MBA642 | Analysing the Success and Failure of the New Royal Adelaide Hospital Project
1.0 Introduction
The New Royal Adelaide Hospital is one of the major projects in South Australia. The project was designed to ensure all South Australians have access to state-of-the-art facilities that meet their future health needs. Some of the deliverables of the project include inpatient rooms, 40 technical suites, gardens and open green spaces, an underground car park with approximately 2,300 bays, and a commercial precinct including restaurant, mini-art, gymnasium, and cafes. The completion of the project attribute to the application of the IPECC phases. This report analyses the success and failure of the New Royal Adelaide Hospital by focusing on the five phases of a project. The primary objective of this report is to analyse the selected project based on the aspects of each of the IPECC stages.
2.0 Project Initiation
Project initiation involves the selection of a project manager, the creation of a project charter, and the determination of the feasibility of the project. Recognition of project sponsors and other stakeholders at the initiation stage is essential for a project (Kloppernborg et al., 2009). The construction of the NRAH was announced by the South Australian government and the developers included SA Health Partnership of Leighton Contractors, Macquarie Capital Group, and Hansen Yuncken. The type of the project was a hospital building and the feasibility of the project was determined before the commencement of the construction activities.
Notably, the initiation of the project involved replacing the then existing Royal Adelaide Hospital with advanced healthcare facilities and an increased capacity to care for a larger number of people. In other words, the project was aimed at improving the condition of the existing hospital by creating a new and improved hospital with modern facilities. Another important aspect of the initiation of the NRAH is that it was developed through a public-private partnership. Leighton Contractors and Hanen Yunchen were responsible for the design and the construction of the new hospital. The construction of the hospital was associated with the South Australia government’s state-wide health reforms. Since the expansion of the existing Royal Adelaide hospital was found to be unfeasible, the SA government decided to construct a new hospital with state-of-the-art facilities.
Another important aspect of project initiation is the determination of the available alternatives and the relevant opportunities. The construction of the NRAH was based on the alternatives of improving the condition of the existing Royal Adelaide Hospital or building a completely new hospital to meet the government’s health reforms. The SA government’s health reforms aimed at improving healthcare in the state created an opportunity for the development and construction of the New Royal Adelaide Hospital. The opportunity and the availability of alternatives show the success of the project initiation for the NRAH.
3.0 Project planning
Project planning involves defining the objectives, developing the course of action to attain these objectives (Dita et al., 2019). During the project planning phase, the project scope is defined and more information about the project is provided. Scheduling is another crucial aspect of project planning since it is designed to show the project milestones (Allen et al., 2015). Besides, the project planning phase includes quality management, scope management, schedule management, risk assessment, stakeholder management, and resource management.
The planning of the NRAH began with an architectural design of the hospital which was provided by Design Inc. and Silver Thomas Hanley through a joint venture. The landscape architect the contributed to the development of a useful plan for the hospital building and thus the construction depended on the design. Contracting is one of the effective planning aspects of the project. A $170 million contract was awarded to Nilsen, a company based in Adelaide in April 2012 (Scopelianos, 2017). The contract was aimed at providing electrical and integrated communication services for the hospital building. The success of such services at the new hospital is attributed to proper and effective planning.
The financing of the project is also attributed to proper planning. A proper budget for a project can reduce the financial constraints that may influence the achievement of project objectives. The new Royal Adelaide Hospital was financed through both equity and debt. A private equity investment of more than $230 million was provided by InfraRed Capital, John Laing Investments, Macquaire Capital, Lloyds Bank and Leighton Infrastructure Investments. In addition to the equity investment, a long-term debt of $1.9 billion was arranged between a group of banks including the National Australia Bank. The primary objective of the debt capital was to finance the construction and medical equipment of the new hospital. Currently, the NRAH is one of the best hospitals with modern state-of-the-art equipment and this shows the success of planning. South Australia raised the cost of the project from the initial estimate of $1.7 billion to over $2 billion to cover risks such as design problems and labour shortages (ABC News, 2011). The need to increase the project cost is attributed to proper risk management for the project at the planning stage. Despite the cost addition estimates of $2.1 billion, the project cost $2.44 billion, which was more than the previous estimates (Puddy, 2018). This can attribute to failure in financial planning that led to a significant increase in the cost of the project.
Accepting and assigning responsibility is a major ethical aspect in this phase of a project. The stakeholders are bound to ethically accept responsibility for the project’s success or failure. The responsibility of the financials, contractors, architects, and other stakeholders contributed to the success of the project. The contractors had the responsibility to ensure that the new hospital building is constructed and completed at a specified time. Project progress updates and meetings are useful for assessing the responsibility of the stakeholders.
4.0 Project execution
The project execution phase involves carrying out the actual tasks based on the plan. At this phase, the key stakeholders including contractors perform the specific tasks in achieving the project goals. The goal of the project was to construct a modern hospital with state-of-the-art equipment that will serve a large number of people. Achieving this objective was realizable by executing the project deliverable. A goal statement is one of the key aspects of the project execution stage since all stakeholders should have a common goal. In this project, the main goal was to construct a new hospital with modern equipment according to the plan.
