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University of Salford

School of the Built Environment


Date: 14th January 2011
Student Name: Nahallage Don Ravindra Ben Guneratne
Roll Number: PYP 382 (@00255238)
Title of Assignment: International Joint Ventures; The Culture of Construction in
India and the Global Financial Crisis: Lesson Learned & Way Forward
Module Name: Culture and People
Programme of Study: Msc in Quantity Surveying
Year of Study: 2010 - 2011
Full Time/Part Time/Distance Taught: Distance Learning
Declaration
I confirm that this work is mine, I have not plagiarized and there is no hidden collusion. I have read and
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International Joint Ventures;


The Culture of Construction
in India and the Global
Financial Crisis:
Lesson Learned & Way Forward

Report Submitted to the


Board of Directors of
Pink City Expressway Pvt Ltd

Report Submitted by;


Ben Guneratne (Qserve Global Pvt Ltd)

Table of Contents
Executive Summary .................................................................................... 2
Background ................................................................................................ 3
Introduction ................................................................................................. 5
Pink City Expressway Pvt. Ltd and Organisational Culture: ........................ 6
Strategic Analysis ....................................................................................... 6
Organisation Background ........................................................................ 6
PCEPL & Organisational Culture ............................................................. 7
Proposal for a Way Forward ................................................................... 12
The Change Management Process........................................................... 14
Rethinking Corporate Culture for an Internally Consistent Organisational
Culture ...................................................................................................... 16
Conclusion ................................................................................................ 18
References ............................................................................................... 19
Presentation to the Board of Directors (Annexure A) ................................ 22

Executive Summary
The Global Economic Crisis impacted many industries none so much as the
construction industry. This report looks at the impact of the crisis on a international joint
venture project between Dubai and India. The report examines the impact of financing
delays on project implementation and how the culture of an organisation can positively
or negatively affect a project. This report is intended for the directors of Pink City
Expressway Private Limited (PCEPL) as a midpoint review of where they are at and the
way forward post Global Financial Crisis. The report covers the economic crisis,
background & current situation of the organisation, recommendations on future
strategies for improvement and a presentation to the management on the key points
discussed.
Background: The Economic Crisis
The collapse of the American mortgage market had a ripple effect on global financial
markets worldwide. Overnight short term and long term credit markets dried up and
access to capital was hard to come by. The effects of this financial melt down had an
adverse effect on all industries especially in the construction industry which is often
referred to as the barometer of an economy. All countries around the world downgraded
their growth rates and the whole world slowed down.
Current Situation of the Organisation
Just before the financial meltdown Pink City Expressway Private Limited was formed as
Special Purpose Vehicle to undertake a mammoth road expansion project in India. Joint
venture partners were a Dubai based diversified conglomerate namely Ascon Group
and an India based construction company namely KMC Constructions. Both companies
embarked on the 6 Laning of the Guragon Jaipur highway which is approximately 267
km long and was 4 lanes wide. The project was marred by financial delays; ad hoc
management changes and substantial delays in project performance, in part a residual
effect of the global financial crisis. These issues continue to date. The report found that
PCEPL had a mixture of a power and role type organisational culture. The
management style was identified as top down with a reactionary style of doing
business. Top management reacted first rather than anticipating risks and having inbuilt remedial strategies. Whilst the organisation does have some problems, it also has
much strength that can be built on to take this project forward.
Recommendation The Way Forward
The author on analysis of the corporate culture of the organisation recommends a
change management approach to address the current challenges being encountered.
The author found that the organisation has many positives including strong human
capital; strong leadership qualities among its management and the need to excel which
can be built on, in moving forward.

