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It’s unrealistic to suggest that major infrastructure projects in the UK are consistently delivered on time and within budget. While there are notable examples of success, the UK’s still faces challenges in effective project delivery, with the High Speed 2 rail link standing out as a prime example.
Research carried out over the last 20 years with MIGSO-PCUBED and UCL has shown that poor business to business relationships often contribute to major project failures, whilst strong relationships focused on problem-solving boost project success. This article explores the vital role that business to business relationships play in driving successful outcomes in major projects.
The Institution of Civil Engineering, the National Audit Office, the Cabinet Office, HS2, Thames Tideway and many others have all recently made key statements stressing the importance of Business to Business (B2B) relationships in major projects.
Martin Barnes, the founder of the Association for Project Management and the inventor of the project management “Iron Triangle” and the NEC contract, stated that “…with poor or missing relationships – nothing else works. The litany of why that’s true is not long but very powerful.”
The UK’s project delivery performance would seem to be getting worse. The Infrastructure and Project Authority’s major project portfolio assessment shows that less than 20% of critical UK projects are likely to succeed and this has deteriorated from nearly 50% 10 years’ ago when the metric was first introduced.
Our research suggests that a key influence on this performance is the quality of the business to business relationship in those projects.
Research carried out by MIGSO-PCUBED and UCL over the last 20 years has proven to help companies deliver their projects by measuring and developing critical B2B relationships.
The research has failed to find any examples of a major project being successfully delivered where the relationships between the main partners can be classed as failed. It’s possible to argue that if a project starts to fail the relationships go with it, and this is a credible argument. However, it misses the impact of one of the key “dimensions” of successful B2B relationships, “Dealing with problems”.
One of the key attributes of a strong B2B project relationship is the ability to focus on problem solving without damaging the relationship. In the best projects, successful problem solving strengthens the relationship.
Our research shows that B2B relationships are far more complex than most people imagine. First of all, relationships are two-way. Relationships can’t be “managed” by one party, they need to be jointly developed. We still see clients specifying in contract how relationships will be managed and measured. Furthermore, relationships cannot be three-way, four-way, etc. For example, in a joint venture of three partners, there are three two-way relationships, not one three-way relationship. Often there are three separate contracts, and each two-way relationship will have different objectives.
All relationships are different. You cannot use an approach that was successful between Company A and Company B for a relationship between Company A and Company C. It is doubtful that you can even use the same approach between Company A and Company B on two different projects, unless the projects are very similar, and the company’s corporate objectives remain unchanged between projects.
There are two types of relationship:
These relationships are very different and don’t exist on a continuum – a transactional relationship can’t get so “good” that it becomes strategic. Often two companies in a relationship have a different perception of the type of relationship and this leads to confusion.
We believe there are seven dimensions to a relationship:
Rarely all seven are managed. We find that ‘Selection of the partner’ is rarely based on a relational basis. Instead, it is typically based on cost and capability and often in competition. Our research also suggests that the ‘Nature of the contract’ is rarely relational. If these two dimensions are not right at the beginning, then there is little chance of a successful project.
Dimensions three to six on the above list are essential to ensure the relationship succeeds in operation. This should include a set a jointly developed procedures that ensure the relationship develops in a positive manner. Finally, it is critical that key relationships are measured, and actions taken to ensure they are performing optimally. We find this is rarely done in the UK and some even argue that it’s not possible.
Our research has been conducted over the last 20 years collaboratively with UCL. Based on our research and experience, we have developed a unique set of tools frameworks, and processes called RelationSHAPE. It has been developed to help clients improve their B2B relationships – or ensure they start off right in the first place.
With RelationSHAPE, companies can understand the types of relationships they have, which ones are critical, and how mature they are. Companies can also conduct an assessment of their critical relationships to identify which factors are important in each unique relationship.
The RelationSHAPE process enables companies to improve their relationships and most importantly track them, so they can ensure they are fit to deal with the inevitable problems that will impact their projects.
This article was written by David Whitmore, strategic adviser and leading the research programme.
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