Joint ventures are tricky at the best of times. Often times the signature on the contract is the easy part. A regional oil services company and an International construction company jointly won a major 3 year government contract to develop a new site, with the potential for lucrative follow on projects.
12 months into the project, with significant budget overruns and an anticipated 15 month delivery delay, the client indicated dissatisfaction and demanded a review of the contract.
Identified issues & symptoms
- Wider purpose for JV not understood by project leadership
- Project leadership was operating in silos and demonstrated zero accountability
- Significant HSE breaches resulting in 2 serious injuries
- No established communication protocols
- Procurement irregularities and delays
- Duplicated operational costs as workforce operated from separate locations
- Lack of trust
- Low employee retention at management level, 5% month on month loss of expertise
Most telling was employees from each JV partner refused to travel on same bus to project sites. Lack of respect, suspicion and low trust levels had manifested into a form of project warfare. Different groups were actively sabotaging work progress to set up the ‘other side’.
Leadership, Managers and Supervisors were not skilled to constructively address behavioral issues within the work place.
What we did
- Aligned board level agendas with the purpose for the JV
- Cascaded the JV purpose and value proposition throughout organization
- Implemented Project Leadership reporting, to a bipartisan Board Review Committee including a client representative
- Project leadership implemented a Team charter and responsibility and accountability matrix
- Defined and implemented cross function decision making processes and protocols
- Established communication protocols and chain-of-command for information flow
- Re-organized workforce into cross function teams
- Relocated teams to the same work areas
- Prioritized HSE best practices and communication to build trust at operational level
- Implemented operational protocols to align cross functional teams
- Executive coaching for Project Director
- Management and Leadership training for supervisory and management levels
Results
- Project was delivered on time and on budget but with a reduced profit margin
- JV successfully won 2 more project contracts with client
- 0 HSE accidents and increase in reporting incidents for remedial action
- Increase Operational efficiency reduced project costs by 23 %
- Improved employee retention, with many SME remaining with JV for additional projects
Organisational Learnings
- A JV requires clarity of the reasons why, and alignment and commitment at the top
- Success of a JV starts with bringing the people together at the beginning
- The JV Leadership needs to be open and transparent in all communications to all stakeholders
- The JV Leadership must walk-the-talk
- People need to be given time and support to get to know each other and define the new way of “that’s how we do things here”