Background
The economic crisis affected all regions of the world in varying degrees and a few
sectors were particularly affected by this crisis namely the construction industry (e.g.
Ruddock & Ruddock, 2010:1; Frei, 2010). The global financial crisis was so severe that
consequences are still being felt three years later. Many commentators made
comparisons to the great depression due to the severity and reach of the crisis through
out the world. As a result of the crisis the short term availability of money all but
disappeared (Friei, 2010:2) which had a significant impact on the construction industry,
an industry reliant on capital injections. The key ingredient leading to the crisis was the
collapse of the American mortgage market leading to a domino effect with the crisis
affecting other sectors. The impact of the crisis on Dubai and India is particularly
relevant to the organization being examined; hence analysis of the crisis will focus on
these two countries.
Dubai and India have significant linkages especially in the context of the construction
industry. Much of Dubais construction labour force is sourced from India. However
before looking at the Dubai-India link and its impact on the company being examined in
this paper, first let us look at the global financial crisis and how it unfolded. As
mentioned earlier, the global financial crisis affected all regions of the world. The impact
of the crisis in India was fairly muted. According to Ruddock & Ruddock, India avoided
the worst of the economic recession and the construction industry will keep pace with
that of China with about ten percent growth (2010:7). Of course this figure should be
looked at within the context of the construction industry in China which is about 3 times
the size of Indian construction Industry (Ibid). Nevertheless, if Indias estimated growth
in 2010 in GDP is examined, it was estimated at 8.8 and 8.4 in 2011 (IMF, 2010). So in
terms of overall growth, it can be seen that India was and is not particularly affected by
the crisis. In contrast Dubai is another story. Dubai was one of the worst affected
countries in the United Arab Emirates. Construction growth was expected to slow from
20% in previous years to about 15% in 2009 (CIOB Policy Brief, 2009).
With the collapse of major banks (Lehman Brothers in September 2008) the availability
of short term money vanished which resulted in interbank lending disappearing (Frie,
2010). This particularly affected Dubais construction industry and as a result countless
construction projects were halted. According Frie, many contractors in response to the
crisis prepared for the down turn by rationalising their operations and becoming leaner
organization (2010). The primary cause for this slowing down in the construction
industry was a lack of financing stemming from the Global Economic Crisis (Wilkins,
2009).
Why was Dubai so severely affected by the crisis? Well according to Archer (2009),
Dubais infrastructure could never keep pace with its pace of development. The impact
of the financial crisis has had far reaching consequences for investment and
development in not only Dubai but especially for those companies investing abroad.
Many large construction companies had to down scale ongoing projects and in some
instances abandon proposed projects due to lack of finance.

For some companies projects untaken outside of the Gulf had to be reconsidered,
especially finance of such projects. It has been estimated that approximately US$ 500
billion worth of projects have been put on hold since the financial crisis began (Wilkins,
2009:21). Many projects found themselves in serious trouble as funding that was freely
available prior to the crisis was now scarce and in short supply. Construction companies
faced many social problems with a large number of suicides of construction workers
who suddenly found themselves out of work and in debt to their employment agents.
It can be seen that the crisis had vastly different impact on both Dubai and Indias
construction industry however the impact of the crisis had particular impact for the
company being examined in this paper.

Introduction
Pink City Expressway Private Limited (PCEPL) was formed through a Special Purpose
Vehicle (SPV) between the ASCON Group of Dubai and KMC Group of India. The
company was formed as result of an award by the National Highways Authority of India
(NHAI) for purpose of the 6 laning of the Gurugon Highway Gurugon to Jaipur in India.
PCEPL engaged Qserve Global (QSG) to act as an independent project consultant to
monitor the cost of the project and ensure the project meets its milestones. The project
commenced in the wake of the global financial crisis and was severely affected by its
impact as the ASCON group based in Dubai was the main investor in this project with
an interest of 51%.
The project is a Build Operate and Transfer (BOT) initiative that will be an ongoing
concern for at least 40 years. PCEPL together with QSG will be engaged for the
duration of this BOT project. The impact of the crisis has had a significant impact on the
project finance however in addition to the consequences of not receiving the financial
draw-downs on schedule there has also been a significant impact on the morale and
organizational culture of PCEPL. This has had a significant impact on the ability to do
business. The organization is based in India and consists of mainly Indian nationals
however the company has also engaged QSG from Sri Lanka as mentioned and several
international project management consultants from varying nationalities. QSG in its role
as independent consultant is intending this report as a recommendation to PCEPL on
how to further improve its delivery and get the project on track. This report will provide
an analysis of the current organization culture including the strengths and weakness
and opportunities to capitalize and areas for improvement.
Part of QSGs mandate as subsidiary of this organization is to ensure the organizations
main project which is the 6 laning of the Gurugon Highway from Gurugon to Jaipur in
India to be constructed in time within the requirements of the concessionaire
agreement. Despite the best efforts of PCEPL, the project is behind schedule and this
is foreseen as having a huge impact on the project as the concessionaire agreement
signed between PCEPL and NHAI for the purpose of this project has stringent
conditions. The delays in the project will have serious financial implications on the
project which in turn will have serious repercussions on PCEPL.
In light of this emerging problem QSG has prepared a report and presentation to be
presented to the board on how to mitigate this situation. The first step is having a hard
look at the organizational structure; the influence of culture on the structure and
strategies for improvement in this new reality of post global financial crisis particularly
focusing on the project at hand given the importance to the organization. The next
section of the report will provide a strategic analysis of the current situation of the
organization and will be followed by an in depth look at the organization culture present
in PCEPL and examine the strengths and weaknesses of the culture of this
organization.

