Project Failure: Sydney Opra House

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PROJECT MANAGEMENT: PROJECT FAILURES
Sydney Opera House
University of Salford 2012
Frederico Costa @00255034
Business Studies with IT
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CONTENTS
Introduction p.3
History p.3 – 4
Stakeholders p.4 – 7
Stakeholder classification p.5
Stakeholder Power/Interest Grid p.7
Causes for project failure p.8-10
Lack of risk management p.9
Unrealistic timescale and Cost escalation p.10
Recommendations p.10 – 14
Risk Management p.11
Forecasting p.11 – 12
Stakeholder Engagement p.12 – 14
Conclusion p.14
References p.15 - 16
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Introduction
For this assignment the project chosen to critically analyse its failure is the Sydney Opera House.
Critically analysing its failure and its consequences and identifying bad project management
procedures made me look into this project intensively and evaluate it as a project failure with a
“happy end”.
This assignment will be divided in three main parts which are History where it will be explained what
the Sydney Opera house is and what was the purpose of the project, a Stakeholders section where
the key stakeholders will be identified and discussed, a Project Failure section identifying what bad
management procedures were taken and for last there will be a Recommendations section
recommending new procedures to avoid an over budget and over timed project, which this is part
of.
For the architect - Jorg Utzon – it is his “masterpiece”, to Australia as a country it is their
representative monument as World Heritage (Design5 final report 2010). Although project manager
and client are now “happy” with the final product it can still be considered as a project failure due to
a huge overrun budget and over timed project with consequences that are still being repaired,
almost 40 years later.
History
In 2003 Utzon is awarded with the Pritzker, the architecture’s “Nobel”. It was said of Sydney Opera
House (from now on in this assignment also known as ‘SOH’) that it is one of the great iconic
buildings of the twentieth century (Murray, P. 2004). It all started in 1957 when Utzon were chosen
to be the architect for this project. Everything was going according with the project but two years
after the new elected government (not the one that agreed with Utzon’s project) was getting
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impatient. More and more companies were being put into the project (in the final more than 165
companies, suppliers included, contributed to this project) and the costs were being added and the
new government was pressing Utzon as much as the media trying to cut in costs and speed up the
project*. They also decided to change the previous project after its construction as started and now
instead of 2 theatre rooms they wanted 4*.Utzon was losing control of the situation and had an
undesirable pressure under him. The initial cost was (Aus) 7 million dollars and in the end it has cost
(Aus) 102 million dollars and a total of 14 years to be constructed, 6 more than it should be*. The
Arup, engineers contracted for the engineering part stayed until the end of the project but Utzon
left in the end , after designing the roof but not concluding. It was hard to keep two of the key
stakeholders happy, the minister David Hughes and the SOHEC – Sydney Opera House Executive
Committee so he decided to quit blaming the first of lack of cooperation but in fact even the
acoustic consultants did not agree between each other (Murray, 2004 :66) and as a result of all these
changes of plans and misunderstandings the Sydney Opera House – finished by three local architects
– still did not had the proper acoustic, which was the first main factor that lead to a new opera
house*.
Nowadays the Sydney Opera House is already seen as profitable since its cost was already covered
by the revenue made from customers (tourists mainly) but further improvements on accessing
conditions were taken.
Stakeholders
Before going back to the subject it is needed to take into account that a failed project is a project
that is cancelled before completion, never implemented, or damaged in some way. Other reasons
that why projects fail are an absence of commitment, a bad project organisation and planning, a bad
time management, lack of managerial control, extra costs among other problems. Among all these
reasons the Stakeholders play a big part in the projects that they are involved and sometimes a
project can go wrong depending on decisions taken by these groups.
To start this stage of the assignment it is essential to identify the stakeholders – all the users that
directly or indirectly affect positively or negatively – the project. (Polychronakis, 2011)
The analysis will be assisted from the article “Toward a theory of a stakeholder identification and
salience: Defining the principle of whom and what really counts”, determining which of the
stakeholders hold which of its three attributes, one can identify stakeholders. Then Stakeholders can
be analysed by its salience. Explaining briefly the three attributes power enables to act despite
resistance of others, legitimacy is being seen as acting appropriately within context norms and
urgency relates to time sensitivity and importance of the stakeholder (Mitchell 1997).
