People, profit and process: ensuring a healthy and successful NEC project

Key Points

• NEC users need to ensure their projects are healthy for participants as well as successful.
• Project health can be assessed under the headings of people, profit and process.
• Assessment of project health needs to include the full supply chain.

A common goal for NEC users is to ensure their projects are successful. There are many ways of assessing success: typically, at board or senior client level, it is measured primarily in terms of cost, but with time and quality also important.

The laws of natural economics mean it is unlikely anything can be achieved quickly, cheaply and to the highest quality. For this reason, time, cost and quality are often shown on a triangle and the client ideally chooses one or a maximum of two as its priorities.

Kerzner (1998) proposed adding ‘accepted by the client’, and ‘client willing to give a reference’ to the time, cost and quality triangle. These are thoughtful additions: not only is the client satisfied, it is also willing to tell others. But a problem with the model who decides: typically success is measured in the eyes of the client or the contractor, but what about the participants?

It is tempting to think a successful project is also a healthy and sustainable one. However, it is possible to deliver all the metrics in Kerner’s model and still have a team, whoever they represent, which hated the experience, or a contractor which made no return. Even if the client considers such a project successful, it would be hard to regard it as healthy. 

So what does project health look like, and how can it be measured?

People

All projects are delivered by people. Project health here does not mean the physical safety of participants, which is taken as given. Indicators of project health at an individual level include the following. 

• It is OK here – the environment is conducive to good outputs, people are happy and feel that they are heard, and the physical environment is acceptable.
• Work is interesting – while some elements can be boring, people can see how their contribution adds to the whole.
• There is diversity – not everyone sees, thinks or believes in the same things.
• There is a path to personal growth for people who want it.

Measuring the above aspects is a combination of seeing development occurring (such as people being promoted during the project or achieving personal goals) alongside monitoring staff turnover. A team changing is not bad in itself, it is more important to know if people are leaving the project for negative reasons. On larger projects it is worth considering using ‘heat checks’, where the same questions are asked on a regular basis and answers monitored.

On an NEC project it would be tempting to use people monitoring as the basis of a key performance indicator. But this has the potential to cause people to be less than honest – a project cannot be healthy if the truth is not known.

Similarly, if a holistic approach is taken, any people monitoring cannot be restricted to the tier 1 contractor and, say, the designer. It needs to extend throughout the supply chain and encompass people at all levels and in all roles, provided they have a significant input.

Profit

Money is the most popular measure of profit, and it is likely that the contractor and its suppliers are all monitoring that closely, alongside cashflow.

NEC can make a significant contribution to project health here by virtue of its approach to cashflow neutrality and relatively generous payment provisions. This is particularly the case in Options C (target contract with activity schedule), D (target contract with bill of quantities), E (cost reimbursable contract) and F (management contract), which explicitly require payment of forecast cost.

In terms of project health, profit needs to be interpreted more broadly. For example, are people getting the opportunity to grow, whether in salary, knowledge or status? Is the client getting what it wants at a price it is content to pay? This overlaps with people monitoring but it is not the same.

Nevertheless, some of the same measures used for people can apply here – particularly in terms of personal progression. It is also important to see that views are aligned. As such, the heat check monitoring needs to cover the client, contractor and supply chain. If, for example, a contractor is delivering profit and strong cashflow but subcontractors are not, the project is not healthy.

Process

Again, process is broadly defined here. Firstly, is there clarity? When asking the questions posed above, do people know the answers? Is success celebrated and communicated at all levels of the project, including suppliers?

On an NEC project, harder measures can also be used for assessing process. Is the programme accepted? Does it form an integral part of the management of the project? There could also be measures around correct use of early warnings, efficient processing of compensation events and adherence to timescales such as periods for reply.

But it is important not to develop perverse incentives. For example, it would not be sensible to have a metric for the number of early warnings or compensation events. A situation where early warnings were being notified to meet a target, or worse held back for the same reason, would be absurd.

The ultimate questions of process are whether the project accords with clauses 10.1 and 10.2, and whether people believe each another. Again, it is critical for this to be considered throughout the supply chain, not just at contractor level.

Conclusion

A healthy project and a successful project are not the same. One can, and often does, exist without the other. As for the question of who decides, this is a matter of perspectives. Funders have different measures to project participants.

However, when focusing on the health of the industry, more weight should be given to project health from the perspective of participants. In doing that, it is important to include all the supply chain.

Reference

Kerzner H (1998) In Search of Excellence in Project Management. New York: John Wiley & Sons.