A few years ago, PwC conducted a review of the programme delivery performance on six nuclear and 47 non-nuclear mega-projects. We found that the average cost overrun for the non-nuclear projects was 88%. This may sound high – until you hear that the overrun for the nuclear projects was almost double that percentage, at 157%. What’s more, in the years since we conducted the review we’ve seen some nuclear new-build projects with overruns significantly higher than this figure.
Many of the reasons for the delivery gap on nuclear projects are relatively easy to identify: factors including regulation, public scrutiny and safety requirements all play a role. But whatever the root causes, the fact is that overruns at the levels historically seen on nuclear projects lead to negative perceptions among stakeholders and potentially lower returns for investors – not to mention its impacts on the share prices of the companies involved.
So, with nuclear new-build now back as a reality in the UK, there’s a clear need for nuclear construction projects to keep to time and budget, and deliver value for money. A vital enabler for realising these goals will be improvements in productivity and delivery performance and controls. This means rapidly deploying world-class programme controls into the UK nuclear sector, while maintaining its high levels of safety and integrity.
Our experience shows that many of the issues contributing to overruns can be overcome by having more robust oversight and control. Achieving this requires projects to revisit the three traditional focus areas of people, process and technology. To deliver improved productivity and performance, all three need to be right. But we are starting to see project leadership teams take growing interest around the ‘people’ dimension – and our client work consistently underlines that this is critical to project performance.
Historically, the people dimension has not tended to be a primary focus on capital projects, partly because the sector’s engineering-based culture and mindset can make process and technology issues seem more ‘natural’ areas to tackle. It is an area that the nuclear sector has focused on significantly in its search for building an effective nuclear safety culture over the past few decades. We are now seeing these two sectors come together in the UK with the Nuclear New Build programme.
In any demanding capital project people-orientated tasks such as building positive team dynamics, developing leadership skills and instilling a collaborative culture and behaviours tend to be seen as more challenging – and are all too often pushed down the to-do list. It isn’t hard to see why. For good reasons, the people leading projects are often appointed because of their proven engineering and construction skills. While this makes them well qualified for the vital technical aspects of the job, it means the quality of their people leadership skills can be variable, possibly resulting in a fairly limited focus on building high-performance teams and leading a group of individuals to achieve common goals.
However, in a programme environment these qualities are – if anything – even more important than in a steady-state business. A programme, especially in a complex industry such as nuclear, involves bringing together suppliers with diverse skills, capabilities and cultures alongside project staff, and mobilising a fast-paced project with many worksteams and moving parts. This demands a leadership style that can cope with constant change and complexity – in contrast to the focus on cost and procedure needed in many steady-state businesses.
What’s more, it’s not enough just to have the right people in place doing the right things on each project. For the longer-term success of the UK nuclear industry, it’s also vital that companies are constantly recruiting, retaining, coaching, training and developing the project leaders of the future. In a highly competitive marketplace for talent, the best people will remain at a premium.
For all these reasons, we believe the leadership of nuclear projects should allocate more attention to organisational effectiveness than has commonly been the case in the past – meaning focusing more strongly on aspects like leadership behaviour and performance, and their alignment with the delivery teams and supplier interactions at the coalface. Clearly, these are massive and complex projects, meaning better people leadership and productivity will be only one component of a successful programme to improve delivery and value. But while the people dimension is just one element, it’s vital to give it the focus it deserves.
The good news is that we’re seeing more and more project leaders adopt such a focus, and achieving significant improvements in productivity as a result. One recent client engagement where we’ve helped the project leadership deliver dramatically enhanced outcomes is a multi-billion pound nuclear power station design and build programme, with a highly complex supply chain and stakeholder environment.
On this engagement, we began by assisting with the creation of a clear strategy and operating model for the project, helping the leadership work out how they would manage a ‘matrix programme structure’, define the behaviours expected at all levels, and establish how the team would work together and interface with the supply chain.
With these elements well defined, what was needed was a methodology to drive the right team dynamics and behaviours down through the project organisation. To do this, we used a proprietary PwC methodology called ‘Perform’, which we’ve developed specifically to instil the leadership and new behaviours that increase effectiveness and efficiency in a project’s functions and teams.
As the chart shows, Perform includes 10 ‘ways of working’ – huddle boards, visual management, problem-solving, and more – that we introduced incrementally through weekly learning cycles of training, design, implementation and review. We have aligned these with WANO traits of a nuclear safety culture and have also included human performance tools. During the six-week implementation period, our practitioners spent each day coaching individual team members in the underlying principles to ensure that the new way of working became business-as-usual and that the benefits were sustainable.
The results were dramatic. In just three weeks in one particular part of their programme, the daily focus on task completion saw the percentage of tasks completed by the agreed date rise from 22% to 77%, and in another area focused on construction preparations, from 23% to 86%. Also, the leadership were able to spend far less time on reactive fire-fighting, and far more on value-adding tasks like managing and progressing workstreams, defining specifications for suppliers, developing leaders, and coaching team members. The net effect was to release 30% to 40% of capacity that had previously been tied up in unproductive activities.
Given this experience: what could your project deliver with a 30% to 40% increase in its effective capacity? If this were scaled up across the industry, we would see the productivity gap between nuclear and non-nuclear projects close pretty fast. Now that’s a goal worth pursuing.