Initiating the Turnaround
Instituting a Balanced Change Culture
As far back as 1994, Construction Industry Institute’s (CII) 1994 publication entitled, Project Change Management, concluded that “the first principle of effective change management is to promote a balanced change culture&hellip The allocation of costs and benefits should be made equitably and consistent with the base agreements in place.” 1 So, here is an interesting interplay between “base agreements” (the contract) and fairness. The parties typically sign a contract that is not necessarily balanced. It is typically written by one party whose attorney saw fit to favor his or her client. And contracts are often presented with a “take it or leave it” option or — at best — with minor modification that only mitigates the highest perceived risks to one party. And yet, this represents the legal agreement of the parties, and it should be followed. CII maintains, “The original agreements must be recognized as a baseline…” 2 However, within this framework, a balanced approach that offers both perceived and actual fairness to all parties can help to restore the trust and good will that has eroded.
Remedying Loose Contract Administration and Record Keeping
Remedying loose and/or inconsistent contract administration — which might have led you into trouble in the first place — is a vital element in the strategy to leverage the parties to the partnering table to initiate a project turnaround. This is especially important where there is disputed extra work, the fact‐finding and resolution of which should occur during the project and not afterward in expensive, time‐consuming court proceedings.
To avoid opportunities for differing interpretations, we must be diligent in the conduct of a timely, courteous, assertive, formal written process for key contractual subjects such as managing change, discussions in meetings, and identifying non‐compliant work or practices. Maintaining accurate communication avoids misunderstandings, asserts contractual rights, reminds both parties to adhere to contractual response times, establishes transparency and accountability to executives, and maintains a good project record (to pre‐empt litigation).
A facilitated project realignment process (briefly described below in the section entitled “Cleaning the Slate”) usually encourages parties to return to communicating orally. Such practice is ideal to maintain a cooperative posture, coordinate the work, and amicably explain each party’s position. However, without the formal follow‐ up (where several parties are copied on a distribution list), these one‐on‐one conversations are often perceived differently by each party.
In the next installments of this series, we will explore how to avoid the perception that the owner is preparing for court.
1 Ibid., page 12
2 Ibid., page 18
This is an 8-part series called Leveraging for Realignment: Best Practices for Troubled Projects, originally presented at CMAA National Conference.
Contributing authors: Shawn Paroline, SAIC; Mike Kenny, San Diego County Water Authority; Dan Fauchier, The Realignment Group; Jim Linthicum, San Diego Association of Governments; Chris Brasco, Watt, Tieder, Hoffar & Fitzgerald, LLP