Projects designed and built with adversarial teams are rarely successful. But building owners can aid collaboration by setting the tone for a project — one that is clear, consistent, and cooperative.
A few months ago, a senior leader at a top-ranked university asked the assistant vice president of facilities and construction what he and his office were doing to capture construction savings related to the deflating market, especially as they were completing the buyout of remaining major projects. Before the AVP had an opportunity to form an answer, the senior leader added, “If you aren’t being ruthless, you aren’t doing your job.” The AVP responded quickly, “No, we aren’t being ruthless. We are getting far more value by supporting collaboration. We save design and construction dollars every day with our collaborative teams.”
This exchange stemmed from a conference the senior leader had recently attended. A number of high-powered university officials were in attendance along with a few government pundits. Many attendees shared glorious stories of the remarkable savings they had experienced on recently bid projects, which had come in 10 percent to 20 percent under budget. Contractors and architects are really suffering right now, they said. They are so hungry that it’s a great time to squeeze them and get some great deals. Armed with these anecdotes, the university’s participants felt confident that they had helpful advice to pass along to construction staff: Beat up those architects and contractors! Now is the time to get the lowest price possible!
This questionable strategy raises several significant concerns. First, universities are part of the communities in which they reside, and they don’t build just one project. It is generally a bad idea to alienate the local design and construction community. Second, projects designed and built with adversarial teams are rarely successful. Those hammered team members understandably spend considerable energy finding reasons to generate additional services and change orders. Third, this strategy is not likely to create the lowest final price or highest value compared to a transparent collaborative process in which commodity and labor prices are promptly incorporated into cost projections, adjusting as the market fluctuates, long before final buyout. A good project process recognizes windfalls early and is never the victim of nasty surprises. Knowledge is power!
This, however, is exactly the problem with owners. Ours is the only trillion-dollar industry in the history of the world in which clients routinely demand the most inefficient processes creating the least value. How many owners, public and private, actually believe they get the best value from design-bid-build? Probably very few professionals do, but they cannot prove it. The reason is simple: Anecdotes, personal experience, and urban legend constitute the foundational knowledge of the industry, one that has done a poor job of creating hard data to support the use of good processes and an even worse job of creating and preserving knowledge through rigorous research. As a result, the industry has no ammunition to convince owners that other options are available to them that can produce higher quality projects at better prices. In this knowledge vacuum, compounded by dire market conditions, some owners are likely to act badly.
But there is another, bigger problem with owners, and it is one that rocks the foundations of building industry knowledge and rattles the most basic tenets of industry leadership. The problem is this: It may be that owners, not industry professionals, hold the most power in managing the building process and are therefore the only viable leaders of the building process. Owners may be the natural leaders of industry change with the potential to create opportunities for great success for all industry professionals.
In 2009, Barbara presented ideas about owner innovation and leadership at the Design Futures Council meeting in Washington, D.C. The ideas provoked a good deal of conversation and generated many questions. One question, however, was asked quietly after the formal meeting had broken up. Charles Dalluge, executive vice president of Leo A Daly, approached Barbara with a thoughtful look and said, “I am interested in what you do, but I am even more interested in how you do it. I mean, how do you create the environment where these actions and processes are possible?” That question is, as they say, the elephant in the room. No innovation is possible without a values-driven environment. Presidents of successful corporations and institutions understand the importance of values in an organization, but few project teams are led with values in the forefront.
A great deal has been written about values in business and service environments. It is well-traveled ground by many business scholars. An excellent book on the subject is Discovering the Soul of Service by Leonard Berry. University of Miami business school profressor A. “Parsu” Parasuraman contributed research for the book and underscored how great values can overcome gaps in service delivery. This is a key concept. A series of gaps naturally occur in the service delivery model because the various participants have different perceptions of the process, its requirements, and customer expectations. Process refinement and formal review of these gaps is critical to success, but no managerial process can address every challenge or potential conflict. Values create an environment in which personal initiative is possible because the project guidebook is understood and internalized.
Of the seven values discussed in our book, The Owner’s Dilemma: Driving Success and Innovation in the Design and Construction Industry, we’ll focus here on the one that in many ways lays the foundation for a successful project: leading with exuberance and caring consideration.