Pink City Expressway Pvt. Ltd and Organisational Culture:


Strategic Analysis
Organisation Background
Fong and Lung (2007) argue that the construction industry is a project based industry
as such each project has different people with professional knowledge and experience
associated, this requires a necessary requirement to work and coordinate with others
from different companies (157). In this context it is hoped that this report will be taken
with the intention it is prepared- to facilitate the end goal which is to ensure that the
project is completed with minimum cost to PCEPL with maximum utilisation of available
expertise.
The Concessionaire agreement requires PCEPL to Widen and Up-grade the 4 existing
lanes to a 6 lane road from Gurgaon to Kotputli in Haryana and Rajasthan in India. The
road has not been closed and is currently being used. The project was awarded in
August 2008 at the initial stages of the global financial crisis however the impact on the
project has been profound as financial drawdowns only started coming through around
April 2009. The gap between the project commencement and actual receipt of financial
draw downs had a negative impact on the project as can be imagined. The project is
worth 1859.7 Crore (INR) which is approximately USD 413 million at the current rate of
1 USD = 45 INR (source xe.com).
The SPV consisted of the ASCON group with a 51% stake and KMC- an India based
company with 49% but just as the project commenced, Dubai underwent a massive
crisis where ASCON was unable to provide the necessary financial draw downs that
were required at the times required. This caused huge delays to the project whose
repercussions are still being felt with the project being more than 1 year behind in terms
of time. This has had huge impacts on the viability of the project- part of the
concessionaire agreement is that until project completion, the current toll collection is to
be kept in a interest bearing escrow account and will only be credited to PCEPL on
timely completion of the project. If the project is not completed on time, the
Concessionaire agreement allows, NHAI to not pay the collected toll. This will have a
significant impact on the profitability of this project given that it is a BOT.
Liquidated damages (LDs) will come in to effect for major delays and the ability to
recuperate costs of project become less realistic as the project gets further and further
delayed. The impact of these factors has influenced the organisational culture that has
developed in PCEPL and its relationship with various stakeholders. The severity of the
impact of the lack of access to finance could have been reduced if the organisation had
maximised its use of its human capital and managed the project in a slightly different
manner in terms of its organisational culture. In the next section, the management style
of the PCEPL will be described and analysed.
6

PCEPL & Organisational Culture


The recent global financial crisis illustrated the importance of checks and balances in
financial sectors of an economy including the corporate world. Although many countries
are making headway in terms of recovering from the crisis, it is important to understand
how the way an organisation conducts business influences the success or failure during
the a crisis situation. This is particularly important in examining the construction
industry, as finance is integral to the success or failure of any construction project.
However, capitalising on the strengths of an organisations culture during a crisis can
assist in mitigating some of the issues faced by an organisation which will in turn ensure
a smooth transition to a post crisis reality. If the organisational management is
described, it could be said PCEPL has a very top down approach. Before looking in
depth at PCEPL, it is important to understand the different types of organisational
cultures that manifests in an organisation.
If the definition of organisation culture is examined, it is described as the personality of
an organisation where the culture is symbolic, holistic, and unifying, stable, and difficult
to change (Mowat, 2002:3). It can be argued that based on this definition a culture of
an organisation develops as a result of what goes in to an organisation- its employees;
management and management style to name a few.
According to Singh (2009), Culture is made up of visible and invisible, conscious and
unconscious learnings and artefacts (also called as practices, expressions, forms and
symbols) of a group where the culture is the shared mental model (2). In the context of
PCEPL, its organizational management styles are very much in line with this idea of
culture as conscious and unconscious leanings. PCEPL is based in India and hierarchy
is very important in Indian cultures and by extension, it would be expected that the
management style would manifest from this idea. In examination of the organizational
culture of PCEPL, it is very much a top down management style in line with this
thinking.
According to Borgatti (1996), corporate culture is different to an organisations culture
and generally a strong organisation culture will be internally consistent, widely shared
and give employees a clear idea as to what appropriate behaviour is in a given situation
(in Mowat, 2002:3). It is different to corporate culture in that it is not simply the vision
and mission but more how employees express themselves in day to day
communications. Organisational culture allows employees and management to know
how to conduct day to day business, in the case of PCEPL, the development of this
culture was ad hoc as the organisation although had a widely shared mandate , lacked
internal consistency within the organisation. This was because of the challenges faced
at the commencement of the project as there was a lack of clarity as to who was in
charge as a result of the financing issue. This point will be discussed further on in the
report. However in short, for the employees of the organization, the mixed messages
and lack of clarity emanating from the top, led to the development of a fragmented
organization culture that was divided based on loyalty to particular individuals-which
was an unhealthy situation.

