Construction relationships – Sydney Metro Northwest
Stakeholder engagement #11
This is the third and final post exploring stakeholder engagement on large infrastructure projects. These posts are taken from an article I researched with Dr Ken Doust which became the course notes for an engineering masters program we delivered for Southern Cross University. Please contact me if you would like to explore these concepts further.
For a copy of the paper describing all three posts simply click here
Let’s get started with post 3
Stakeholder engagement types of conversations and complexity vary over the project lifecycle. This is more pronounced on large infrastructure projects due to the large numbers of stakeholders, complexity of the contractual arrangement and the size of the project. This post explores feasibility, execution and operations phase of the project lifecycle using the Sydney Metro Northwest project as a case study.
Consortium partners/Subcontractors (Feasibility)
‘With more people becoming involved, the number of stakeholders continues to increase as does stakeholder engagement complexity’
Consortium partners have different cultures and drivers that need to be worked through to deliver a successful project. During this feasibility phase the conversations move to operational as consortium partners and their subcontractors begin to work with each other to scope and estimate the work outlined in the major packages. With more people becoming involved, the number of stakeholders continues to increase as does stakeholder engagement complexity.
Sydney Metro Northwest project’s three major packages were tendered and a number of consortiums bid for the work. Three successful consortiums were awarded the contract.
- TSC works ($1.15 Billion) was awarded to Thiess, John Holland, Dragados
- SVC work ($340 Million) was awarded to Impregilo Salini JV (ISJV), and the
- OTS PPP ($3.7 Billion) was awarded to Northwest Rapid Transit consortium made up of MTR Corporation, John Holland, Leighton Contractors, UGL Rail Services and investor called the Plenary Group.
During this phase of the Sydney Metro Northwest project, different companies came together in consortiums to bid work, some had relationships with each other, while for others this was the first time they have worked together. The consortium members are separate companies who have their own culture and drivers. For example, John Holland is owned by China Communications Construction, MTR Corporation has 27000 employees and is from Hong Kong and Impregilo Salini is from Italy.
Each company has their own vision, values, norms, systems, language and beliefs which will all effect how they work together. Each company has their own business drivers, for example the size of their profit margin, one company may be happy to forgo something to fulfill their strategic goal of breaking into the Australian market. Then there is, the contract conditions that consortium members will agree to work under, who will take the risk within the project. Now overlay the culture and drivers of ‘Transport for NSW’ who are the client.
Effective stakeholder engagement is critical if the consortium partners are to establish clear goals and agree how to work with each other.
“So how do you agree on project objectives? – Imagine you are starting feasibility, there is confusion and misunderstanding around the project objectives between the customer, key stakeholders and the project team. We need agreed measurable requirements that reflect the project deliverables. How would you do it? Review the User Requirement Specification eBook as one approach to create the alignment among your stakeholders.”
Contract/Project team (Execution)
‘During execution the level of complexity has increased significantly and makes stakeholder engagement very complex’
Stakeholders engagement becomes very complex as stakeholders deliver the project. During the execution phase, the conversations became tactical and stakeholder complexity reaches its peak as the Sydney Metro Northwest contracts are delivered by project teams. For example, to deliver the Tunnel Services and Civil (TSC) works, Thiess, John Holland, Dragados consortium formed a project team, bringing on their employees and subcontractors and the people who will actually do the work. The number of stakeholders increase as the work ramps up to meet project milestones. An internal stakeholder engagement plan is required to ensure consortium partners are up to date and communicating effectively amongst each other.
The client, ‘Transport for NSW’ also introduces a key stakeholder, an independent certifier to represent them and liaise with the consortium to sign off quality and progress of work. At this point external stakeholder engagement needs to also ramp up. A community liaison implementation plan was created by the consortium to ensure external stakeholders such as state government departments, corporations and agencies are engaged. Local councils, community groups, utilities, transport and traffic, emergency services, neighboring projects, neighboring property owners and tenants all have to be engaged as part of the project and included in the plan (refer Community Liaison Implementation Plan North West Rail Link – TSC works)
Now add to this complex environment, both the Surface and Viaduct Civil (SVC) Works contract and the Operations, Trains and Systems Public Private Partnership (OTS PPP). The level of complexity has increased significantly and makes stakeholder engagement very complex. It’s not only the number of stakeholders, it is also their interaction across the project. For example, John Holland have separate project teams in both the TSC works and the OTS PPP.
It’s vital to recognise stakeholders have different objectives. At the highest level ‘Transport for NSW’ wants a rail link that the public will actively use, the consortium and subcontractors want to make a profit, government agencies want to represent their interests and the community wants to be treated fairly and involved in the decision making.
During execution these objectives will be tested as stakeholders go about their work and deliver the project. For example, when building a station, it becomes clear something was missed in the design, who will pay for the changes, when the community are unhappy with increased traffic in the local area, who will pay for the delays and disruption to the project schedule. On large infrastructure projects there are hundreds of examples that will test the relationships between the stakeholders.
This is where, all the good, positive stakeholder engagement that was done in the early phases of the lifecycle, starts to pay dividends. If stakeholders have established trust between each other, they are more likely to work through the issues together and solve problems. This effective problem solving helps to ensure a successful project.
“So how do you align your team? – Imagine your project team is in place and you are kicking off (or underway) and the team is not aligned. There are unrealistic goals, people are resisting tasks and there is increased tension. You need to quickly align and build the team. How would you do it? Review the Project Alignment eBook as one approach to create the alignment among your stakeholders. Also watch the short video.”
‘Stakeholder engagement relationships change from project delivery conversations to an ongoing engagement of stakeholders who are impacted by the day-to-day running the rail service.’
Stakeholder engagement relationships change from project centric to operations centric. During the operations phase, conversations remain tactical as the operator and agencies ensure an enduring licence to operate. The Sydney Metro Northwest will be operated by Northwest Rapid Transit (NRT) consortium under a 15-year contract referred to, the Operations, Trains and Systems Public Private Partnership (OTS PPP). The consortium is responsible for customer service delivery, operations, and maintenance of the Sydney Metro Northwest.
There is a shift from project based measures to ongoing business measures. For example, NRT has to meet strict performance targets including 98 per cent on-time running and having trains available 99.5 per cent of the time. Northwest Rapid Transit will not be paid for the number of people who use the North West Rail Link. To be paid, it will need to meet important customer service contract requirements like running trains on time and making sure trains and stations are kept clean. If these customer service standards are not met, financial penalties have been written into the operating contract (refer Operations, Trains and Systems Contract overview). NRT will also have to work closely with the government agencies and the community to ensure Sydney Metro Northwest has an enduring licence to operate.
Stakeholder engagement relationships change from project delivery conversations to an ongoing engagement of stakeholders who are impacted by the day-to-day running of the rail service.
I hope you enjoyed exploring Stakeholder engagement on large infrastructure projects. I want thank Dr Ken Doust for his knowledge and support.
For a copy of the paper describing all three posts simply click here.
Regards David Jenkins