In mid-August I wrote an article highlighting the basics of construction team partnering/facilitation. For this article I would like to spend time reviewing a recent court decision delivered from the Civilian Board of Contract Appeals – CBCA 3450 Kiewit-Turner, A Joint Venture (KT) v. Department of Veterans Affairs (VA). Kiewit-Turner was contracted to build the VA’s regional medical facility in Aurora, CO.
This example is timely and relevant because it highlights how one party derailed an attempted partnering effort (the “blue ocean” meeting) without regard to the affect that act would have on a major construction project. The decision was released on 9 December and will have an impact on future Department of Veterans Affairs’ projects.
A joint venture team was put on contract in January 2006 (there was a hiatus for two years) to design the medical campus. K-T was put on contract 31 August 2010 for pre-construction services (analyze the design and give advice on the basis of which the owner can make design changes or procure additional funds) with an option to perform construction services as well. Although the ultimate cost of construction is unknown at this time, the cost of construction at award was $582,840,000. It is evident from reviewing the decision that the VA was ill-prepared to administer this type of contract and project of this magnitude. It should be noted that Mr. Lynn (Jacobs Engineering – contracted to assist the VA) testified that the only way an early contractor involvement type contract will work is if there is true collaboration and trust between all parties.
It is pertinent to start with a brief review of partnering and how other agencies approach partnering. For example the Naval Facilities Engineering Command (NAVFAC) partnering policy (NAVFACINST 11013.40A 28 December 2004) states that partnering requires the “…partnering mindset, full commitment of all the parties involved, and execution of a sound process”. There are numerous other agencies at the federal and state level that include partnering as an integral component in their project delivery method. The Virginia Department of Transportation Construction Division uses partnering to improve project delivery and maintains a list of active partnering consultants to engage as needed.
Therefore, a basic assumption is that for partnering to work all sides must commit to the process and that all of the stakeholders will act with integrity and in accordance with the expected behaviors agreed upon during the initial partnering session. In partnering sessions I have led members are strongly encouraged to swear/affirm an oath of commitment to partnering for the betterment of the project.
Case Study – Background Information
While the 18 page decision addresses several elements, I will focus on providing an objective review and analysis of the Findings of Fact pertaining to partnering. The most recent decision is the culmination of eight days of testimony and a review of numerous documents that found the Department of Veterans Affairs in material breach of its contract with Kiewit-Turner.
Based on the information present in the decision released on 9 December 2014 the project did not engage any type of partnering until January 2013 – the “blue ocean” meeting. However there was one attempt at an informal partnering session 9 November 2011 led by Mr. Lynn (Jacobs Engineering). Mr. Lynn was successful in temporarily breaking an impasse only for the effort to fail in the coming months.
The blue ocean meeting was scheduled to occur over three days with the stated goal to “brainstorm” cost-cutting ideas. More than 70 cost cutting ideas were raised valued at more than $400 million, all of which were classified as “easy/like acceptance”, “local approval only required”, or “undesirable but will live with”. Despite an abundance of savings offered and declared acceptable the VA only accepted approximately $10 million of the cost cutting ideas.
Analysis and Summary
This project would have been (and could still be) a great candidate to engage a partnering consultant. As highlighted in the case decision this project had multiple issues to contend with:
- Severe leadership deficits
- Multiple parties contracted with the VA responsible for some facet of the project
- Severe budget limitations
- Numerous delays (schedule and design documents)
In a normal situation and with cooperation of all concerned a skilled partnering consultant could have bridged the gaps noted above. Partnering is not for the faint of heart, I believe it takes a significant amount of energy to work through problem sets faced by project teams.
- I have found in working with project managers and executives it is possible to adapt an individual’s leadership style that is right for the situation. In many instances leadership is not a one size fits all skillset. People and situations are unique to every project and require adaptation.
- A third party partnering consultant brings impartiality to the table and the one individual all members can trust. I found this especially true as an Inspector General working with multiple agencies and service members to resolve issues. The more diverse and complicated the stakeholders the more important an impartial facilitator becomes.
- Since money is at the root of so many arguments the impartiality of the partnering consultant is critical. Most people are more willing to accept an agreement if they believe they had an equal bargaining position, even if they end up on the losing end.
- Delays are a second cause for passions to run high on a project, no one wants to accept responsibility for the delay. Doing so means that party takes ownership of the delay and any remedies, even though multiple parties may have contributed to the delay. A neutral partnering consultant can help the team get to the root cause and establish the group(s) responsible. A Harvard Business Review article “Making Dumb Group Smarter” on team decision making (Oct 2014) highlighted that groups not trained in collaborative, or team decision making actually make worse decisions as the project progresses. This project reaffirms that position.
Although I am an advocate of partnering after reading this decision I can only conclude that any attempt at real partnering as staffed by the owner would have failed in the same manner as the VA failed in its attempt to manage the design and construction of the medical campus. This case is replete with examples of the VA staff contradicting itself, reneging on commitments, and slow walking decisions.
If this project continues to go forward I can only hope that a partnering consultant is engaged to help the team carry this project across the finish line in the most expeditious and cost effective manner.