Let us examine what we mean by organisational culture and its relevance to this report.
Well to put it simply, all organizations have an organisation culture that goes beyond a
corporate culture and this culture defines the way things get done in an organization.
The culture of an organizing determines the drive and action of an organization; it
guides employee thinking processes and how they act and feel. In defining culture
DeWitt (2001 in Mowat, 2002:4) describes culture as where philosophy expresses
values; values are manifest in behaviour; and behaviour gives meaning to the
underlying philosophy. Philosophy, values, and behaviour describe an organizations
culture and culture is the glue that holds the organization together. Therefore it can be
seen the importance of the development of a healthy organizational culture.
Culture develops and evolves overtime and is influenced by the entities that form the
organization - a big part is its employees. Certainly in the case of PCEPL, the
organizational culture has developed over time however the dynamics of the SPV has
influenced the current culture prevalent through the organization negatively as the SPV
partners have not acted as internally consistent entity but rather as fragmented set of
organisations pursuing its own interests rather that the organisations shared goal.
It is important to note that culture may be effective at one time, under a given set of
circumstances and ineffective at another time. This was and continues to be the case
for PCEPL. Theorists suggest that an organization could have one of four types of
culture (e.g. in Gameson, 2010:16 & Handy; 1985). They include the following:

Power in this type of organisational culture, power is concentrated among a few


people and control emanates from the centre. The organisation here is
influenced by one central group or individual and the personal relationships with
that group or individual is what matters. Generally in this type of culture an
organisation have few rules and almost a nonexistent bureaucracy. The benefit
of this type of organisational culture is that decisions can be made quickly (e.g. in
Gameson, 2010:16 & Handy; 1985). In examining PCEPL , certainly its
organisational culture has some characteristics of this type of culture
Role balances the power of the leaders with a system of bureaucratic structure
and procedures. A role culture organisation consists of people with clearly
delegated authority within a highly define structure (e.g. in Gameson, 2010:16 &
Handy; 1985). In terms of roles, at the start of the project it was apparent that
one particular role was significant in terms of the functionality and decision
making in the organisation however as the balance of power in the SPV has
shifted so too has the power associated with particular roles.
Task/Achievement evokes internal motivation by providing opportunities to use
ones talent and abilities. An organisation that has task culture is where teams are
formed to solve a particular problem. Power derives from expertise as long as the
team requires expertise (e.g. in Gameson, 2010:16 & Handy; 1985).
Support offers members satisfaction which comes from relationships

Generally, in organizations, senior management will determine the corporate culture of


an organization based on the objectives of the organization. Whilst at the same time,
there will be an existing internal/organisational culture among the work force that will
also manifest itself in the organization (Montana & Charnov, 2008). The resultant culture
tends to be a mixture between what the organization wants and the manifest culture
from the workforce. If the characteristics and nature of PCEPLs organization is
examined it is quite apparent that the culture is a mixture of Power and Role type of
culture. At the commencement of the project the ASCON group had a larger stake in
SPV as it was the majority investor and the individual that was put in the position of
authority tried to do everything in others words the organizational bureaucracy was not
very well developed and everything went back to this person- he made all the decisions.
This changed later on when the organization could not provide all the finance. In other
words the organizational culture manifested itself based on the stake holding of the
organization and although the primary objectives of the organization remains consistent,
the internal working culture changed when employees saw internal changes at the top.
As mentioned above PCEPL has a very top down management style with a mixture of
role and power culture present in the makeup of its organisational culture. As reaction
to the slow progress of the project construction and inability to meet milestones, PCEPL
has been adding layers of management in the belief that this will assist in achievement
of the project milestones. However the reality has been that increasing layers has
created challenges to the various groups involved in the project and the management
has become dysfunctional in particular areas.
Initially the ASCON group which had a larger stake in the SPV had a more dominant
role in PCEPL and the project was guided by what Dubai wanted in a manner of
speaking. The management was shared by both companies with representatives from
each group however the President Operations appointed by ASCON had a larger say
in what went on and his management style was very much a top down approach with
elements of the power culture in place. The project was micro managed and the
approach to contractors was adversarial in nature. There was a significant lack of
transparency in terms of communication. The adversarial approach taken by PCEPL
became a problem especially when the draw downs from Dubai did not come through
as scheduled.
Figure 1 below illustrates the organisational structure present at commencement of the
project. QSG was engaged to provide independent cost and risk management support
to the project. The chart below shows a organisation that has clear reporting lines. Of
course the reporting lines could be further broken down however it is clear there was
one person who reported to the SPV. From the start of the project, management did not
seem interested in mitigating issues that presented instead looked to blame groups or
avoid the real issues. This was at the heart of the organisational structure at the time.
This caused groups within the organisation to align themselves based on personal
relationships relating to the two companies. Concurrently the project was falling behind
due to lack of financial draw downs. However if the management had not encouraged
an organisational culture that was so individual /personality based, perhaps some of the