Activity duration and resource allocation is a crucial element of the execution phase. The availability of resources is essential in enabling the project manager and each stakeholder to achieve the project milestones. The key project milestones for the NRAH include topping of the concrete structure by September 2014, architectural and functional design completion by 2014, removal of the last tower crane by 2015, and certificate of occupancy in 2016. Despite the project plan and milestones, the project faced delays. The union reported that the construction work was about six months behind the schedule due to management problems. Besides, the union reported that there were design issues that led to significant delays in the construction of the New Royal Adelaide Hospital (ABC News, 2013). Such problems can be mitigated by ensuring that the project plan is developed appropriately and that resources are allocated effectively for each project department. The delay in construction of the hospital shows a failure in the scheduling and activity duration of the project.
Getting the right level of authority is a major ethical aspect for project success or failure in the execution phase (PMI, 2018). Project managers are responsible and accountable for the success of a project, thus delays due to management problems can be associated with poor management of the project. The level of authority in a project is useful in clarifying responsibilities from time to time. Also, project managers can ensure that the project task is completed in a good time. The delays in the construction process witnessed in the NRAH project can be associated with failure in the right level of authority. Major projects such as NRAH should have proper management that follows key approaches and milestones to achieve the project objectives and goals.
Another ethical aspect in the execution phase of a project is ignoring health or safety standards. SafeWork Australia provides guidelines and recommendations that project managers should implement to promote the health and safety of the workers. Adherence to the health and safety of the workers can be considered ethically correct for the completion of a project. During the construction of the New Royal Adelaide Hospital, a man was seriously injured and eventually died. The man was crushed between a scissor lift and a concrete slab above (ABC News, 2014). As a result of the incident, approximately 1400 workers stopped work at the site until the inspection by the SafeWork SA was complete. Such actions can lead to significant delay, leading to late completion of the project. Therefore, such includes attributes to project failure concerning lack of proper adherence to health and safety standards at the construction site.
5.0 Controlling and monitoring phase
Some of the key elements of the controlling phase include collaborating on initial project schedules, forecasting, monitoring project costs, and feedback reporting. Mohd et al. (2021) assert that cost overrun is a common occurrence in a construction project. The researchers add that the primary cause of project delays and budget overrun is poor site management, poor contractor planning, and poor workmanship. A project manager can enhance the achievement of project objectives by ensuring that there is a proper allocation of resources. During the planning stage, the project stakeholders take their responsibilities to ensure that the key elements of the project are completed appropriately and that the goal is achieved on time.
The lack of control and monitoring can be categorised into contractor site management and financial management category (Mohd et al., 2021). The success of a major project such as the New Royal Adelaide Hospital can be attributable to the extent of controlling and monitoring. Controlling can enable the project management team to prevent the impacts that are associated with the lack of project control and monitoring. Regarding the financial management category, the NRAH project experienced did experienced cost overrun since the cost of the project was more than the initial estimated cost. Due to proper management of resources and cost allocation, the project team managed to achieve the intended objective. The success of the project despite the cost overrun shows that it is important to ensure that there are important strategies in controlling and monitoring project costs. Accountability is one of the crucial ethical aspects of the controlling phase. The concerned parties should be countable to the project cots to ensure that the achievement of the project goals is feasible.
6.0 Closing phase
Project closure phase involved handing over the deliverables to the project owner, passing the documentation to the organisation, releasing equipment and staff and informing the stakeholders of the closure of the project. Some of the key aspects of project closure include verifying the completion of project deliverables, conducting post-project assessment, conducting post-project review and evaluation and disbursing project resources such as facilities, automated systems and staff. The success of a project can be attributable to effective closure with the highlighted attributes. In this case, the project was handed over after completion to the South Australian government. The deliverables attributable to NRAH include 4-star Green Rating, water conservation, energy efficiency, indoor environmental quality, equipped medical facilities and rooms (RHA, 2020).
7.0 Conclusion
The main phases of a project include initiation, planning, execution, controlling, and monitoring. The success of the New Royal Adelaide Hospital attributes to proper initiation, planning, execution, and control. Such success can be measured by the current condition of the hospital; it is one of the best hospitals in South Australia. Despite the success of the project, it also experienced some failures during the construction process. Such failures include cost overrun, delay, and poor adherence to the health and safety of the workers.
References
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ABC News. 2013. RAH build facing delays, says union, 2013 . ABC News. https://www.abc.net.au/news/2013-04-17/rah-build-facing-delays-says-union/4634254
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Puddy, R., 2018. New women’s and children’s hospital “could cost twice Royal Adelaide Hospital per bed,” 2018. . ABC News. https://www.abc.net.au/news/2018-07-30/adelaide-womens-and-childrens-hospital-to-cost-1.8-billion/10050568
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