1. The Link Between Trust and Issue Resolution Building trust on Projects Photography courtesy of Gregg Gargan

2. Leadership and Trust “Trust is mandatory for optimization of a system. Without trust, there cannot be cooperation between people, teams, departments or divisions. The object of a leader is to create an environment of trust.” Edwards S. Deming

3. Whom Do You Trust ?  In 2003, –34% of Americans believed that other people can be trusted –68% in Scandinavian countries (Denmark, Sweden and Norway) David Halpern, British Sociologist Speed of Trust, Stephen M.R. Covey

4. Whom do You Trust?  In the United States –27% trust the government –22% trust the media –12% trust big companies –8% trust political parties –Trends also down in healthcare and churches 2005 Harris poll Speed of Trust, Stephen M.R. Covey

5. Whom do You Trust ?  At the organizational level: –Only 51% of employees have trust and confidence in senior management –Only 36% of employees believe their leaders act with honesty and integrity –76% observed illegal or unethical conduct on the job Speed of Trust, Stephen M.R. Covey

6. Whom do you Trust?  Students who acknowledged that they cheated to improve their odds of getting into graduate school: –Liberal arts students – 43% –Education students – 52% –Law and medical students – 63% –Business students – 75% Rutgers University Study Speed of Trust, Stephen M.R. Covey

7. Economics of Trust  High trust organizations outperform low trust organizations by 286% on total dividend return to shareholders Speed of Trust, Stephen M.R. Covey

8. Though difficult, in most cases, lost trust can be restored Once lost, trust cannot be restored Trust can be both created and destroyed You either have trust or you don't Trust is a function of both character (which includes integrity) and competence Trust is built solely on integrity Trust is hard, real and quantifiable. It affects both speed and cost Trust is soft REALITYMYTH Trusting people is too riskyNot trusting people is a greater risk Myth versus Reality Speed of Trust, Stephen M.R. Covey

9. Partnering  Workshop? Not!  Strategy? Yes! –To assist teams in meeting project objectives –A management tool providing input to senior and project leaders along with other “classic” project control measures Schedule Budget Safety Quality Team Dynamics –To assist in decision making

10. Project and Partnering Success  Has less to do with project delivery, management structure or contracting method  Has more to do with how the senior and project lead teams establish and manage the business climate the team will operate within –Timely and fair resolution of issues will ultimately foster a trusting environment

11. Partnering Team Evaluation

12. Purpose of Team Evaluation  Identify issues while they are still brush fires – head off forest fires  Monitor team performance throughout the life of the project  Provide senior and project leaders with unfiltered input from the project/field team from which they can develop strategies to optimize team performance and meet project objectives

13. Scale  5 – Exceeding expectations  4 – Meeting expectations  3 – Not quite meeting expectations  2 – Fundamental issues and problems exist  1 – Worst experience of your career ____________________________________________________  Anything scored < 4 requires a written comment  This requirement presumes that there are some that will “rate up” to a “4” to avoid writing comments

14. Evaluation Participants  Project manager-level through task force/functional team- levels on major projects  Senior leaders (offsite above project managers) are not included –Senior leaders should be placed in a role to look at results of evaluations and then make objective decisions based on the input

15. Industry Results Profile  29 projects –13 wastewater –4 highway –6 rail works –1 highway/rail works –5 general building  Size: $9 million – $1.7 billion  Project Delivery Method –23 Traditional Design – Bid/Build – 4 Design/Build – 2 CM/GC  Percent Complete: from Preliminary Design Phase to 100% complete  Response Rate: 1003 of 1354 (74%)

16. Partnering Process  All projects had ongoing follow-up processes in addition to initial “kickoff” partnering efforts –All did Team Evaluations either on bi-monthly or quarterly basis –17 of 29 projects held quarterly “Executive Level” sessions separately and in addition to the Team Evaluation process

17. Results – all Projects  Communication : 3.85  Timely Resolution of Issues: 3.60  Cooperation: 3.90  Morale: 3.91  Trust: 3.74  Average: 3.80  _______________________________________________  Highest Scoring Project: 4.53  Lowest Scoring Project: 2.89

18. Results by Project Delivery Method Design/Bid/BuildDesign/BuildCM/GC Number of Projects2342 Communication3.863.823.74 Timely Resolution3.633.523.45 Cooperation3.923.833.85 Morale3.913.893.87 Trust3.753.653.77 Average3.873.723.77 Highest Scoring4.534.163.88 Lowest Scoring2.893.283.65

19. Results by Project Size < $50 million$50–500 mm$500 mm–1 billion > $1 billion Communication4.143.763.663.94 Timely Resolution 4.013.483.383.69 Cooperation4.303.783.683.97 Morale4.213.813.744.02 Trust4.103.633.533.85 Average4.153.703.603.86 Highest Scoring4.314.533.914.16 Lowest Scoring3.872.693.243.34

20. Results by Percent Complete Pre-Con0–50%51–85%100% Communication3.573.303.803.95 Timely Resolution 3.213.123.523.71 Cooperation3.623.293.864.00 Morale3.653.363.874.00 Trust3.423.073.733.84 Average3.503.233.773.89 Highest Scoring3.653.284.234.53 Lowest Scoring3.343.173.242.69

21. Optimum Curve Partnering Evaluation Trend

22. What Do The Scores Mean? Results to Date  > 4.20: career project  > 4.00: great project  3.75 – 4.00: good project  3.50 – 3.75: still has issues to be resolved, but still a good project  3.25 – 3.50: major issues still unresolved  < 3.25: project and senior leaders are unable to resolve major issues – high probability of going to claim

23. Building Trust – Individually  Talk straight  Create transparency (versus hidden agendas)  Clarify expectations  Deliver results  Right wrongs  Practice accountability  Keep commitments – do what you say you're going to do  Extend trust

24. Building Trust – Owners  Have clear and reasonable objectives when selecting a project delivery method  Have a plan (process and $$$) to deal with unknowns, differing site conditions and changes  Provide reasonable $$$ authority to project level  Be ready to make a deal: –Do not defer to end of project –Issues are not like fine wine – they do not get better with age –Create solutions versus positions

25. Building Trust – Architects/Engineers  Work with owner to establish an adequate budget for construction administration  Work with the team to establish –Clear expectations for submissions –Non-contractual targets for information turn-around, particularly on critical items (based on schedule) and total submissions  Be open to ideas from contractor that will preserve/enhance quality and create financial savings (materials or constructability)  Engage and work with the contractor –Develop big picture solutions

26. Building Trust – Contractors  Develop big picture solution (s) that will help the owner save time and money –Don’t just submit cost-added changes –Develop cost savings and value-added changes as well  Be responsible for your own errors, particularly in regard to schedule –Recovery versus accelerate –Don’t necessarily default to the “impact” game  Understand your responsibilities in QA/QC and do it

27. Conclusions (1 of 2)  A high degree of uncertainty exists on most projects –Constant variable conditions  Unresolved issues are the major area of uncertainty  As major issues get resolved, trust and scores tend to improve  The industry has tough evaluators – show me!  Even on good or great projects, scores reach their peak only as the project moves toward completion

28. Conclusions (2 of 2)  Issue Resolution and Trust are linked within the design and construction industry  Teams are optimized when team members are confident that their issues will be resolved in a timely and fair manner  Partnering processes (particularly on large projects) must initially be focused on organizational development and issue resolution protocol

29. Bill Spragins FMI Corporation Denver, Colorado Phone: 303.377.4740 bspragins@fminet.com