residual issues that are still ongoing could have been avoided. It is not say that strong
leadership was not necessary but the resulting organisational culture was one where
there was lack of communication between departments with each team blaming the
other for issues and money being spent unnecessarily without adequate accountability.
There was also an un-willingness to listen to the expertise provided by different
stakeholders including the independent consultants such as QSG. Managements
adversarial attitude toward not only external consultants but also toward contractors
hindered and continues to hinder progress with some contractors having to be
terminated or abandoning the sites.

This adversarial relationship between client and contractor is very much a cultural
phenomenon and if the nature of the relationship had been adjusted to more of a team
environment, perhaps the company would not have faced some if the issues it is now
facing today. To address the financing issues, KMC obtained some additional financing
and as a result started to get the upper hand in the SPV. That is the inability for Dubai to
obtain the financial draw downs in a timely fashion forced KMC to explore options in
India as well. This resulted in a shift in the balance of power. Today several more layers
have been added to the management of PCEPL several vice presidents have been
employed; now representatives of ASCON have also introduced another layer over the

10

president to monitor the project. However this has inadvertently caused additional
issues- now the president of operations wings have been clipped and as such the staff
has again re-aligned themselves along those lines. So again the organisational culture
and internal workings have shifted. In addition although representations from each
organisation has reached higher levels with top management of each of those
companies being a part of the PCEPL, the problem is that still the culture of the
organisation remains the same. With essentially groups within the organisation
continuing to blame other groups for short comings and lack of team environment in the
execution of this project. Figure 2 below provides another organigram which illustrates
the current organisational structure.

The above chart shows that senior management, rather than building on the existing
organisational structure- created a new one. This was not done in consultation with the
former President Operation but rather just decided- this non- consultative process is not
conducive to a healthy organisation and the demotion of the former President to a VP
created many mixed signals to the staff of the organisation in terms of reporting, to say
the least.
In this context QServe proposes the following way forward for the organisation.

11

Proposal for a Way Forward


QSG proposes a step by step approach to mitigate the residual impact of the Global
financial crisis on this organisation. There is much strength in the current hierarchy of
the organisation however each group within the organisation should have specific
reporting lines. PCEPL currently looks at the lack of progress in the organisation and
affiliates it simply to financials however if the organisation was to re-think how it did
business in terms of relationships with the various groups within the organisation some
improvements can be made. Many of the issues that are being faced could be solved
and processes streamlined. The solutions in the past and now has been for senior
management to add further layers to organisation and more reporting lines rather than
streamlining existing ones.
One of the major issues that QSG noticed at commencement of the project was that the
implementation and progress of this project appeared to be in the hands of one person.
This is a project worth1859.75 Crore (INR) or USD 413 million was in practical terms left
to one person to manage. Realistically this person should have had a sound
organisational structure with clearly delegated roles for staff. However from the start,
even qualified personnel were not made use of in a meaningful manner. In fact the
president of operations was someone with a very strong personality and he appeared
to make all decisions minor and major often micro managing staff. The current structure
has many Vice Presidents all currying favour with the top management of PCEPL rather
than working together as a cohesive group. So it would have been prudent rather than
adding layers to rather build on the existing structure. Based on this premise, QSG
believes that PCEPL would benefit from undertaking a change management process.
If a change management process was undertaken, management buy-in is essential for
the process to be successfully implemented. According to Egbu (1999), there are
several factors that create a favourable environment for an innovative culture in an
organisation. Among them of note are support from top management in other words the
a strong innovation champion; flexibility in communication- top-own, bottom up and
lateral communication and a risk tolerant climate where it is accepted that lessons can
be learned through mistakes (Ibid:5). In the case of PCEPL, the author believes that the
will is there. If the change management process is to be effective, then PCEPL must be
in a position to accept the above factors and champion the cause. This would involve a
significant re-structure of the existing organisation followed by team building exercises.
As mentioned previously, PCEPL is characterised by its adversarial nature in terms of
doing business internally and externally hence for any type of change process to be
successful, a culture and climate of openness and willingness to share information,
experience and knowledge across teams is essential ( Egbu, 1999:8).
Unfortunately the current situation is that information sharing is one sided and there is
no real acceptance of the idea that shared learning can innovate. However QSG
believes that PCEPL has the knowledge and the expert personnel required for such an
exercise, all PCEPL has to do is be open to this process.

