In construction, a project is generally considered complete once the facility is commissioned. Formally, that is true: the completion certificates have been signed, construction and installation work has wrapped up, and the facility has officially been handed over to the client. But from a life-cycle perspective, this is when the project’s outcome begins its real life, facing the test of reliability, durability, efficiency, environmental performance and ergonomics.
At earlier stages, mistakes existed in documents, assumptions or poorly developed solutions. During operations, they become reality:
- an impractical layout
- excessive energy consumption
- failure to maintain a comfortable indoor climate, with spaces that are too cold and/or too hot
- engineering systems that are difficult and/or expensive to maintain
- limited scope for upgrades
- alterations and repairs intended to correct these mistakes, where correction is even possible
Operations, therefore, is not simply the stage at which a completed building or facility is put to use. It is where the quality of all previous decisions is tested. This becomes particularly clear when the facility’s operating costs are calculated.
During the delivery phase, meaning the construction of the building itself, the focus is usually on CAPEX, the cost of creating the asset. OPEX, which includes operating, maintenance, repair and energy costs, is treated as secondary and irrelevant to the immediate task. After all, operations are another team’s responsibility and ultimately the owner’s problem. But this raises an obvious question: are the party paying for the design and construction work and the party that will later pay to operate the facility not, in fact, the same person or organisation?
A brief clarification is needed here to avoid confusing the issue. In reality, it does not matter whether the developer and the operator are the same entity. Whatever happens to the building or facility later – whether it is sold immediately, as is common with residential developments, or after an extended period of operation, as is more often the case with commercial properties – the buyer will consider the cost of operating it, including repairs, refurbishment, maintenance and other expenses. The only question is how soon this assessment takes place, given that buildings have long operating lives, ranging from 20-30 to 50-70 years. Operating costs are therefore assessed over a foreseeable time horizon. Engineering solutions eventually become obsolete, while systems suffer wear and fatigue and begin to require major repairs or reconstruction. By then, however, the asset has entered another stage of its life cycle. It is therefore reasonable to assess OPEX over the period during which the building serves its current purpose, at a particular point in time and, for the sake of analysis, under a single owner.
Returning to the building life cycle, it shows that a facility can be relatively cheap to build and extremely expensive to operate. Savings on engineering systems, maintainability or spare capacity return year after year in the form of higher operating costs. In practice, some of the money supposedly saved during construction becomes a recurring expense lasting for decades.
The next important issue is repair and modernisation, already mentioned above. During its operating life, every facility undergoes:
- routine repairs
- major repairs
- equipment replacement
- modernisation
- changes in function or load
In other words, operations constantly generate new projects. Once again, the quality of the original decisions comes into play. If the facility was not designed to accommodate change, modernisation requires complex alterations, replacing equipment becomes a problem, and shutting down operations during repairs creates additional losses.
Decisions made without considering the facility’s future development are especially costly. What seemed “sufficient” at an early stage begins to constrain:
- business growth
- technological change
- increased loads
- the introduction of new systems
As a result, operations cease to be about using an asset and instead become a constant struggle to adapt it to new requirements while working around constraints embedded in engineering decisions made years earlier. This is where the central gap running through the entire project life cycle becomes fully visible. At the early stages, attention was focused on getting the project started quickly, meeting construction deadlines and formally completing the work. Almost no one established the building’s intended service life, which broadly defines how long the chosen engineering solutions are expected to remain viable. Yet this is precisely what should shape the operating strategy:
- Long-term performance
- Flexibility
- Maintainability
- Resilience of design solutions
- The cost of ownership over decades.
If these qualities were not built into the project from the outset, adding them later is extremely difficult and expensive, if not impossible. This is why the cost of correcting mistakes during operations can rise many times over. Nor is this limited to the direct cost of alterations. It also includes commercial losses caused by:
- disruption to operations
- restrictions on the use of the facility
- lower efficiency among businesses occupying the areas under repair
- additional organisational and operating costs.
One would like to emphasise just how important this is. Unfortunately, these issues are often excluded from consideration altogether. Operations do not create new problems. They expose poor decisions made at earlier stages of the life cycle.
It follows that a project cannot be considered successful simply because construction was completed. A project is successful only when the resulting building or structure supports the efficient work of people and businesses. More specifically, it must:
- remain resilient in operation
- allow for development and modernisation
- provide an acceptable cost of ownership
- remain functional throughout its life cycle.
How can this be achieved, drawing on international experience? The key differences between countries lie less in their level of technology or the amount of funding available than in the maturity of their project management systems (see figure).
In the UAE, for example, major construction projects are delivered through process-based and contractual management models. PMBOK approaches and FIDIC contracts are widely used, with a strong emphasis on risk allocation, formalised change management and an independent project engineer, whose role is to protect the client’s interests on technical matters. This makes it possible to manage not only the construction phase but also the resilience of the project as a whole.
China has taken a different path. Project management there is embedded in the state’s strategic planning system. Major infrastructure projects are aligned with long-term objectives for regional development, transport, industry and the wider economy. China’s effectiveness stems not only from the speed of delivery, but also from systematic coordination and disciplined execution.
Russia occupies an intermediate position. Despite familiar post-Soviet problems, including bureaucracy, corruption risks and an uneven market, major infrastructure and industrial projects make active use of modern project management approaches, EPC/EPCM models, which should not be confused with the turnkey contracts often treated locally as equivalent to EPC contracts, and elements of FIDIC. This provides a significantly higher level of control than the traditional construction model.
Kazakhstan is also in a transitional phase. The problem is not a lack of specialists or resources. Both are available. Moreover, many professionals have strong practical experience. The main gap lies in the management culture of public institutions and in the regulatory system.
Modern projects are still being delivered through an outdated management model:
- heavy dependence on “manual management”
- personalised accountability placed on ministers, akims and other senior officials
- poor separation of roles, both across government agencies and within the management hierarchy
- reactive rather than systematic management.
The prevailing culture remains one of “serving the boss” rather than serving the project’s objectives and the facility’s life-cycle strategy. Project management methodologies and FIDIC approaches are not used as the foundation for controlling complex projects. Instead, they are applied piecemeal and usually treated as formal instruments that create the appearance of using effective and advanced management practices.
International experience, however, points to an important conclusion. The success of a construction project is determined not only by money, technology or the speed of construction. It depends on the system’s ability to:
- make resilient decisions
- manage uncertainty
- define and document requirements
- allocate responsibility
- consider the facility’s entire life cycle, rather than only the construction and installation phase.
Does Kazakhstan need to invent its own unique model for managing construction projects? No. Best practices already exist.
The real question is whether the country’s public and corporate governance systems, regulatory framework and management culture are ready to move from reactive construction to managing assets throughout their life cycle. This is the dividing line between construction as a process of spending allocated budgets and construction as an instrument of long-term development.
Svetlana Nurtazina, civil engineer, PhD, certified project manager, specifically for www.economyKZ.org
