Innovation in the new age of infrastructure
As a series of major transport schemes gets underway, could a new and more radical approach to project management help keep them on track?
We know that innovation is the key to improving performance, but when it comes to megaprojects, managers have traditionally been incentivised to avoid new ideas or approaches.
With Malcolm Turnbull aiming to go down in history as the ‘infrastructure prime minister’, and Labor planning to create a $10bn investment bank, Australia looks set to enter a new era of construction. Sydney Metro, the Gold Coast light rail and Cross River Rail are amongst the major schemes currently getting underway.
But while raising the finance for these megaprojects is one thing, managing them is another. Infrastructure schemes are notorious for running over time and over budget, yet failures in delivery can have a serious long-term economic impact and provoke public outcry.
According to Dr Sam MacAulay, an expert on project management at UQ Business School, a more strategic approach to managing innovation could help improve performance on projects like these. He believes Australia could learn from other countries – in particular the UK, which has been a ‘laboratory for experimentation’ in recent years with some of Europe’s largest construction works.
Dr MacAulay has first-hand experience of many of these projects. In his previous role with Imperial College London, he and his colleagues worked with major construction contractors and clients to pioneer a new approach to innovation management in infrastructure. This approach was developed through a three-year research program conducted at London’s $30bn Crossrail project, and taken on to other projects, including Thames Tideway Tunnel and High Speed 2.
“We know that innovation is the key to improving performance, but when it comes to megaprojects, managers have traditionally been incentivised to avoid new ideas or approaches,” he says.
“They prefer to play safe, using only tried and tested methods, and refusing to deviate from the set plan. As a result, designs become set in stone at an early stage and opportunities to improve performance are missed. In fact threats and opportunities should be seen as two sides of the same coin and both need to be managed at the same time. Megaprojects often have elaborate systems for managing downside risks, but are less sophisticated about managing upsides”
The importance of innovation in major construction works was recognised in the UK during the 1990s, when the Latham Report and the Egan Report examined the reasons for the industry’s poor track record. In the wake of these studies, Dr Macaulay and his colleagues at Imperial College started to work with firms such as Laing O’Rourke, Arup, Mace and BAA to help them find ways to manage innovation.
However applying the same approach on a megaproject with thousands of contractors and suppliers presented a whole new challenge. Their research program with Crossrail helped to develop the first innovation strategy for a project of this scale.
Innovation at Crossrail
As Europe’s largest engineering construction project, Crossrail has 10,000 workers on more than 40 construction sites. The 100km route will increase London’s rail capacity by 10 per cent when it is operational from 2017 onwards.
Crossrail began developing its innovation strategy in 2012, part-way through the project. In addition to a review of industry practices, the research team interviewed Crossrail managers about the nature of innovation in major infrastructure projects and then studied how this changed with the introduction of the innovation strategy.
They discovered four different ‘windows of opportunity’ where management could strategically intervene to encourage innovation.
The bridging window
At the beginning of a project, there is the chance to systematically learn from previous schemes and adopt innovative practices and technologies. Crossrail looked to projects like the 2012 London Olympics, the Channel Tunnel Rail Link and Heathrow Terminal 5, and drew on their experience to develop two innovative organisational structures.
The ‘integrated project team’ aimed to enhance collaboration between the client, delivery partners and program partners. Recognising that many megaprojects fail during the transfer to operations, Crossrail also developed structures to ensure that the eventual operator could be integrated into the strategic decision making process well before the handover stage.
The engaging window
The tendering process sets the scene for the project and offers the opportunity to create incentives and rewards to encourage innovation. The Crossrail team avoided the temptation to ‘control risk by using the tried and tested’ methods and instead developed a novel approach, known as ‘Optimised Contractor Involvement’.
This enabled each contractor or supplier to input new ideas, while sharing the risk and rewards. The set-up gave contractors an incentive to drive performance and find ways to reduce risks and costs.
For example, after a government spending review in 2010, joint venture partners found a new and cheaper way to construct tunnels by boring them in advance of constructing the stations, rather than at the same time.
The leveraging window
Once contracts have been awarded and the supply chain established, the real work gets underway. At this stage, contractors need to be able to suggest new ideas, get help evaluating and resourcing them, put them into practice and share the results.
The Crossrail project had already reached the leveraging stage when it began developing its innovation strategy. The executive body overseeing it, the Crossrail Innovation Forum, created a dedicated team and a process to drive innovation. Members of the project can now go online to submit ideas, which are then assessed by the innovation team, working with industry experts. Their recommendations are passed to the Innovation Forum for a final decision and allocation of resources.
Within the first three years of using this system, funding had been provided to support 30 innovations, ranging from the use of hydrophobic coatings in concrete production and application, through to repurposing grout shafts for geothermal energy production.
The exchanging window
In the final stages of a project there is the chance to identify lessons learned and share them with others. Crossrail’s senior management are committed to sharing their experience in order to contribute to the success of future projects.
However they have also taken the ‘exchange’ process one step further, by identifying organisations with similar challenges with a view to working together to pursue common goals – for example, to find ways to improve the sprayed concrete lining tunnelling process of which Crossrail is the UK’s largest user. Talks are underway with a number of like-minded projects and organisations.
Dr MacAulay said the lessons from Crossrail were already being applied in other UK projects such as the Thames Tideway Tunnel and HS2 rail ink. “Australia could build on this experience. With billions of dollars being invested in infrastructure, a more strategic approach to managing innovation holds huge potential.
“Certainly it will be interesting to see the approach taken by the Sydney Metro and Cross River Rail projects. As Malcolm Turnbull says, there has never been a more exciting time to be an Australian.”
For further information see the Project Management Journal.
Interested in learning more? Contact Dr Sam MacAulay or read more about the research findings here: Mantra to Method: Lessons from Managing Innovation on Crossrail, Innovation Strategy in New Transportation Systems: The Case of Crossrail, and Making Innovation Happen in a Megaproject.