12

The next section will provide a brief outline of what the change management process
would include and how QSG proposes it should be taken forward.

13

The Change Management Process


Mills, Dye & Mills argue that change is an everyday occurrence but when change is
significant, this creates attention and forces leaders in organisations to take action
(2008). In the case of PCEPL, change was recognised but the steps that were taken
were not necessarily the right steps. It is important to understand that leadership and
culture are interlinked (Knowles, Reddy & Konczey, 2002). Therefore there is no point in
adding layers to an existing bureaucracy but rather it is more beneficial to improve the
existing culture of the organisation. Zou and Lee (2008) argue that although there is
agreement in both academia and industry that project change management practices
can improve project change cost performance , individual change management
practices are not equally effective (387-393). However Molly (2007) argues that change
is inevitable and occurs to some degree in almost every construction project (12).
Although there are various views on the effectiveness of change management, it is the
view of the author that based on the events and experiences with PCEPL; it is
recommended that a change management at the management level be undertaken.
So what is change management and how will benefit PCEPL? Well change
management is a structured approach to shifting individuals, teams and organisation
from a current state to a desired future state and the process is positive in that it
empowers employees to embrace change (Hiatt and Creasey, 1996-2010).
Organisation change management begins with a diagnosis of the current situation (Ibid),
in the case of PCEPL the organisation is suffering from multiple reporting lines; lack of
cohesiveness within the organisation; lack of communication and adversarial
relationships internally between departments and externally causing business to
conducted in an ineffective manner.
The positives include strong leadership and qualified personnel. Generally organisations
undergo change due to challenges in growth; economic down turns; and changes in
strategies
to
name
a
few
(http://www.cipd.co.uk/subjects/corpstrtgy/changemmt/chngmgmt.htm).
However
effective leadership is the key to ensure that change happens in a beneficial manner.
Given the nature of the organization, first it will be necessary for the two partners to
come to agreement on how to manage their involvement without causing employees to
align themselves with the parent organizations. In other words, senior management
needs to ensure that the rest of the organization takes appropriate cues from the two
partners.
During the change management process PCEPL as an organization can look at their
mission and vision and re-define it based on the new structure. By redefining their
mission and vision as an organisation, PCEPL can create a cohesive vision that has the
organisation as heart. According to Molly, there are 6 steps to change management:

14

1. Effective change order management is to understand the requirements of the


contract fully- in the case of PCEPL it would be to have thorough understanding
of the concessionaire agreement
2. Identify the change when it occurs. Change according to a contract can be
defined as extra or additional work; defective or deficient plans or disruptions to
the work progress and methodology. The case with PCEPL is slightly different as
the organizational structure experienced several changes in dynamics as result
of external forces outside the confines of the concessionaire agreement.
Nevertheless, the impact on the dynamics of the organization and resulting
organizational culture has had a significant impact on business and recognizing
that change has occurred and dong something about it can only benefit the
current project outcome.
3. Notification is the third element and is both internal and external function.
4. The fourth step is documenting the change
5. Preparing for change order request is the 5th step. This is to establish cause and
effect
6. The final step is to attempt to have all parties resolve the change order request
(2007:12)
It is argued that change is the only constant in construction projects and the ability to
manage change can determine the success or failure of project objectives. The fact that
the SPV was formed for this project and given that this is an ongoing concern it is
important that PCEPL recognize that change has occurred and the manner in such it
has dealt with is ad hoc and a structure process would be beneficial (Molly, 2007:12).