The owner can and should set the management tone for the project. Managing well in the project team environment is just as important as in any major corporation and even more complex, considering that an owner must pull together different firms and disciplines to create a building project. If an owner wants a team that will be creative, productive, and effective, he or she must lead with exuberance and caring consideration. It is up to the owner to make the project process unique and exciting for the project team. The most successful projects are a product of team investment where the team embraces the project goals of the owner and gains satisfaction from achieving them. In addition, when the owner communicates the strategic importance of a particular project, the team can help guide the project in a manner consistent with the owner’s strategic goals. When the owner also shares an interest in the success of each project team member, he or she creates an environment of respect and caring that will serve the project well.
Good, effective project managers manage clearly, consistently, and cooperatively. This is a simple way to outline good basic practices that serve both the owner and the team well. Clearly communicating high-level performance expectations to the team is extremely important because no one can meet expectations that are unexpressed or ambiguous. In the project environment, it is easy to misinterpret and misunderstand direction. Often, multiple people believe they have authority to direct the team, and the team is unsure who can authorize changes and directions.
In Barbara’s role as Rice University’s associate vice president for facilities engineering and planning, every university building project starts with the “your nickel” speech, which clearly defines the communication and approval process. University clients are informed that they cannot direct the design or construction team without going through the project manager. The design and construction teams are informed that if they follow the direction of any person other than the project manager, any cost incurred will be on their nickel. Additional services costs are appropriately compensated, but only if they are incurred with the approval of the project manager. When trying to manage clearly, extra effort has to be made to define problem resolution, appeals, and decision processes. Even vocabulary can be important in this regard. Project team members and owners should make every effort to understand each others’ language and perspective. Group visits to precedential projects can help team members view issues through a common lens that creates a collective understanding, which will be used throughout the project to help explain new ideas and approaches.
Consistent management of the project team is critical. This consistency must be inherent to everything from invoice payment to participation in project meetings. An effective team relies on the owner to manage in a manner that is reasonably predictable. The owner, for example, should not only enter into a contractual agreement that is clear and appropriate but should administrate that contract consistently. The project team should expect uniformity in the practical administration of any gray areas in the contract.
For example, the Rice construction guaranteed maximum price contract defines contractor contingency and limits any expenditure of that contingency without owner approval. The contract also states that owner approval will not be unreasonably withheld. The definition of unreasonable is a gray area, so the responsibility falls to the owner to provide that approval fairly and consistently. If the owner misuses this authority just once, the trust and integrity of the team will be undermined. And consistency is important in personal behavior as well. Almost every professional has worked for someone who reacts based on personal mood or stress level. Walking into a meeting without knowing what you are facing is difficult in any situation and worse if you are dealing with tough issues. If the owner’s demands change when problems arise compared to those made during good times, then the team will also react in an unbalanced and inconsistent manner.
Finally, the owner should manage cooperatively, acting as a service provider to every project team member. Any owner who believes that his or her needs are the only ones to be considered in the management of a project is missing a great many opportunities to gain value and save time and money. Many other “C” words can define this management value, including collaboration, consideration, and customer service. Managing with consideration means that the owner has acknowledged and addressed the project team’s needs and manages in a manner that ensures those needs are met, whether related to project information, financial reimbursement, personal reassurance, or performance feedback. Team members who are managed cooperatively will return that consideration by fulfilling the owner’s needs, often in collaborative and creative ways.
One opportunity to practice cooperative consideration occurs during the selection process. Some owners have no reservations about asking large numbers of consultants or contractors to complete proposals, compete in design competitions, or participate in interviews even when they have little chance of being selected. This participation is costly and time-consuming and takes the time of key members of the firm. Wasting the resources of potential team members is unconscionable and disrespectful. On the other hand, when the owner creates fair, transparent, and reasonable selection processes, consultants and contractors will often respond carefully to opportunities presented by proposing exceptional teams and focused proposals. This lays the foundation for a strong, cooperative relationship.
