The Daily Telegraph carries an article today, 17th May, entitled ‘ Rail Mob’s Huge Pay-Ella’
(https://www.dailytelegraph.com.au/news/nsw) in which it reports on the Spanish company holding Sydney to ransom with the delayed light rail project.
According to this article Spanish construction company Acciona, who appear to have a track record of contractual spats with international governments, is in a bitter legal stoush with Transport NSW over the behind-schedule light rail project and is suing the Berejiklian Government for an extra $1.2 billion for work on the light rail claiming it was misled about the complexities of replacing power lines before signing the contract.
“In 2013 Acciona signed a $2.3b contract to help build a hydro-electric dam in British Columbia, one of Canada’s biggest infrastructure projects. The dam is now a year and $1.7b over budget and came close to being cancelled by the provincial government” (Daily Telepgraph, 17 May 2018, https://www.dailytelegraph.com.au/news/nsw)
Far be it that we should make judgement about either party without the facts, this article does raise the focus on the challenges in contracting and project management where complexity prevails.
“Contracts, as a major driver of complex project governance, have a significant contribution to make on delivery performance…..Successful project outcomes depend on the right forms of contract and supportive contract management.”(ICCPM Contracting For Success in Complex Projects, 2016)
In 2016 the International Centre for Complex Project Management (ICCPM) and the International Association for Contract and Commercial Management (IACCM) partnered to bring together their members to reflect constructively on how improvements could be identified and barriers overcome in order to achieve further gains in delivery performance.
Research on the topic found complex project success factors are tied to relationship management, collaboration, and principles of fairness and equity. In complex projects, it is important to recognise the contract must reflect its environment and enable the project to operate and deliver effectively. Contracts in complex projects must therefore accommodate flexibility, agility and evolutionary development to reflect the projects adapting environment, resulting in a agreed definition of a Contract for Complex Projects defined as:
“A legally valid and binding agreement between parties that meets all of the necessary elements [offer, acceptance, consideration etc] to deliver outcomes in an open, emergent and adaptive systems environment, characterised by recursiveness and non-linear feedback loops” (ICCPM Contracting For Success in Complex Projects, 2016) . Participants in the research also agreed contracts in complex projects must therefore be “a live and dynamic document” that focuses on relationships, creating responsibility to establish foundations of trust to enable adaptive relationships to operate.
Key themes identified as crucial to successful complex project contacts include:
+ Clearly defined and shared project goals and vision,
+ Suitable relationship/behavioural management,
+ Prudent risk management and equitable risk allocation,
+ An acquisition and sustainment strategy suited to to the project at hand,
+ A robust project management and systems engineering framework, and
+ Leadership and competencies of the team.
None of this is to say what has been discussed above can in any way be attributed to the potential contractual complexities in the Sydney light rail project, however it provides timely opportunity for us to revisit Complex Project Contracting and promote agreed best practice on the topic. Collaboration between ICCPM and IACCM resulted in a white paper report published on the future of contracting in complex projects entitled ‘ Contracting for Success in Complex Projects’. You can read the full report and key recommendation on our website.
*The details related to the contact dispute between Acciona and Transport NSW expressed in this article are taken directly from the Daily Telegraph article and does no reflect ICCPM’s view or judgement on the fact. Any commentary discussed above is not meant to agree or disagree with either party but is used only to highlight potential contracting complexities in large scale complex projects.
By Collin Smith, ICCPM CEO