QUESTION 2

As highlighted in the case study, the concept-and-design phase is where the most project value can be gained (or lost).

Comment on this statement using relevant content and examples. (10 Marks)

Read the case study provided and answer the following questions. THE CONSTRUCTION PRODUCTIITY IMPERATIVE Around the world, ever-larger capital projects are being undertaken. Better project management and technological innovation can improve the chances of success. Three factors are defining the future of large-scale capital projects. First, investment is growing fast. In 2013, global investment in energy, infrastructure, mining, and real estate-related projects was about $6 trillion; by 2030 , that, could be $13 trillion, according to McKinsey research. Second, billion-dollar-plus megaprojects will account for a greater share of these developments. Third, the industry does poorly complete megaprojects on time, on budget, and to specifications. Our research estimates that 98 percent of megaprojects suffer cost overruns of more than 30 percent; 77 percent are at least 40 percent late. There are many reasons for this poor record. Start with productivity-or, rather, lack of it. Construction productivity has been flat for decades, according to McKinsey research. In manufacturing, by contrast, productivity has nearly doubled over the same period, and continuous improvement has been the norm. These problems are serious, systemic, and all too common. Still, some companies do manage to succeed. Through our analysis of more than $1 trilion worth of capital projects over the past five years, we have found that improving "basic" project-management skills offers the most potential to improving site performance. There are numerous practices that can help to improve productivity in the three phases of project delivery-concept and design, contracting and procurement, and execution. The concept-and-design phase is where the most project value can be gained (or lost). Various principles are offered providing promising ways to improve performance, and therefore financial returns. Design-to-value (that is, design based on understanding and minimizing the elements that drive up costs) and the minimal technical solution (MTS, design to deliver only the necessary value-added requirements) are two concepts that can be used to reduce capital investments to what is required-no more, no less. Consider the example of two utility companies who needed to build a similar substation building. One spent substantial time and money building a full shell, including floors, walls, a roof, and so on; this required many approvals, followed by a long and difficult construction schedule. The other utility defined the MTS to be "protection against the weather, while retaining ease of access during maintenance;" on that basis, it built a retractable roofing structure with pillars. This latter option required much less time and money to build. The various practices offered apply to specific moments in project delivery. There are also ways to set up the entire organization for success. Again, the analogy to manufacturing is pertinent. Manufacturers have learned to keep value creation and efficiency in mind all the time, which is one reason that the sector has seen sustained productivity gains. When it comes to megaprojects, though, it is common to concentrate on just finishing the job-and not to consider how value can be enhanced along the way and how to transfer knowledge between project teams. High-performing megaproject teams, on the other hand, review project NPV every three to six months and think through the most important risks and how to mitigate them. Once a project is done, they have structured meetings to discuss what lessons to learn. Extracted from: (Burke, 2021)