The overwhelming majority of project owners in asset-intensive industries now seek collaborative relationships with their contractors as a way to help minimise the negative impacts of changes to construction projects. Such collaborative partnerships improve visibility into long-term project costs and help ensure a return on investment. Replacing litigious relationships with genuine partnerships reduces the risks and makes it easier to handle the unforeseen project changes that can result in delays and cost overruns during construction.
This new research by The Economist Intelligence Unit, sponsored by Oracle, explores how asset- intensive industries manage change in their construction projects. It is based in part on a global survey of over 300 senior decision-makers in asset-intensive industries.
Key findings of the report, Building in change: Project construction in asset-intensive industries, include:
· Owners often lack adequate skills to minimise the impact of change. Barely half (51%) of respondents to our survey rated themselves as effective at delivering their projects to scope, budget and schedule when confronted with change. Only 43% rated themselves as effective at anticipating potential change.
· Collaborative relationships make costs more predictable, according to two-thirds (67%) of respondents. Furthermore, 57% see such relationships leading to more proactive change management and 65% highlight the partnerships’ help in avoiding contract disputes. While owners should hold contractors accountable if they fail to meet agreed targets, focusing on penalties may not be the most effective line of defence against unplanned changes.
· Unambiguous contract expectations and clearly defined roles are essential for project owners to benefit from collaborative relationships. Through these steps, thorough vetting and participation in up-front team-building exercises, owners are more likely to resolve issues faster, avoid disputes and reduce the impact of change to their projects.
· Partnerships now continue throughout a project’s lifecycle. This is a departure from the traditional framework, in which the relationship concludes when construction is completed. Organisations that view the contractor relationship as “extremely important” during the operations phase – including for example, maintenance and production – are far more likely to say it is an “extremely important” aspect of change management – 91% compared with the 50% of respondents who did not rate the importance of the relationship as highly in the operations phase.
Building in change: Project construction in asset-intensive industries
is available free to download from:
http://www.managementthinking.eiu.com/building-change.html
Press enquiries
Joanne McKenna, press liaison, +44 (0)20 7576 8188; joannemckenna@eiu.com
Brian Gardner, Editor, +1 212 698 9710 briangardner@eiu.com
About the survey
In October 2011 the Economist Intelligence Unit conducted a survey of 304 senior executives, drawn in roughly equal measures from each of the following industries: oil and gas, utilities, infrastructure (excluding utilities), chemicals, mining and metals industries. This survey was global in scope, with 29% of respondents based in Western Europe, 29% in North America, 27% in the Asia-Pacific region and 15% in the rest of the world. Around four in ten respondents (41%) were C-level executives or above. More than two-thirds (68%) of respondents came from organisations with more than US$500m in global annual revenue.
About the Economist Intelligence Unit
The Economist Intelligence Unit (EIU) is the world's leading resource for economic and business research, forecasting and analysis. It provides accurate and impartial intelligence for companies, government agencies, financial institutions and academic organisations around the globe, inspiring business leaders to act with confidence since 1946. EIU products include its flagship Country Reports service, providing political and economic analysis for 195 countries, and a portfolio of subscription-based data and forecasting services. The company also undertakes bespoke research and analysis projects on individual markets and business sectors. More information is available at www.eiu.com or follow us on www.twitter.com/theeiu
The EIU is headquartered in London, UK, with offices in more than 40 cities and a network of some 650 country experts and analysts worldwide. It operates independently as the business-to-business arm of The Economist Group, the leading source of analysis on international business and world affairs.
About Oracle
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