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Stakeholder Classification Power Legitimate Urgent Type
Stakeholder Classification
NSW Government Power Legitimate Urgent Type
x x x Definitive
Public Works, David Hughes x x Dangerous
Utzon x x Dangerous
Arup x x Dominant
SOHEC x x Dominant
Design Team x x Dependent
Engineer Team x x Dependent
Consultants x x Dependent
Suppliers x x Dependent
Contractor x x Dependent
Hall, Todd, Littlemore (Three architects hired) x x Dependent
Construction Workers x x Dependent
Discretionar
Public/Customers x y
Media x x x Dangerous
There are 14 main stakeholders:
NSW Government – Can be considered the client so its type is definitive, has the power to over ask
and the project manager has to show urgency on keeping him happy.
David Hughes – Having the role of Public Works minister for the new NSW government he has dealt
directly with the project having the power to influence it and as a client’s representative has the
same urgency status. Is considered Dangerous because although is not definitive (could be replaced
for example) he affects directly the project as client representative (pressuring Utzon till he
resigned)
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Utzon – Being the project manager and architect he presented the project and designed it so he has
power on the project itself and on the staff. He has an urgent characteristic because he continuously
needs to keep on track of the project’s milestones and delivery dates.
Arup – as the engineers company they have some power on the project but no urgency at all since
they work when it is told to but is legitimated to act within the norms but couldn’t deliberately
change anything and was socially accepted. Is dominant because has a key role in the project.
SOHEC – Although it has the power to demand certain characteristics and has legitimacy in the
project it doesn’t have big urgency since it isn’t a client but a client’s influencer. Good to keep
informed.
Working staff (remaining stakeholders) – They don’t have great power but they are dependent on
milestones so also they have the urgency to meet expectations. They also have their legitimateness
since they depend on each other and need to coordinate their designed areas. Hall, Todd and
Littlemore, the three architects that replaced Utzon don’t have any power since everything was
planned and they only needed to re-design the roof in a way that could match the foundations.
Public/Customers – Since they are “watching” delays and over costs being paid from their taxes they
are on the legitimate attribute because they are on the “socially accepted and expected behaviours”
side (Mitchell 1997).
Media – Has the indirect power of showing a project as a project success or failure. Meets the
parameters of the legitimate attribute expecting behaviours and has the urgency of being time
sensitive (generating news with the project delay).
The main stakeholder was the architect, but Utzon was much more concerned with the design
aspect rather than time and costs objectives, which proved problematic. During the project, Utzon
collaborated with Ove Arup, who was in charge of the structure and the engineering while
subcontractors were in charge of mechanics, electrics, heating and ventilating, lighting and
acoustics. There was no real project manager, but rather collaboration between Utzon and Arup.
The other main stakeholder was the client, the state of New South Wales (Australian government).A
executive committee was created to provide project supervision but the members had no real
technical skills. The government eventually became an obstacle to the project team by inhibiting
changes during the progress of the operations and thus contributed to cost overrun and delays.
Finally, the public and media was an indirect stakeholder because they were concerned with the
project’s success.
Defining INTERNAL AND EXTERNAL STAKEHOLDERS.
External stakeholders
The external stakeholders can be considered as anyone outside the implementing organisations who
could be affected by the project’s results.
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Internal Stakeholders
Internal stakeholders are those associated with the process, typically members of the project team
or the governance structure.
After describing what internal and external stakeholders are, it can be specified what stakeholders
need more attention, or in other words, need to be ‘more’ satisfied.
It is known that it’s impossible to keep all the stakeholders happy at the same time so the following
picture will show that it was essential to keep NSW government and Mr. David Hughes happy (a
reminder to say that the relationship between Utzon and David Hughes wasn’t good). The
relationship with Arup should be stronger in order to have a better performance linking
‘departments’. As a result (of not doing it) the roof couldn’t match the foundations created by Arup
(the roof was too heavy for the foundation’s material) and the amount of resources would not be so
many times recalculated, it would have minimized the time spent and the money wasted.
The relation with the media should also be managed better. The relationship between stakeholders
was too ‘transparent’ and what was meant to be a huge partner advertising the project ended up
pulling down the project in terms of future customer’s point of view (customers would be driven by
the media and associate the Sydney Opera House negatively).
Also the relationship with the SOHEC could be better driven since it was the major beneficiated
within the project. They did not pay for it (the government did) and they were represented by the
ones that would use it the most but what was hope was turned into despair.
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