There are certain similarities between the Federation Square project and the construction of the new Scottish Parliament House (the Holyrood Project). Holyrood was an extremely difficult and complex project. The Auditor-General of Scotland (2004: 8) commented that, ‘in the recent history of Scotland there has not been a public building project as complex or as difficult to deliver as the Holyrood project’.

In 1998, the client (the Scottish Parliament Corporate Body) required the new parliament house to be built by mid-2001. In fact it was not completed until 20 months after that date while cost more than doubled from £195 million in September 2000 to £431 million in February 2004. There is no doubt that the resulting building is an outstanding facility and an ‘icon’ for the Scotland’s new found independence, but the excessive cost could have been reduced by better project management practices.

The Holyrood project was faced with a very tight and far too ambitious construction program. The use of the ‘construction management’ method of procurement and contracting was identified as the main reason for the significant cost increases. In construction management the design is incomplete and uncertain when construction starts, whereas in normal construction contracting most of the costs are determined at the time when the contract is awarded. In the Holyrood project, the Auditor-General (2004: 6) identified that, ‘design development became a process of costing a developing design rather than developing the design within a cost limit’. Given the high degree of uncertainty and complexity associated with the various work packages, there was significant risk. The method of contracting placed most of the burden for risk on the client and not the contractors, and also left open the opportunity for contractors to claim additional payment for time-related cost increases.

One of the main criticisms made by the Auditor-General of Scotland was in regards to project management and control of the Holyrood Project. Leadership and control of the project was apparently not clearly established (2004: 7). The Project Manager (or project director) was the Chief Executive of Parliament who should have been assigned clear responsibility for making decisions about balancing time, quality (performance) and cost. The Auditor-General stated that the client (in effect the Parliament) did not give the project director the responsibility for managing the project. The report states, ‘in the Holyrood project there was no single point of leadership and control’ (2004: 7). As a result, the parties to the project could not agree on a cost plan and, when a draft plan was prepared in late 2000, ‘it was an indicator of the costs rather than a reliable estimate of the costs’.

The Scottish Auditor-General’s report identified a number of important lessons for management of public-sector projects.

First, the form of contracting adopted should place the risk on those best able to manage it. Using construction management methods the risks stay with the client and not the contractors. In public ‘icon’ projects, the temptation exists to err on the side of performance (including prestige and appearance) rather than on cost and time. Consequently, public project sponsors should ensure that appropriate measures including adequate safeguards are put in place to ensure that construction costs do not ‘run away’ on technically complex projects.

Second, there is a need to ‘scrutinise the business need for a project at key stages in its life-cycle, before key contracts are awarded, to provide assurance that it can progress successfully to the next stage’ (2004: 8). In project management this can be achieved by establishing key milestones or decision review points where ‘go/no go’ decisions can be assessed and made.

Third, the Auditor-General of Scotland (2004: 9) recommended that, ‘In all projects, care should be taken to put in place a payment regime that provides incentives to contractors to perform against clear targets for quality, time and cost’. In ‘icon’ projects this is especially relevant, as the practice has often been to chase quality, prestige and performance, by committing funds well over initial cost estimates.

Fourth, there should be a clear distinction between the project sponsor and the project director. This is particularly important where governments are concerned as the political need is so inextricably linked with the business need. If big projects are to be effectively and efficiently managed, there must be a clear separation between project sponsorship and project direction or management. There should be a single point of leadership and control for a project.

Fifth, to ensure that time, cost and performance targets are met, there should be agreed project budgets, timetables and specifications. Key performance indicators that can be used throughout the project to measure performance should support these.

Last, the Auditor-General (2004: 9) emphasised the importance of adequate project planning, particularly in projects where there is significant complexity or technical risk, or when there is a tight schedule for completion. There may be some political cost in establishing more realistic time frames for big projects, but these costs are preferable to the death of a thousand cuts situation experienced by governments as scandal-ridden projects struggle to completion.