of the design and density of the

development (Auditor General, 2004).

By September 2000, the building was 50% larger than

it was originally designed to be (Max Wideman, 2010).

Subsequently, this had an effect on the construction

timeline and the budget of the project. In June 1999,

there was a call to look into the design of the debating

chamber again (Max Wideman, 2010). As a result, the

architects and members of the design team were required

to put in significant amount of additional time and

effort into the design of the debating chamber. In fact,

to help discover an effectual solution for the project

visits to Holland and Belgium were arranged to examine

the arrangements of the Flemish and Dutch parliament

buildings (Max Wideman, 2010). This single issue deterred

progression of the project as the architects and design

team took three months to resolve this single issue (Max

Wideman, 2010).

It was concluded by the Auditor General (2004) in

his report that one of the main reasons construction

costs ballooned and the project deadline extended was due

extensive design developments.

4.2 Procurement

Although the building was delivered successfully to

the SPCB, the project was deemed as a construction

debacle because cost and time objectives were not met.

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Originally the project was set to start in 1998 and

finish in 2001. However the final completion was only in

2004. This delay occurred even though time was said to be

a priority by the project team in the beginning (Fraser,

2004). One of the most discussed aspects of the project

was the procurement system.

The Holyrood Project employed a construction

management procurement system over other procurement

systems such as Public Finance Initiative or Public

Private Partnership (PFI/PPP) (Fraser, 2004). This was

questionable since the latter method is usually adopted

for public sector projects and large scaled ones. To

avoid any delays in the completion of the SPB the

ministers decided that the PFI/PPP method shall not be

pursued (Fraser, 2004). Even though it was a political

judgement exercised by the late Donald Dewar (Secretary

of State of Scotland) and project team with unrestricted

constraints it was necessarily in the best interest of

the project.

Although the procurement method has its advantages

however, it was disadvantageous to this project due to

several reasons (Fraser, 2004):

Greater client risk

The complexity of administering many differenttrade packages (approximately 60 in the case ofHolyrood)

The requirement for client to be informed anddecisive

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The essential need for a good project team andproject brief

The relative difficulty of managing delays anddisruptions in the project

Absence of any overall contractual programme ofcontract sum

In addition to that, there was no detailed

consideration of procurement options prior to the

selection of the construction management method. In

summary, the procurement method adopted was not given the

due consideration it needed. The findings in the Auditor

General’s (2004) report stated that construction

management is an unusual method of procuring construction

projects in the public sector and it has never been used

in a major public building project in Scotland. This

clearly shows the lack of expertise in the project team

especially in a crucial decision such as this.

4.3 Management

The Holyrood project did not consist of one Project

Leader but rather a team of Project Leader(s) which led to the

classic case of ‘too many cooks spoil the broth’. Based on

literature, there are many reasons as to why a project fails.

Amongst these reasons are lack of senior management and

ministerial ownership and leadership (Cicmil, 2005). In this

project this is clearly demonstrated by the project sponsor

Barbara Doig. Mrs. Doig was clearly not equipped to handle a

project of this scale as she lack the experience, expertise

and assertive qualities required for the role (Fraser, 2004).

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Her lack of skills was apparent when there was no in depth

research done on the method of procurement adopted for the

project (Fraser, 2004).

The project manager had no single point of authoritative

command which made it difficult to assert his authority of

influence to control the direction of the project. This was

one of the reasons the first project manager Bill Armstrong

resigned from his position. He had indicated that he was not

receiving the support necessary to enable him to carry out his

job as Project Manager and that his advice was not being

listened to (Fraser, 2004). Although he was an excellent

project manager as demonstrated by his track record, he was

powerless in this project and was unable to perform his duties

to the best of his abilities.

Also there was no clear direction as to where the

project was heading as this caused the delays and budget

overruns (Auditor General, 2004). In this case, the client,

SPCB, did not use normal budgetary control procedures in their

decision making process (Auditor General, 2004). Also, in June

2001 when the Parliament approved a motion that was construed

as removing the budget constraint of £195 million the Project

Team did not set a cost ceiling that would allow the project

to be properly managed in terms of time and cost (Auditor

General, 2004). Due to this fact, the focus turned to high

deliverable quality with no regards to cost and time

implications.

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Another flaw in the project management was the lack of

communication with the stakeholders. A high level of project

of this scale will attract significant amount of interest by

the media, public and other important stakeholders. It is the

responsibility of the client to keep the stakeholders informed

of its progression be it good news or bad news. The lack of

communication with the stakeholders shows that the project

sponsor had little knowledge of the project and the

construction industry. Moreover, throughout the project, cost

reporting and financial control was managed poorly in this

project (Auditor General, 2004) causing the overall cost of

the project to rise significantly.

In summary, the project did not have a clear direction

from the outset and lacked leadership. This in turn led to

lack of control over the project, poor flow of communication

and incompetent management by the project team.

5.0 CONTROVERSIAL ISSUES: COST AND TIME OVERRUNS

The two biggest factors that lead to the Holyrood Project

being one of the most discussed construction disasters are

cost and time. Following this statement:

“In spite of the political and cultural imperative of the successful completionof the SPB to the Scottish people, from a project management perspective thedesign, procurement and development of the SPN was certain to be subject toimmense cost and time overruns”

This statement is true to a certain extent. Given that

the project is of a massive scale there are some certainty inAnushya.R 18

cost overruns due to design variations and contingencies. This

in turn may or may not lead to cost overruns depending on how

well or how detailed the project has been budgeted in the

first place. Also, given that the procurement method that was

adopted was construction management there is added risk of

cost and time overrun.