Another critical component of effective management is the “safety zone.” All projects are deeply dependent on team members’ contributions, and every team member has to be willing to participate fully in developing project ideas, creating effective project processes and decision-making processes. This means that every project team member will be required to take risks during the project delivery process, and taking risks means that sometimes even the best, most talented team members will make a mistake now and then. Team participants will avoid risks and therefore will not advance projects unless they know that it is productive and safe to do so. The owner can create a safety zone by assuming that the project team is working on his or her behalf, even when mistakes are made. Furthermore, if the team member takes responsibility, the owner should support that individual and participate in resolving the issues arising from the mistake rather than taking punitive measures.
It must always be safe for any diligent team member to come to the owner with bad news. This does not mean that owner expectations for performance shouldn’t be very high, that team members should not be responsible for their own mistakes, or that dereliction of duty will be accepted, but it does mean that innovation has inherent risks that the owner should understand and manage in a supportive manner.
Many owners mistakenly believe that they are best served by laying blame when problems arise. This practice is a costly waste of time that degrades the team dynamic and delays the resolution process. Of course, many things will go wrong on a project, and the owner must be a reasonable and responsible steward of project funds, but real value is created when the team is working in a blame-free zone. Solutions come more quickly when team members take responsibility freely and collaboratively (even when they did not make the mistake) rather than being derided and punished. An owner can easily destroy an existing safety zone. It takes only one bad response, one act of punishment to demonstrate to a team member that there is no safety in the project environment. And a team member that does not feel safe will not perform at full capacity.
Consultants and contractors like to be successful, so it’s amazing when owners readily assume that team members are always to blame, rather than the processes that the owner and the industry have created. Is it really the architect’s fault when bids are wildly inconsistent with the estimate? Is it truly the internal client’s fault when he tries to increase scope, even though the team cannot provide an accurate budget projection or disciplined process? Is the contractor to blame for delays when the owner has repeatedly failed to make timely decisions? If the owner were to attack the process rather than the people working within it whenever a problem was identified, innovation would result. More often than not, it is the processes that set up teams for failure.
Another leadership value, balancing risk and reward, is related to creating a safe environment and can be the key to creating the greatest value in the project. Owners who are ready to challenge their teams to be creative and innovative are taking risks. Those risks can create great rewards, but it is unlikely that a team will initiate them unless the owner communicates a willingness to take a few risks to achieve the project goals, improve efficiency, and create far greater value. The level of risk that an owner is willing to take on should be proportionate to his experience, confidence in the management tools, and trust in the project team.
One of the most effective ways owners can provide a safe environment and demonstrate the desired cooperative culture is, in very simple terms, to take the blame themselves. Just as Leigh Ann Tuohy explains to Michael in the movie The Blind Side, when she urges him to think of the team as his family and “cover their back,” the owner should defend the team when things go wrong and accept the blame when needed. This builds trust in a remarkable way: It develops leadership through respect rather than fear.
An owner who is willing to place the target on his or her own forehead also demonstrates to the senior executive staff and board of the organization that he or she is willing to take responsibility for the bad news and deal with it. When the owner is willing to take responsibility alongside the team, the team will work harder and longer to solve problems and will share tough information earlier, when there is still a chance for quick resolution.
Managing well with great collaborative values can create a team culture that is effective, generous, and creative. A team that can safely contribute ideas and identify problems early creates real value on a project. And when an owner protects the team and respects team goals, permitting the team to safely do its job and be personally successful, an environment of effective collaboration is built.
This article is adapted with permission from the book The Owner’s Dilemma: Driving Success and Innovation in the Design and Construction Industry by Barbara White Bryson and Canan Yetmen, Greenway Communications LLC, August 2010.
Barbara White Bryson is the associate vice president for facilities engineering and planning at Rice University. During her 10 years at Rice, she has overseen design and construction projects totaling more than $1 billion that have added more than 2 million gross square feet to the campus. Bryson is a fellow of the American Institute of Architects and a member of the Design Futures Council and the Association of University Architects.
Canan Yetmen is principal of CYMK Group, an Austin, Texas, consulting firm that provides writing services to architecture and design firms around the country. From 1995 to 2001, she was publisher of Texas Architect magazine, where she directed marketing and business management of the magazine as well as the public outreach and communications efforts of the Texas Society of Architects.