A Program Management Approach: Stakeholder Management
“I cannot give you the formula for success, but I can give you the formula for failure, which is: Try to please everybody.”?- Herbert Swope
When people think of Dubai, they think of the Burj Khalifa; when people think of Taipei, they think of Taipei 101.??Super-tall buildings have come to identify the cities in which they’ve been built.?They impact their surrounding communities, often reshaping the look, feel, and function of the urban landscape in which they’ve been placed or have created anew.???
They involve developers conceiving a vision, investors providing financing, consultants planning the work, contractors constructing the building, statutory and regulatory bodies approving for use, and perhaps most importantly, local communities, end-users, and the general public.??
Beyond the vast quantities of concrete, steel, and glass involved in constructing a super tall building, construction is a people business, and managing stakeholders is arguably the most challenging aspect of successfully delivering such a project. Identifying, analyzing, communicating with, and engaging all relevant stakeholders early, informing them often, and, to the extent possible, aligning their interests are the general principles of stakeholder management.?Figure 1 effectively illustrates this concept.
Stakeholders Defined
The term “stakeholder” is broad and can practically refer to anyone who is either affected by or can affect the outcome of a project.?With super tall construction, stakeholders can be broken down into three primary classifications:?1) those with development, fiduciary, or contractual obligations to deliver the project (in other words, those who have “skin in the game”), 2) those with no vested financial interest or contractual obligation for project completion but whose involvement and approval is requisite for successful delivery; and?3) those with limited or no obligation to the project but whose “hearts and minds” must be won over during the design and construction process.
While stakeholders are identified and classified, a project-specific strategy is developed to communicate across and within these three boundaries, manage expectations, and universally align interests.??
Class 1 Stakeholder.?This stakeholder class is characterized by their active willingness to pursue and become a part of the project.?More often than not, members of this class (which includes developers, investors, designers, and contractors) had to aggressively compete in order to win the right to participate. These stakeholders require continuous, real-time information and must be engaged throughout the project.?It is also essential that members of this class remain aligned behind a common, long-term vision that typically emanates from the developer or local government, as the case may be.
Class 2 Stakeholder.?This stakeholder class is defined less by an active pursuit of joining the project and more by obligation.?Municipal authorities and local regulatory bodies often comprise this class.?With these stakeholders, it is best to seek early guidance, engaging them often until the requisite approvals or permits are obtained.?Input can be solicited from the Class 1 stakeholders, both during the planning phase and during handover and occupancy.?
Class 3 Stakeholder.?Typically the general public, this stakeholder class is often characterized by their project involvement having been dictated by default.?Depending on where a super tall project is under consideration, these stakeholders may or may not have had much say or influence during the planning phase, though they are without question the group that is most heavily impacted during and after construction.?Early and frequent engagement, particularly through public forums and town hall meetings are critical.
Case Study:?Taipei 101, Taipei, Taiwan
Taiwan’s long-term vision in the 1990’s was to transform itself into the “Asian-Pacific Regional Operations Center”, the epicenter of manufacturing, shipping, aviation, telecommunication, media, and finance with Taipei becoming a financial hub for Asia.?
To achieve this, Taipei needed a new financial district and, therefore, the Taipei City Government issued a Build-Operate-Transfer (BOT) request for proposal (RFP) whereby the successful tenderer would win the right of using the land provided by the city government for 70 years.
The successful tenderer would pay the tender amount plus 2% of the publicly announced land value as annual rent and would have first negotiating rights with the city to rent and operate the center for an additional 20 years after the initial 70 years expired.??
The Stakeholders.?In 1997, China Development Industrial Bank won the project with a tender of USD 646 million, and they established the Taipei Financial Center Corporation which included thirteen (13) Taiwanese companies, namely: CUTIC, Chie-ho Construction., Walsin Lihwa, Taiwan Stock Exchange, China Life, Insurance, Cathay Life Insurance, Shin Kong Life Insurance, Taishin Bank, Chinatrust Bank, Hung Tai Insurance, United, World Chinese Bank, Chiao Tung Bank, and Chunghwa Telecom.?
The project was initially named Taipei World Financial Center but later renamed Taipei 101. A vast majority of the investors were from the banking and finance sectors with no experience in super tall project development. C.Y Lee, who designed three of the four tallest buildings in Taiwan, was the architect. The structural engineer, Evergreen, is also a locally experienced firm, and Thornton-Tomasetti from the United States performed structural peer reviews. Continental Engineering Consultants was the Mechanical and Electrical Consultant supported by LEHR Associates from the USA, and there were ten other specialty design consultants for wind, elevators, facade, etc.?Turner was retained as the Project Manager, and the selected main contractor was KTRT Joint Venture (formed by Japanese builder Kumagai Gumi and three local companies, Taiwan Kumagai, RESA, and Ta-Yo-Wei). Kumagai Taiwan had already built the tallest building in Taipei, the 245 meter Shin Kong Life Tower.?Nine sub-contractors were nominated to KTRT Joint Venture and there were 22 direct contractors.
