3 (a) Meetings were held throughout the design and construction of the centre. These meetings focused on the building of the
centre, monitoring progress and resolving minor issues that arose during construction. The successful completion of the centre
on budget and ahead of schedule suggests that these meetings were effective. However, the absence of a wider project
initiation document or terms of reference created problems that could have been resolved or better understood. An analysis
of how a standard document could have helped address some of the issues that affected the construction and subsequent
evaluation of the centre is given below.
There was confusion about the objectives of the project. The local authority is unable to recognise the distinction between
project objectives and business objectives. The business objective of the project was to deliver payback in four years as
required by the Private/Public investment policy. In contrast, the project objective was to build the centre by June 2011 for
$600,000. By their very nature, the business objectives are not within the control of the project manager from the
construction company responsible for building the centre. The achievement of the business objectives will involve much more
than just delivering a building. They will concern marketing, sales and the successful operation of the centre. Evidence seems
to suggest that the project manager was not (as the second project sponsor claimed) a failure. He delivered the building within
budget and ahead of schedule. The problem was the failure of the local authority to distinguish between the project objectives
(constructing the building) and the wider business objectives which the building was to help satisfy. It appears that nobody
was either aware of, or willing to take responsibility for these wider objectives. It is recommended that future projects should
clearly distinguish between project and business objectives and assign responsibilities to each.
The scope of the project was well-defined by the standard architectural drawings agreed between the construction company
and the project sponsor. The only significant problem concerned the quality of the internal painting. There is no way (post
project) of reconciling this misunderstanding. The construction company felt that it had come to an arrangement about this
with the initial sponsor, but no documentation could be found to irrevocably support this. The letter confirming the intended
finish produced by the construction company was not counter-signed by the project sponsor. This is an important lesson for
the construction company in future projects. Changes or clarifications to the specification must be counter-signed by both
parties. This is also appropriate to the local authority’s project management methods, continuing to demand that all changes
must be counter-signed by both parties.
19The constraints of the project were relatively well-defined in terms of time and cost, as these were defined in the original
business case. However, tension was caused within the project when it became clear that certain labour and sourcing
requirements of the Private/Public policy were not being adhered to. Specifically, these concerned the use of sub-contracted
labour (not to be used without the commissioning agency’s permission) and sourcing at least 80% of timber on the project
from sustainable forests. The generic terms of the Private/Public investment policy were not made available to the construction
company. It is suggested that the local authority should, in future, integrate such objectives explicitly into the project terms of
reference.
The authority of the project is the sponsor responsible for making decisions about the project, providing resources, considering
and agreeing changes. They should also promote the project within the local authority and accept the project once it has been
completed. The original sponsor on the local authority was very supportive of the centre’s design but their successor seemed
unsure of her responsibilities and focused on obtaining concessions from the suppliers under the pretext of ‘value for money’
rather than considering the wider issues, such as defining who had responsibility for delivering the business objectives. She
also failed to promote the project to her fellow employees and tried to blame the builders for the failure. The role of the project
sponsor should be formally defined within the local authority. Their responsibilities should be clear and failure to adhere to
those responsibilities should be addressed.
The resources available to the project were relatively well defined, although the lack of local authority staff able and willing
to discuss disability access meant that the contractors had to use their own initiative in this area. Fortunately for them, they
interpreted legal requirements correctly and the delivered centre was deemed to be compliant with legislation. However, this
is a risky approach and is not recommended for the future. Local authority resources and support required by projects should
be specifically defined in advance. If they are unavailable during the project then substitutes must be provided.
(b) This part of the question evaluates the four sets of benefits identified in the payback calculation. It requires the categorisation
and critical evaluation of each benefit.
Ward and Daniel use the term ‘observable benefits’ to describe the least explicit benefits such as increased staff morale in
the case of the community centre. They suggest that such benefits should be assessed against clear criteria by someone who
is qualified to make such an assessment. So, for example, current staff morale and motivation might be assessed in an
independent survey and compared to results from a similar survey conducted once the centre has been built and occupied.
In the context of the centre it might seem reasonable to assume that improved staff morale and motivation will have a positive
effect on the success of the centre. For example, it may lead to better customer service, which may, in turn, lead to customers
returning more often or using more facilities whilst they are there. It may also lead to reduced staff turnover, so decreasing
costs associated with recruitment, induction and training.
However, from a benefits perspective, two issues have to be specifically addressed.
Firstly, the relatively significant estimated benefits attributed to improved staff morale in the original payback calculation must
be questioned. In terms of increased benefits it is difficult to disentangle benefits due to this from other factors which might
lead to increased customer use. In terms of reduced recruitment costs, there is little to suggest that staff turnover is high at
the moment. 80% of the staff has been with the centre for over five years and there is an economic recession in the country,
with unprecedented unemployment.
Secondly, and perhaps more fundamentally, the whole basis of the benefit needs further consideration. It is unclear why
moving to the new centre would necessarily improve staff morale and motivation in the first place. There may be some
intellectual support for the view that a pleasant working environment contributes towards motivation, but, in the initial stages
the centre is likely to have temporary teething problems leading to (at least in the short term) a more stressful work
environment. Similarly, even if a survey found that morale and motivation had increased it would be hazardous to attribute
this to the investment in the centre as it may be largely due to external factors affecting each individual.
A measurable benefit is one where an aspect of performance is currently being measured or could be measured. However,
it is not possible to estimate with any certainty, in advance, how much performance will improve when the changes are
completed. In the context of the centre, increased income seems a reasonable measurable benefit. It seems reasonable to
expect that current income is measured and that similar measures may be collected in the future.
The estimates on the payback calculation need further scrutiny, particularly the large increases predicted for years three and
four. It should be acknowledged that few benefits are instantaneous and that use will only increase as the reputation of the
centre grows. However, this growth in customer use is not associated with any increased costs which would seem unlikely.
Hence, the basis of these benefits requires further investigation.
A quantifiable benefit is one where there is sufficient evidence to forecast how much improvement or benefit should result
from the proposed changes. In such circumstances the level of performance prior to the change is known and the
improvement can be specifically attributed to the investment, rather than to other changes. Energy savings appears to fit into
this category. Energy use could be established for the current building. The Private/Public investment policy requires buildings
constructed under this arrangement to meet specified target energy levels. The construction methods and design of the
building should reflect the need to meet this target. Thus there is a good basis for predicting energy savings, although, of
course, the actual savings will not be known until after implementation.
Finally, a financial benefit is one where a financial value can be obtained by applying a cost, price or any other valid financial
formula to a quantifiable benefit. Thus we might re-classify the quantifiable benefit of energy savings as a financial benefit,
assuming that the new building meets the minimum level required by the initiative. There are still important assumptions
20here, and the real performance can only be assessed after the building has been used for a while. There is still an element
of estimation, and indeed the new building may surpass the minimum levels assumed in the cost/benefit analysis. In contrast
rental savings on the current properties are both definite and immediate and are correctly recorded in the payback calculation.
In summary, the benefits in the payback calculation should probably have been initially restricted to financial and quantifiable
benefits. The other benefits are important and should have been documented in the business case, but it seems inappropriate
to artificially quantify these benefits to satisfy the need to achieve a payback target. However, if the measurable benefits are
included in the business case, their underlying assumptions and probability should be communicated to the decision-maker.
Furthermore, efforts might also be made to better estimate the likely benefits, perhaps through looking at performance in
similar centres, and using this as a benchmark to elevate the benefits to being, at least, quantifiable.
