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Big-Project Engineers Have to Deal with Too Much Red Tape

January 14, 2016

On August 5, 2010, a mine collapsed in Chile’s Atacama Desert, trapping 33 miners more than 2,000 feet underground. Nineteen days later, as rescue crews grew desperate, a 24-year-old field engineer named Igor Proestakis decided to travel to the site with what he hoped was a breakthrough idea: using a particular drilling technology, called cluster hammers, to cut through the collapsed rock. Cluster hammers had never been used to such depths — and never in Chile at all — but in a striking display of openness, the managers of the rescue operation tried the suggestion, which proved to be a key decision in bringing all 33 miners to safety.

Engineers are capable of remarkable feats, and in our experience they relish the opportunity to unleash their creative potential. But breaking down the traditional organizational barriers that stifle their creativity should not require a crisis. The stakes are particularly high for cities, where urban infrastructure projects from mass transit to bridges, tunnels, housing, and hospitals too often exceed their budgets by enormous sums. Given United Nations estimates that more than half the world’s population already resides in cities, with 2.5 billion people to be added by 2050, the status quo is now untenable.

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The scale of the opportunity in engineering and project-management improvements goes well beyond project owners and the engineers they employ. An estimated $12 trillion a year, approximately 16% of global GDP, is spent on capital projects globally. Any meaningful improvement in this sector sends enormous value cascading throughout the global economy.

Project engineers possess a wealth of good ideas and creative solutions, but too often these ideas are just not able to carry the day inside the bureaucracy of large capital projects. Project executives also understand that entrepreneurial and creative engineers can be their best allies in delivering quality, cost-efficient, timely new builds. So what is holding these engineers back? Some of the most common barriers are the unintended consequences of well-intentioned efforts to mitigate risk:

  • A sense that blanket design philosophies, technical standards, and previous designs cannot be questioned. While common standards across companies and industries foster consistency, they can blind stakeholders to potential breakthroughs — unless a culture of healthy challenging and questioning is encouraged.
  • Removing responsibility for key technical decisions from the project team. Most organizations that undertake capital projects centralize the ultimate arbiters of technical design decisions (the very best subject-matter experts and engineers) in order to leverage economies of scale and achieve consistency. This can often mean that the most talented engineers have no skin in the game on any single project (except to ensure there are no major technical shortcomings) and develop a bias toward conservatism.
  • An inability to easily determine the value of ideas. The rigmarole required to financially model most projects can make evaluating ideas extremely difficult for engineers, so they often assume that any deviation will produce nominal (or negative) value.
  • A preoccupation with benchmarking against other projects. Comparing project costs can create a false ceiling by inherently casting doubt on innovative ideas that create value beyond the benchmark.
  • Missing the forest for the trees. In managing the tremendous volume and complexity of work required to develop and build a large capital project, the notion of creating value is often lost in the flurry of activity to complete engineering deliverables.

Project-owner organizations and engineers each have a hand in the creation of these unintended consequences. The trick, without pointing fingers, is to uncover how the unintended consequences of bureaucracy may be stifling just the sort of innovation that owners and engineers alike wish to encourage. To begin probing the health of your capital project culture, consider the following questions about your organization:

  • When was the last time your organization safely deviated from a design philosophy or technical standard in the name of raising project value? Was this occasion celebrated or lamented?
  • When was the last time a cost or design benchmark was challenged? Who initiated the challenge and how did the organization reward them for it?
  • What formal expectations exist for a project engineer to find additional value within the project? If the project economics get worse, are engineers required to make a greater creative contribution?

Contemplating how a project team would behave in a crisis situation like Chile, where the clock is ticking and lives are at stake, is instructive. Would they be more open to new ideas? Would they make time for a 24-year-old who approached them with a new idea? Witnessing what human ingenuity can accomplish during times of urgency is inspiring, but this ingenuity not being brought forth every day in large capital projects is a blight. Engineers are driven by the belief that there is always a better way, a more “nearly perfect” system; most capital project owners and investors share this optimism. And why shouldn’t they? Don’t engineers have centuries of groundbreaking progress already on their resume?

Scott Whitbread is a partner at Stroud International.

Nathaniel D. Greene is the CEO of Stroud International.