A primary location within the new Xinyi District was offered, a new MRT line and station would be attached to the project, the departure and approach flight paths of Taipei Airport would be adjusted to ensure future aviation safety, and low interest loans (totalling approximately USD 600M) were provided to help finance the project.?
The Plan.?The first challenge among the stakeholders was agreeing on the height of the building.?Balancing economic feasibility with local customs and the long-term desired outcome to have Taipei reinvent itself within the region would prove to be more challenging than originally anticipated.?
The initial plan included a single 66 story main tower with two 20 story adjacent buildings that would serve as the two primary shareholder’s headquarters.?Neither of the primary shareholder’s wanted their headquarters in the “adjacent” buildings; they wanted their headquarters in the main tower and it was from this early stalemate that the concept of a single, taller tower was born.?The first single tower proposal included a 77-story building, which was the optimal height from a construction cost point of view. It would later be increased to 88 floors since the number eight is a Mandarin symbol of prosperity, and thus, an auspicious number of floors for a financial center. Taipei 101’s evolution to super tall status continued with encouragement from Chen Shui-bian, the Taipei City Mayor (who would later become the President of Taiwan from 2000 to 2008), eventually culminating in its current form of 101 floors.?The number eight is still prominent in the design: the tower is divided into eight sloped segments and the eighty-eighth floor houses a gold-plated tuned mass damper which is visible to the public.??
While the contract between the Taipei Financial Center Corporation and the Taipei City government was a BOT, Taipei Financial Center Corporation used a more conventional lump sum design-bid-build strategy with multiple construction bid packages to execute the project.?
The General Public.?While the first two stakeholder classes dominated the project’s early phases, the general public became involved after it was announced that Taipei 101 would be the tallest building in the world. Of foremost concern were earthquakes and whether building such a structure in Taiwan was wise, regardless of its anticipated economic or political benefits. These hesitations intensified in 1999 when a 7.3 magnitude earthquake struck Jiji, a small town located 225 kilometers from Taipei, killing 2,145 people. The government and the Taipei Financial Center Corporation were challenged and immediately requested to review the feasibility of the project. At the time, the construction of Taipei 101 was only in the excavation and foundation stages, so the impact on the project was minimal.
Public skepticism climaxed on 31 March 2002 when a 6.8 magnitude earthquake centered 140 km from the project site caused two of the four tower cranes to collapse.?At the time of the earthquake, the bases of the tower cranes were on the 47th floor, 206 meters above ground level.?One of the cranes landed on the road adjacent to the site and one landed atop the podium, unfortunately resulting in five fatalities and sixteen serious injuries. One of the remaining cranes lost all its counterweights.?This time, the developer stopped the project entirely and cooperated with the local authorities to conduct a full investigation of the cause of the crane failure. The Central Government of Taiwan temporarily suspended all project sites using tower cranes and retained the Taiwan University Earthquake Center to investigate the accident at Taipei 101.???
Upon conclusion, the Taiwan University Earthquake Center established new guidelines for tower cranes that significantly increased the minimum wind and seismic loads required for tower cranes.?The study also mandated structural reinforcements, typhoon guy-wire precautions, fall prevention cables, fixed counterweights, and non-destructive testing to be performed on temporary supports before jumping the cranes.?Taipei 101 was suspended for six months, and steel erection didn’t resume until 27 September 2002.?As for the building itself, 400 structural members were removed and replaced, 291 members were repaired on-site, 204 pieces of long-span trusses were replaced, and a non-destructive testing re-assessment was conducted at all critical joints.
Financial Challenges.?During its eight years of planning, design, and construction, Taipei 101 endured major economic challenges that raised stakeholders' concerns about the viability of the project.?Foremost among them was the 1997 Asian Financial Crisis and then the 2000 dot com internet bubble. Most significant for public health and safety was the 2003 SARS (Severe Acute Respiratory Syndrome) outbreak which caused widespread panic and depressed the stock and real estate markets.
Conclusion.?Despite the numerous unexpected (and, at times, uncontrollable) challenges, the Taipei 101 stakeholders persevered.?The podium was opened to the public in November 2003, and the Tower was opened a year later.?From the perspective of the Taiwanese people, Taipei 101 is an unqualified success.?It is the symbol of Taipei, it was the first supertall green building, and it plays host to numerous charitable and public events each year, including the annual Chinese New Year fireworks.??
For the investors, it remains unclear whether Taipei 101 will achieve the expected returns projected in its feasibility studies.?In the short term, the answer appears to be “no” as it was not until 2010, thirteen years after planning commenced, that Taipei 101 started generating a positive return on investment.