Realising the extraordinary: successful ways of working in capital delivery environments

In this second article in our ‘realising the extraordinary’ series, we summarise findings from industry leaders on how their business is evolving to create successful project environments in the infrastructure sector.

By Stefan Hilson, Associate Director and Hannah Grealish, Senior Consultant

Infrastructure’s need for change

The construction sector continues to face a productivity crisis. The cost of this crisis to industry has been put at $5.4bn annually in the US and Canada alone, according to a study published in the Journal of Construction Engineering and Management in 2020.

Compared to more aggressive market sectors (such as consumer goods and manufacturing), the built environment’s poor productivity stems from its reliance on traditional and often less effective approaches to developing and delivering projects.

This is coupled with its failure to adapt and embed more structured and simple ways it delivers projects, evolve working environments, and ultimately embrace new and more innovative ways of working.

As a result, the sector remains trapped in outdated and fractured working environments. The way organisations interact with processes, systems and each other lacks holistic integration throughout, and remains quite a heavy transactional process, relying on learned routine.

This often results in a lack of flexibility, ‘silo’ mentalities and adversarial or obstructive behaviours both between the business and its supply chain, or internally between its respective functions. The problem is compounded by the sector’s dependence on a handful of experienced people to save the day when things go wrong.

Our research carried out in 2020 and 2018 has identified four core weaknesses in the infrastructure sector's ways of working:

Weakness Sector response
Poor understanding of digital: digital is one of the most used words in the industry, but there is confusion over what it really means and what it can offer. There is a common perception that digital relates to technology and systems owned by IT departments. Businesses often invest without considering the capability shift, culture and environment needed to create digitally-enabled project delivery. Alternatively, they fail to invest, giving rise to productivity challenges and hindering development of fresh delivery approaches. Businesses are failing to understand what can be simply digitised (automation of certain processes), and where it can create digital-based solutions (creating completely different ways work gets developed and delivered). One in three do not have "technological" knowledge and understanding: this finding is based on our 2018 survey of global construction industry leaders and is supported by evidence of incompatible systems, poor visibility of data and lack of technological skills in 2020.
 Processes working in isolation: systems and approaches are driven by a chain of command and siloed across organisational functions throughout the capital delivery lifecycle. The sector is focused heavily on the execution of delivery milestones and process compliance, and fails to connect these processes to corporate or major project outcomes. This results in bigger overheads as strategy, data, processes and governance fail to integrate across functions. Tactical level responses to process and a failure to consider broader project outcomes meant leaders scored themselves only four out of ten in our interviews.
Limited planning for future organisational capability: the sector strategically plans for major projects, but often fails to plan for organisational change required to help develop the capability it needs. A lack of future capability planning leaves the industry having to work harder to catch up when a crisis does arise and it has to change. This also drives an environment unwilling to evolve or innovate as this takes the team beyond their frame of experience. Three-quarters of respondents to our 2018 global survey said that adapting to change was their single greatest pressure. This consistently remains one of the lowest-performing areas in our recent business reviews with project leaders and infrastructure businesses. 
Outdated leadership approaches and team dynamics: teams and leadership have not evolved sufficiently to meet current and future needs. When in trouble, projects currently rely on high profile ‘heroes’ to make tactical decisions and steer teams out of danger. Instead, we need strong project leaders who are also savvy business leaders and can build a projects business that drives innovation and pre-empts future problems. Only one out of 30 leadership teams interviewed had a clear view of their future business direction and a medium-term plan for realising the strategy. This included a framework for decision making and subsequent planning.

Following the pandemic, governments are looking to the infrastructure sector to ‘Build Back Better’ and deliver ‘shovel ready’ projects. Infrastructure growth and investment are being promoted to help drive economic stimulus and support long term employment, social mobility and sustainability.

If the infrastructure sector is to respond effectively to this call for growth and investment, while balancing this with increasing challenge around social solutions which are much more sustainable, it must adopt fundamental new ways of working and create project environments that deliver success from the outset.

Four ways to embed change

Our industry engagement through 2020 has found that businesses are now exploring how to make organisation or project-wide changes to the environment in which their teams work. Across transport, power, utilities and defence sectors, businesses are recognising that the disruption of the pandemic provides a focus for much-needed change and improvements in asset solutions, pace of delivery and productivity.

Based on our interviews and observations, four areas consistently emerged as priorities when considering long term working environment changes:

1. Moving to human-centric digital solutions

Digital is a broad term and organisations must be clear what they mean by it. Feedback shows that we know what it is not: outdated technology based on multiple individuals or siloed functional solutions, which are not integrated as one platform.

Interviews also identified a lack of focus on 'human' factors, which are critical in implementing and embedding new ways of working, using digitally-enabled solutions.

The result is a drive to creating an environment where digital is embraced, not feared. This requires instilling understanding, defining what digital means to the organisation and aspiring to be digitally capable across the organisation.

The industry needs to look at digital solutions which fundamentally change how the industry develops and delivers its projects. Just digitising the existing workflows is just a simple start to what really can be achieved if the existing workflow can be completely changed.

2. Creating impactful processes that integrate

Historically, organisations have used a task-based focus and a reliance on controlling action through gated processes that stifle, rather than support teams. Interviews found a change towards processes that guide thinking and enable more agile organisations that are better able to adapt and innovate.

By blending all the functions into broader asset-based lifecycles with common outcomes and control, this enables a much more aligned and empowered business which can operate and deliver at pace. However, the live performance data and people capability need to be well structured to enable this to work effectively.

Organisations must make processes purpose-focused in the long term. Process should offer a framework that is tied to outcomes and shared across multi-disciplinary teams and functions.

3. Getting ahead of change

In order for businesses to become adaptable to change, it is essential they start to proactively plan their future capability. This year has demonstrated the long-standing issue that the infrastructure sector relies on a crisis in order for it to change, and is not planning for change as a matter of course.

Lessons have been learnt this year and now businesses must think strategically to get ahead of the curve and pre-empt changes in the future markets. This requires organisations to increase their self-awareness and external focus so that they can identify future capability needs as well as set out a long-term roadmap of change broken into deliverable stages. This will enable them to design the change and mobilise their business around it.

4. Enabling success through every member of an organisation

Changes in digital capability, agility in the process and strategic planning provide an opportunity to involve the whole organisation in driving success. That requires a fundamental rethink of the roles of ‘heroes’ and our teams.

The infrastructure market is growing, diluting further the talent and experience; businesses therefore need to create an environment where everyone can successfully deliver large projects and portfolios of work.

Businesses must now focus on collective success, which is enabled by ‘the many’. They must create clear purpose and direction in order to energise and focus their teams to deliver project success through greater autonomy, real-time and flexible decision making and with a greater breadth of skills.

To do this, organisations need to change leadership styles, develop valued skillsets and create integrated structures that better support their people.

Diagnosing how to make change

While these organisational challenges may seem daunting and complex, there are simple but effective ways to diagnose if a change is needed. Businesses must unravel their complexity in a structured way using top-down solutions such as target operating models and business strategy building blocks.

To self-diagnose your challenges, see how other organisations have adapted, and understand the actionable steps which can be taken in the short term, request a copy of our full findings and solutions at [email protected].