Tackling the Project Management Crisis

Loss of manufacturing has led to a lack of practical hands-on experience for young engineers. John Challenger wonders if it is time to introduce a process industry-specific qualification

IN RECENT years, the engineering community has understandably focused attention on the immediate problems of climate change, resource depletion, digitisation and, more recently, artificial intelligence. Various organisations, through scientific and technical journals, outline a wide range of solutions which often ignore the social, economic natural drivers, while international agencies and the UK government propose a wide range of targets without, it seems, any clear means by which they are to be realistically achieved.

Many of these proposed solutions are enormous in scale and complexity but often fail to recognise the key importance of high-quality project management and management in general as an essential enabler to drive the projects efficiently to a successful conclusion. We have recently witnessed serious failures in major projects such as HS2 and the deplorable impact of inadequate management in the water industry, but it is not just the large and newsworthy projects that are a problem. The same management problem applies to, but is perhaps less noticeable in, small- and medium-scale projects.

As chair of IChemE’s Contracts Committee, I have become concerned at the declining standard of UK project and contract management, which is falling to a damagingly low level. I’ve seen the impact first-hand on the recent projects on which I have worked, and I’ve heard colleagues within the Contracts Committee and the wider IChemE community share similar concerns from their own experiences.

To prevent major long-term problems for the social, defence, and economic wellbeing of the UK, we need action, first to halt the decline and then reverse it.

Skills shortage

Unfortunately, a shortage of qualified engineers and project managers is hampering the fightback. The Institution of Engineering and Technology stated last year that there was “a shortfall of over 173,000 workers in science, technology engineering, and maths (STEM) sectors: an average of ten unfilled roles per business in the UK”. They put the cost to the economy at £1.5bn per year. Almost half of the UK’s engineering businesses are experiencing difficulties recruiting workers with the skills they need. This has led to many companies employing inexperienced and under-qualified staff to fill the gaps. It also places greater pressure on their experienced and competent employees. This shortage is inevitably having an impact on the UK’s ability to set up and then execute projects of all scale in an efficient and timely manner.

Many major manufacturing and contracting companies have boards dominated by non-technically competent directors and it is no surprise, therefore, that decisions are often made on purely commercial factors. Where we would expect and prefer to find an engineering mindset, we instead find commercially biased managers who lack the skillsets and long-term strategic capability for the strong project planning, funding, execution, and management needed for a more cohesive and robust industrial base. While it is not essential for chemical engineers to act as process plant project managers, there are definite benefits based on the systems thinking that drives effective process plant design and construction.

Matters may not be as bad in countries that have maintained a strong manufacturing capability such as China, the US, Japan, and Germany, on which the UK has increasingly relied upon to provide engineering, production equipment, contracting and materials for process plant and other major projects. It should, however, be noted that several European countries have also indicated they are suffering from a shortage of engineers and technically competent managers in a range of sectors. According to lobby group BusinessEurope, which represents more than 20m businesses across 35 countries, “the European Union’s economic growth is being slowed down by a lack of qualified engineers and scientists”. 

The declining engineering numbers has a consequential impact on the availability of technically competent management. This is particularly true in the case of the UK where the loss of manufacturing assets and capability has led to a significant reduction in opportunities for engineers to gain practical hands-on experience before moving into project management and general management roles. In a professional career of more than 50 years, I have witnessed this steady decline which has been exacerbated by a wide number of complex political, commercial, and self-interest decisions that have driven the transfer of manufacturing overseas.

While there appears to be a recognition of this issue at government level,1 there is a lack of long-term strategy and consistent planning that might help turn the tide. The vulnerability caused by the reduction of manufacturing capacity became obvious during the Covid pandemic when many critical healthcare and engineering products needed to be imported amid enormous and sometimes ruthless global competition.