5.1 Was the SPB Condemned to a Cost Overrun Since

Outset?

Looking at the method of procurement and the lack of

decisiveness from the client one can foresee that the project

was doomed to a cost overrun from the beginning. It did not

that help that the initial programme schedule was not

realistic enough to accommodate the futuristic design of Enric

Miralles. Changes in design cause a revision in cost and

construction and implicate the programme schedule as well.

During the detailed design period, £80 million was added to

the construction cost (Auditor General, 2004). This is

calculated to be approximately 19% of the overall construction

costs. Poor planning, decision making and lack of foresight by

the client and construction managers led to this outcome.

The programme schedule provided by Bovis should have been

deemed unrealistic and unachievable by the Project Sponsor and

the Project Team. The lack of experience by the latter caused

the late delivery of the project. Lack of project management

skills by the Project Managers and Project Sponsor also lead

to the rise of cost overruns.

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5.2 Was Time an Important Factor in the Completion of

the SPB?

From the outset the client was very clear regarding the

timeline of the project; the project needed to be completed to

the highest quality within the schedule. However, the question

then arises: Was the programme schedule for the construction a

realistic one? The answer is a sound ‘no’. The initial

programme schedule indicated the project was to be completed

by June 2001. However the final completion of construction was

not until March 2004.

Although Bovis complied with the client’s requirements

and came up with a programme schedule that fulfilled the

client’s deadline, both parties should have realised and come

to terms that from the onset that the demanding schedule could

not have been met. This lack of knowledge clearly shows that

the client or project team lacked significant experience in

the area of construction. Bovis on the other hand instead of

pleasing the client should have taken the responsibility of

highlighting the unachievable completion dates and the

consequences of pursuing the initial programme schedule

(Anderson, 2004).

It was evident that even though time was an important

factor in the construction of the SPB, the Project Team lacked

the necessary skills and experience to ensure the project was

delivered on time. The Project Sponsor and Minister involved

especially lacked the necessary leadership skills to take

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charge and make important decisions to ensure the well being

of the project.

6.0 DISCUSSION

The Holyrood project has been an extensive topic of

construction discussion amongst scholars. There are many

aspects of the project outcome that can be discussed and

debated upon. Generally, it can be concurred that the Holyrood

Project lacked teamwork, good communication flow, proper

project management and control. This naturally led to a budget

overrun and time delays.

6.1 Lessons to be Learned

In depth research and a detailed analysis should be done

before choosing a procurement method. Procurement methods

need to be chosen based on project requirements. In this

case construction management was not a suitable method of

procurement. The Project Team should have opted for the

Public Private Partnership method instead.

Project risks should be identified, carefully analysed

and weighed. If necessary, provision for counter measure

must be allocated to avoid cost overruns and construction

delay.

Project briefs must be prepared in detail during the

inception stages of a project. Cost analysis and timeline

must be thoroughly discussed before architects,

construction managers and design teams are appointed.

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Budget allocation must be done clearly along with a set

of key performance indicators that shall be used

throughout the duration of the project.

A clear cut hierarchy of the Project Team must be

appointed along with a proper communication line

flowchart. All personnel involved in the project

including contractors, designers, architects and project

managers must adhere to the flowchart.

For large scale public sector projects such as the

Holyrood Project, appointment of key personnel in the

Project Team such as Project Sponsor and Project Manager

should be exercised with much deliberation and care. In

the case of the Holyrood Project, lack of experience and

expertise amongst the key personnel involved in the

project proved to be one of the downfalls of the project.

Both client and construction manager should be realistic

about the programme schedule before the commencement of

the project. In this respect, the experience of the

Project Sponsor and Construction Manager is crucial to

the final outcome of the project

7.0 CONCLUSION

Today, nine years after its construction, the Scottish

Parliament Building stands as one of the most iconic buildings

of Britain. However, this iconic building also stands as one

of constructions’ greatest lessons. Public sector projects

should be handled with extra attention and thoroughness owing

to the fact that high profile projects are bound to be under

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media and public scrutiny. Having said that, if the Project

Team had exercised due meticulousness throughout the project,

the failure to deliver the project on time and on budget would

not have been so severe.

8.0 REFERENCES

Lord Fraser, Sept 2004, The Holyrood Inquiry, Scotland: ScottishParliamentary Corporate Body.

Scotland Parliament, Milestone dates in the building of the Scottish Parliament (n.d.).Retrieved Sept 25, 2013 from:http://www.scottish.parliament.uk/visitandlearn/16333.aspx

Max Wideman, 2010, Risks in Political Projects: The New Scottish ParliamentBuilding. Retrieved from: http://www.maxwideman.com/papers/political_projects/political_projects.pdf

Andersen E.S, Grude K.V, Haug T, Goal directed project management:effective techniques and strategies Kogan Page 3rd edition (2004)

Gardiner P.D, 2005, Project Management: A strategic planning approachPalgrave Macmillian

Cicmil S.K, 1997 Critical Factors of effective project management the TQMmagazine Volume 9 Number 6 Pg. 390-396

Auditor General, Robert Black, June 2004, Key findings from management of the Holyrood building project. Retrieved from website: www.audit-scotland.gov.uk

Isobel White and Iqwinder Sidhu, January 2005, Building the Scottish Parliament, the Holyrood project

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