15

Rethinking Corporate Culture for an Internally Consistent


Organisational Culture
The change management process will not only involve re-thinking roles but also how
they do business. Where PCEPL has a strategic advantage especially in terms of
human capital, the organisation can maximise and use this capital to its full potential this
can lead to cost savings in terms of project costs and also in catching up in achieving
project milestones. By (2005), argues that often change is unpredictable and tends to
be reactive discontinuous, ad hoc and often triggered by a situation of organisational
crisis (375). This is certainly the experience with PCEPL; initially the two representatives
of the ASCON and KMC had an adversarial relationship, with the ASCON
representative often asserting his representation of 51% on decisions regarding the
project when the power structure changed as result of the Dubai groups inability to
obtain funding, a new layer of management was implemented.
This was definitely a reaction to the changing circumstance. To be fair to the
representative from ASCON, his hands were often tied due to lack of access to capital
however the relationships within the organisation could have been handled delicately, if
that had happened from the start, the organisational dynamics might have been
different. There are various change management methodologies however for the
purpose of this proposal; the author believes the emergent approach best suits the
needs of the organisation. This approach is modelled after the premise that
organisations are dynamic and unpredictable and they constantly have to adapt (By,
2005), certainly the construction industry post the global financial crisis is testimony to
this line of thinking. The table below (By, 2005: 376) provides 3 models of emergent
change.

16

Table 1: Comparison of three models of Emergent Change sourced from By,


2007: 376.
The first model Kanters Ten Commandments for Executing Change fits in with the
status of PCEPL. QSGs proposal is to use this methodology in the change
management process. The rational for the use of this model is that the current
organisational culture and management is fragmented and employees are divided.
Although there will be challenges to completion on time the first step in addressing
these issues is for PCEPL to get their house in order. This requires recognising that
there is a problem and coming up with a shared vision. The model allows for the use of
existing resources like in the case of PCEPL the presence of strong leadership. At the
heart of the model lies the importance of communication which has been a serious
failing in the past. This will allow employees to take there cues from management and
develop a more internally consistent organisational culture rather than one that is based
on personal relationships.

17

Conclusion
Organisational culture grows out of a need and develops as result of the people
involved in that organisation. It is not static but constantly evolves. However it is
important that when organisational culture is ineffective or affects the organisations
ability execute projects, that the need for change is embraced. Change management
does not happen overnight. In the case of PCEPL, the author firmly believes that
change management would benefit the organisation. The first stage is acceptance of
the need for the process and to embrace the proposed methodology. QSG believes
that the above commentary provides the case for change management and the
proposed methodology is appropriate based on the current nature of the organisation. If
the PCEPL management accepts this proposal, the next stage will be to facilitate the
process of change. It is recommended that PCEPL consider these implications as the
time is right for correcting some of the bad practices that have developed over the life of
the organisation which is fairly young to ensure a long and fruitful lifespan.

18

References
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Journal of Change Management, Vol. 5, No. 4, 369380, December 2005

CIOB Policy Brief, (2009). The Impact of the Global Financial Crisis on the
Construction Industry, CIOB
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(2001).
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Practice of Organisational Structures and Cultures, University of Salford

19

Handy, C.B. (1985) Understanding Organizations, 3rd Edn, Harmondsworth, Penguin


Books
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management, Change Management Tutorial Series, www.change-management.com

Knowles, MC; Reddy, Prasuna & Knonczey, Kinga (2002). An Analysis of Different
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Economics, Monash University
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Why
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2008) 26, 387393

21

Presentation to the Board of Directors


(Please refer to attached Annexure A)

22

NOTES
The Global Economic crisis had an impact on many industries and as you all know none so
much as the construction industry.
We particularly felt its impact when the financial draw-downs were not coming on time
As you all know, we are now approximately 1 year behind in terms of progress and it is
important that we take stock of what has happened and try to mitigate some of the issues
that we can fix.
The report in front of you is meant as mid point review in terms of the organisational as
a whole and how we can capitalise on our strengths and perhaps iron out some of our
weaknesses.

NOTES
Every organisation has both a corporate culture and an organisational culture. The former
develops based on the vision and mission of the organisation and the latter develops based
on the day to day operations of the organisation and its inputs come from you as
management and your employees.
Corporate culture is unique to each individual organisation. The current organisational
culture that has developed is fragmented and a reflection of dynamics at the top.
This fragmentation has developed a negative organisational culture with departments
and individuals aligning themselves based on personality or advantage. It is important that
an internally consistent organisational culture develop
The top down management style that has emerged does not capitalise on the many
strengths of the organisation including the high level of expertise available.
By capitalising on the strengths, some of the cost related impacts that are affecting the
organisation can be mitigated.
QSG proposes some steps to be taken to create a more beneficial working environment.
This will be discussed next