To prevent major long-term problems for the social, defence, and economic wellbeing of the UK, we need action, first to halt the decline and then reverse it

Fewer training opportunities

The downturn in manufacturing has also led to a reduction in the number of major contractors that were at one time a crucial source of training, particularly in the field of process plant design and construction. In the UK, this has meant that large portions of major projects are often dependent on small privately owned contractors and consultants. The main contractors, in turn, are reduced to predominantly programme management roles rather than offering a full design and build service with all its associated risks. A more litigious environment has also seen the boards of major companies become risk averse and hence, there has been a marked reduction in companies willing to take on full engineering, procurement, and construction (EPC) projects in the process industry, instead tending to offer service-only. As a result, there are fewer opportunities for young engineers to gain full training and practical construction and operating experience covering all the elements that contribute to the successful design, construction, and start-up of a plant.

Consequently, it has become noticeable that several quantity surveying and civil engineering companies and consultants have filled the vacuum left by the reduced number of process contractors by offering their brand of services in the roles of either project management or as main contractors. These organisations are often inexperienced and ill-fitted for such roles, with many having previously worked on projects for the water and infrastructure industries in which there are a high proportion of civil and building works and limited process plant content. Since many have a pure building industry background, they are often unfamiliar with the complex issues of process engineering and safety which are at the heart of chemical and biochemical projects.

Due to the growing number of quantity surveyors and civil engineers undertaking project management roles there was, for a while, a drive to use the National Engineering Contract (NEC) for the execution of projects in all construction sectors. This despite the form having been originally drafted for the civil and building sector. Fortunately, it has now been recognised that process and related performance projects require a structured approach, provided by the IChemE Forms of Contract, to control the wide range of technical, procurement and construction activities, including design, testing, quality assurance, performance testing and guarantees. This has seen an increase in use of IChemE contracts, not only by the chemical industry but also in the fields of renewables, food/beverages, power, infrastructure, and mining/minerals.

During a recent training course provided by IChemE, operating companies admitted they had allowed the published IChemE contracts to be altered to such an extent that they had essentially become bespoke forms, with such extensive changes having questionable benefits. These wholesale changes have been caused by the relinquishment of detailed control and oversight by many manufacturing companies, placing their reliance on external consultancy and legal firms, often with a background in civil/building projects and limited experience in the process and manufacturing sector. This is again caused by the lack of process industry-trained technical managers.

It is worth noting a couple of recent examples that have illustrated these concerns. In one case, after providing contract training, I learnt that the purchaser’s project management and engineering team was entirely staffed by personnel working under consultancy/agency agreements. The main contractor appointed had never built a pharmaceutical plant and was totally dependent on subcontractors for all specialist engineering activities. What often happens in such circumstances is that the production buildings are developed without sufficient attention paid to the operational requirements which would dismay any competent and experienced process engineer. This can often lead to major omissions in contract documentation, leading to an unstructured approach to project execution. Not only do such projects suffer from a lack of competent management at the project level, but the risks due to a lack of process safety and efficient operational design can be significant. In one case, these factors combined with a poor funding structure to cause the abandonment of a strategically important project.

Typically, in these types of scenarios, projects are delayed, subject to overspending, and lead to disputes which could have been avoided with competent management. I attended a recent presentation by Celtic Sea Power on the planned offshore development based on floating wind power generation. I was staggered to hear that the initial view was that over 90% of the supply chain for this billion-pound scheme will be from outside the UK. This is another example of how we will continue to lose knowhow and manufacturing capacity if such projects proceed with such minimal input from the UK.

We will continue to lose knowhow and manufacturing capacity if such projects proceed with such minimal input from the UK

How training is affecting project management

There is a belief that project management can be taught academically and this has led to an unrealistic expectation by students of immediate seniority, or that because academic training has been undertaken, the attendees at such courses will be qualified to manage any project.

This approach generally ignores the close inter-relationship between the technology and the specific requirements of managing the broad range of engineering, procurement, and construction techniques required for process plants. In particular, the impact of the procurement of specialist equipment and systems and the requirements of specialised installation, commissioning, quality assurance, and operation of complex process systems.

As a result, many project managers lack the technical background that enables both strategic and tactical thinking to be applied to the execution of projects. What causes enormous frustration and lack of performance among experienced managers is the fact that project managers often spend much of their time recording financial and programme matters retrospectively rather than being able to understand the commercial, time, and technical drivers of projects.

