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Is management the cause?

“Do not try to make circumstances fit your plans. Make plans that fit the circumstances,” US senior military officer General George Smith Patton Jr. (1885 – 1945).

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By Yousef Awadh Al-Azmi

IN ANY company, establishment or even the private or government sector, the most essential thing is prudent management. This means the management of any entity should show a good sense of its capability and carefully calculated managerial judgment when handling practical matters. In other words, a prudent management respects the ability of an entity and avoids falling for unrealistic ambitions, because confident progress even if at a slow pace is better than rapid unstudied success. In the field of major construction companies, a prudent management is the key factor in running the business. In this regard, I don’t only mean the contracted projects, but the entire management of the company through the formulation of a comprehensive idea about the reality of the project which is about to be executed. This includes activation of risk management due to its importance in this kind of companies considering the effects on the fl ow of work from every angle. If risk management is ineffective, there is no point in justifying failures or mistakes.

Recently, a major construction company in Britain – the Carillion Construction Company, collapsed despite its brilliant global reputation. There have been several speculations on the reasons behind what is considered a surprising collapse. However, those interested in such affairs would have anticipated its natural collapse due to some precursors which started last July, when the company sustained a heavy blow that led to the stepping down of its CEO Richard Howson. The British government attempted to bail out the company from the crisis by providing several grants of millions of pounds, including the railway line project. This is in addition to allowing the company to continue working on the huge contract with the British military, but the company reached a point where it could no longer nurse the damage and recuperate.

All the steps taken by the British government to rescue Carillion Construction Company could be compared to painkillers given to a sick person on deathbed. This company was established in 1999 and it achieved rapid successes, up to the point of taking over rival companies and expanding its services overseas. Interestingly, the report on its collapse focused on two things: delayed contractual payments of major projects in three Middle Eastern countries and pitching for contracts at any price – unfeasible contracts. It is very clear that bad management was the main reason behind the collapse, especially in terms of project contracts in the Middle East – with countries known for ill-treatment when it comes to settling contractual payments.

This is in addition to the unstable currency and economy, let alone the widespread corruption. This is why it is necessary for companies venturing into overseas contracts – whether in the Middle East or elsewhere – to gather enough information on the political, social and commercial conditions of the targeted country; as well as laws governing the labor sector, customs and exemptions in addition to difficulties in transporting capital assets. With regard to pitching for unfeasible contracts at any price, here we understand that the problem is internal before becoming external as far as the company goes. We also reiterate the effect of bad management, especially in terms of risks. The space is not enough for me to dig further into the issue, but the most pressing issue is related solely to management. This does not necessarily mean that the management is corrupt.

On the contrary, the management could uphold principles of integrity but, unfortunately, it could lack capabilities which are necessary for innovative and prudent management. Currently, Carillion is in a very difficult situation. It has been put under liquidation and the issue could extend to prosecution. Only time can tell, especially after the government’s failure to bail it out, since the collapse has put the future of Carillion’s 19,500 employees at risk and put pressure on the government.

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