NOTES
Change is a constant phenomenon that construction companies need to face. The extraordinary
events of the global financial crisis early in the project created much of the issues being faced
today. However some of those impacts could have been minimized.
This report in front of you is a mid point review of the project as whole and provides some
recommendations to ensure the project runs smoothly
QSG believes that the time is ripe for a Change management process to take place. Many bad
practices have developed over the last 2 years and this process will allow PCEPL to change some of
these bad habits. So what is change management: it is a structured approach to shifting individuals
and teams of an organization from a current state to a desired future state which is a positive
process which embraces the employees to embrace change.
Organizational cultures (OC) develops from the cues received by employees from top
management. OC is basically how employees conduct day to day business; beliefs on
communication and the norms of an organization. This different to corporate culture which is
simply the vision and mission etc.
If the employees do not have clear guidance on what this means, a fragmented type of
organisational culture develops. This has a negative impact on the day to day running of the
business with factions being formed and the shared end goal being lost in the process of currying
favour with various top managers.
Through change management, a shared and cohesive vision and mission can be developed by top
management that takes in to account the new dynamics between the two partners in the SPV. This
then can lead to a more cohesive internally consistent organisational culture.
The benefit for PCEPL, is that staff can put aside petty differences and irrelevant issues and work
toward the end goal which is to complete the project on time, with minimum costs.

NOTES
Internal and external communication in the past has been poor- it is important that
proper processes be in place to manage this communication. The monthly meetings that
PCEPL have with the various departments are excellent however these can be improved
upon by ensuring that these meetings are not an opportunity to nit pick or blame
departments but an opportunity to improve areas that have issues.
Leadership is an important part of the change management process- there are many
strong leaders within the organization. Through the change management process these
individuals can be identified and capitalize on their strengths while at the same time
making use of the internal expertise available.
PCEPL is backed by a team of architects, designers, engineers who can take this project
forward it is important that this expertise is used!

NOTES
PCEPL has many strengths as outlined in the previous slides but with these strengths we
also have weaknesses. The main issue we face is a lack of team cohesion. The different
departments seem to work in isolation without communication and working together with
the other teams.
Rather than having a risk log and contingency plans in place, management tends to react
to issues rather than anticipate. This can create additional layers of management and no
real understanding of the potential risks and anticipating measures to mitigate these said
risks
One of the biggest weaknesses is micro management- it is important that management
learn to trust the various departments to do their job and not create unrealistic
expectations. For example un-realistic expectations may lead departments/employees to
be afraid to report accurately on issues due to fear of reprisal.
Through the change management process clear reporting lines and roles can be defined
and agreed upon which will allow for easier maneuvering within the organization.

NOTES
In this slide we will discuss what the change management process entails.
The first step is to recognise that change is constant in a construction project and that
anticipating change is important and recognising that change is not necessarily a bad thing.
The next step is to acknowledge that a organization has a culture and defining what that
culture entails- its positives and negatives
Finally recognizing that management buy-in is essential for the change management
process to be successful

NOTES
According to Kant- there are 10 steps to change management and they are as follows:
1. Analyze the organization need for change- so why do we need change?
2. Create a vision and common direction- the current situation is that we are fragmented,
this is an opportunity to get together as a team and create a cohesive vision
3. Separate from the past- move on from the past issues- discuss them but put them to
rest
4. Create a sense of urgency- it is urgent- we are 1 year behind- lets work toward the end
goal and try to formulate strategies to reduce that 1 year lag
5. Support a strong leader role- the former structure of have a an overall president was
useful rethink how we can use strong leadership given that top management is only
in one place once every month- an overall leader is necessary.
6. Line up political sponsorship- top management meaning the two partners need to be
both onboard to ensure success
7. Craft and implementation plan
8. Develop enabling structures
9. Communicate, involve people and be honest
10. Reinforce and institutionalize change

I just described the emergent approach to change and this approach is modelled

after the premise that organisations are dynamic and unpredictable and they
constantly have to adapt . This model allows us to use existing resources and
capitalise on the many strengths the organisation has.

NOTES
For this process to work- you the directors have to recognize that the organization can
benefit from such a process. QSG can facilitate this process of change however from the
management side -a champion to take this forward will be required to ensure that all staff
believe in the process and benefit from the same.

NOTES
Change is constant -denying its existence is a mistake. For us to succeed as organization we
need to recognize this process of change and rather than reacting to it- we should
anticipate. This proposal is an opportunity to correct some of the bad practices of the past ;
capitalize on our strengths and create some good practices.
Most importantly to ensure that PCEPL successfully manages to complete the project with
minimum costs and maximum profits.