It is also rather peculiar that many project managers lack a true understanding of how contracts are drafted because so often the process of negotiating and finalising contracts is left to either lawyers or commercial managers and the role of a project manager is discounted. Those of us that were trained in the past were expected to gain direct experience in all aspects of plant design, procurement, construction, and commissioning before being appointed to management positions. Training was also given on subjects such as negotiating skills, estimating, planning, risk assessment, and contracts. An experienced project manager was therefore expected to know all aspects of a contract and understand its technical content in order to take ultimate responsibility for its outcome. Interestingly, the IChemE contracts expect and require the project manager or contract manager to have full authority to act on behalf of either the purchaser or the contractor, respectively.

Sadly, project managers often lack real leadership to be able to direct what is needed for successful overall execution. They are often seen as simply project administrators, retrospectively monitoring costs and programme, but not leading from a position of in-depth knowledge and experience.

Project management training courses

There are organisations offering project management courses, including universities (up to MSc standard) and professional institutions, including the Royal Institution of Chartered Surveyors, Prince 2, and the Institute of Project Management, which lead to certified qualifications. It is questionable whether students who gain a qualification via this route have sufficient knowledge and all-round experience to manage complex multi-technology projects without going through an extensive training period within the industry in which they are to operate.

It is noticeable that many books and courses on project management provide little on contract application which provides the underlying legal and operational aspects of project delivery. It is essential that any project manager has a full grasp of the development and administration of contracts since the two activities are completely entwined. It is hoped the points raised in this article will prompt IChemE to develop a strategy that will help both the development of associated training but also a method of evaluating project management competence.

IChemE publishes a series of books on project management including a very useful toolkit for project managers, authored by Trish Melton CEng FIChemE. While such guidebooks and courses are helpful, they can never replace the need for, or the effectiveness of, on-the-job training and experience gained in various elements of the process plant design, construction, commissioning, and operation.

The rise of apprenticeships and what they offer in terms of both academic and practical experience is, perhaps, a helpful way forward. I would also like to acknowledge that there are several major- and medium-sized organisations that devote considerable time and energy to the training of project managers and engineers. However, from a general perspective, the situation in the UK remains rather patchy, and there are plenty of examples of project managers being appointed who have totally inadequate capability and experience.

Conclusion

If we are to improve project and general management in the process industries, we need to consider how to reverse the decline in this critical enabling function.

• IChemE should perhaps consider how it can influence the matter as a high priority. In my view, the Institution needs to consider the following:
  placing greater emphasis on project management as a key enabler, including greater coordination between project management and contract training
• maintaining efforts to influence government thinking, particularly with the risks and future strategic importance of the process and related industries. It is recognised that efforts are being made to emphasise the need for long-term strategic planning, but this needs greater awareness in the wider media to drive popular support and influence the political approach
• influencing companies to be more proactive regarding hands-on training
• reversing the trend of exporting manufacturing overseas as a means of reducing costs and improving returns to investors. While great emphasis had been placed on reducing the UK’s carbon footprint, this has been done in part by exporting the carbon to less environmentally sensitive countries. As a consequence, it has reduced the UK’s product development capabilities
• considerable emphasis is made by the government on the importance of STEM subjects in schools and universities but if the practical training is not available within existing manufacturers or contractors, these skills will be lost abroad or may just wither post-qualification. While there is a clear shortage of technical personnel in the existing industry base in the UK, there needs to be a fully coordinated approach to early learning through to post-academic practical training. Consideration should be given to the establishment of an in-depth project management training programme that leads to a process industry specific qualification relevant to the needs of the industry

I have highlighted the issues surrounding project management as I perceive them. It would be helpful to receive feedback from the wider membership of IChemE to determine what approach might be adopted to try to influence these matters which are so critical to the UK and, for that matter, Europe as a whole.

References

1. https://commonslibrary.parliament.uk/research-briefings/sn01942/