Recently, while I was outlining what I view as the 3 key influences on project delivery performance – Value Alignment, Team Effectiveness, and Production Management – my focus on Value Alignment was admonished for being too conceptual, too “soft.” It was suggested that what people really want to hear about are concrete actions and activities – processes and tools that they can sink their teeth into. I countered that there is nothing soft or fluffy about the creation of value alignment when it comes to project performance – I am not referring to value in the context of what we hold dear but value in delivery of project outcomes.
Indeed, we tend to see “value” as the conceptual equivalent of policy statements framed above the reception desk or KPIs translated into slogans on posters around the office. We do this because we don’t understand it – because we don’t break value down into its component parts, missing the opportunity that maximising Value Alignment creates for influencing delivery performance.
The Nature of Value
When speaking of value, it’s important to remember that value can only be defined by the customer. The value that a “supplier” ascribes to their outputs is largely inconsequential if it does not align with the value required by their customer. There is a natural tendency to think of “the customer” as the client that has undertaken the capital delivery project or perhaps the client’s customers that ultimately fund the project. These “macro customers” can be expanded to include the organisations, and their shareholders, which are responsible for delivering the project – often at a level of financial risk. Macro customers define value in terms of overall project outcomes, although not necessarily the same overall outcomes. In other words, they represent the macro value view of the project.
There are also what I refer to as “micro customers” that exist within the project delivery environment. These include the trade that our enabling work will be handed to, the construction team that a design output will serve, as well as the teammate who needs the work we’re doing today to complete her work tomorrow. This means that there are macro values around which the team as a whole needs to align as well as micro values around which individuals and work groups need to find common ground. Both types are important to understand from a delivery performance perspective and in some ways, the latter is more influential than the former.
While understanding the macro/micro value principle is useful, performance is influenced by the level of value alignment that exists across this spectrum. It is this alignment that is the key to establishing common objectives, creating a target for continuous improvement and achieving overall project optimisation. Individualised value sets lead to groups and individuals pulling in different directions and almost invariably, sub-optimal results for everyone.
The Foundation of Value Alignment
There are three pillars on which Value Alignment is founded. We can enhance project delivery performance by influencing this foundation in a concrete, proactive manner:
There is a tendency to believe that commercial common ground only comes through contractual means. Collaborative or partnering agreements are an attempt to codify this belief. However, in my experience true risk-segregation or win-lose commercial situations are relatively rare in capital project delivery, regardless of the contracting mechanism. Although the measures of success or failure may be different, successful projects tend to benefit all participants and unsuccessful results tend to be shared as well.
Alignment begins when focus is placed on the common ground on which the various commercial arrangements are built. This creates the opportunity to establish collective leadership for the project rather than each party leading their forces against the commercial enemy. It sets the stage for bringing an investment strategy to the expenditure of time and capital rather than simply trying to minimise the cost. Ultimately, it allows the project’s leadership to drive performance against business expectations rather than manage a recovery effort.
Aligning on a strategy is not just about the path to successful delivery outcomes but also the vehicle for traversing that path. Strategic alignment requires both ownership and understanding by the whole team– it can’t be dictated. Simply saying the strategy is embodied in the contract, project schedule or cost plan and the team just needs to follow it doesn’t generate alignment. At best, it engenders compliance and at worst, it means you have no strategy at all.
Effective Strategic Alignment comes through a process of co-creation. The client and contractor must co-create the project objectives and operational principles in a manner that meets their collective and individual needs. The delivery strategy should be created by those responsible for executing it, as well as those managing the operational and stakeholder impacts of that execution. Strategic Alignment is resilient when we recognise its dynamic nature. To paraphrase one of Murphy’s Military Laws, “no strategy survives first contact.” Therefore, alignment is maintained when the strategy is continuously tested against the current situation.
Once broad based ownership of a strategic approach is established, the stage is set for the team to make their efforts – the execution of work – conform to that strategic intent. This opens up potential for improvement activities aimed at taking advantage of potential opportunities rather than simply repairing the damage of negative variance. It affords a project team the opportunity to deploy its capacity and focus against the activities that are the highest priority in achieving overall results rather than “firefighting and expediting.”
The transformational nature of capital projects means that individuals and work groups rely on the work of others to enable their activities; it is ultimately this flow of work between individuals that determines the level of efficiency. If individuals and work groups operate in a manner that is founded in self-interest and personal optimisation, they adversely impact on the smooth flow of work and hinder the work of others.
Individual alignment is created when work groups are cross-functional and objectives are project-based not individually-based. It comes from understanding all of the day-to-day activities that are required to achieve strategic objectives and how those activities constrain and enable one another. Most importantly, it comes from the individuals who are responsible for their respective tasks, making and keeping commitments to the team on when those tasks will be completed.
As these commitments become meaningful, you build trust at the working level rather than a culture of blame. As this collaborative culture takes a foothold, the team can draw upon its collective wisdom and inspiration to solve problems and innovate. It is this collaborative, problem-solving mentality that begins to eliminate the variability that persists in most delivery environments and permits the work to flow in an efficient and productive manner.
Questions for consideration:
Have you seen the distinctions between the three foundational pillars of commercial, strategic and individual alignment at work on your projects?
Is there a correlation between a high level of Value Alignment and positive delivery performance in your business?
Do you actively try to create Value Alignment as a means of improving your project delivery outcomes?
I would love to hear your thoughts and experiences. Please share them in the comments area below.