Complexity in Engineering Procurement & Construct Projects

Written by Matthew Winchur, August 2019

This is the first article in a three-part series that will investigate how the field of complexity is applied
in the Engineering, Procurement, and Construction (EPC) projects in the construction sector. In this
first article, the basics of complexity will be translated into EPC projects. A risk trend of how the
emergent impacts from complexity could generate cost volatility will be provided. These risk trends
will highlight the fact that complexity is not a single characteristic of a project but a dynamic
attribute that ebbs and flows over time.
In the second article these foundations will be used to create a toolkit for construction project
directors and their teams. The toolkit will help identify when emergent risks may arise from
complexity, and how to systematically tackle them. An enterprise governance framework will be
created to complement the toolkit.
Finally, in the last article of the three-part series, the toolkit and framework will be aligned with
modern digital practices to highlight how enterprise architecture strategies and key practices,
including risk management, need to be modified in order to leverage the large data sets most
companies now create.
Basics of complexity
Any system where entities are interrelated can result in a dynamic, uncertain, and often ambiguous
environment, with any events potentially creating unpredictable effects. Further, aspects of the
system (such as levels of detail, properties, dimensions, states, probabilities of events, etc.) are not
universal constants, but dependent on the observer / stakeholder frame of reference.
In the case of groups/parties of people working in these types of systems, the efforts of each party
to collaborate, cooperate, and compete will also have an impact that is unpredictable. This
unpredictability is due to the interdependence and dynamic interaction across the system of these
groups/parties.
How and why does this unpredictability arise? Over time, there is the possibility that small
interactions within the system will have a compounding effect and that this will create the
emergence of a new property in the system. The event that creates the interactions between
entities will have a non-linear impact on the system and the result will have a qualitatively different
characteristic. Systems are co-creating their environment.
Complexity in projects
The complexity of a project typically scales with the number of its elements, the number of
interactions, the complexity of the elements, and the complexities of the interactions.
Following Remington & Pollack (2007), we identify four elements of projects:
1. Hierarchy: project systems have subsystems (In EPC projects subsystems of the Design
function include cost planning, specifications, procurement, others)
2. Information: how well parties are communicating (In EPC projects this includes whether teams
are co-located, project organisational structure, meeting protocols, etc.)
3. Control: the ability of the systems and teams to maintain stability (In EPC projects the Project
Management Plan integrates all the other control systems, policies and procedures)
4. Adaptiveness: ability of the systems and teams to respond to change (In EPC projects
adaptiveness is impacted by the capability level of the team and the level of bureaucracy)
Since these elements are interrelated, the dynamic interactions increase the unpredictability that
any event will have on the project. Thus, a larger project will have a larger inherent attribute of
complexity. Unpredictability in projects has two other contributors: 1) understanding the product of
interactions of system parts and 2) the impact of “agents”.
1. The essential or defining properties of a system are properties of the whole, which are the
product of interactions between the parts, not from any individual part itself (Ackoff &
Emery, 2006).
2. Complex adaptive systems include “agents” that have the freedom to act in ways that are
not always totally predictable and can change the context for other agents (Holden, 2005). In
EPC projects agents can be anyone involved in the project: someone from the project team
or an external stakeholder. Agents are also subject to biases which lead to deviations from
rationality in judgement. In EPC projects, forecasting the remaining work for design drawings
is often underestimated due to the impact that small changes have to the overall program.
Fortunately, complex adaptive systems do share certain fundamental behaviours (Gore, 1996; Lowe
& Ng, 2006) which allow us to start to organise and manage them. These include emergence,
adaptive self-organisation, and information processing.
· Emergence in project systems is where two or more elements, agents, or parties interoperate
and produce a property or behaviour that none can produce on their own. These properties
which cannot be predicted from prior knowledge of the agents, in turn affect the
environment. Feedback loops create a multiplier effect that can accelerate this effect.
· Complex systems tend to adapt to their environment and can self-organise into more highly
ordered states.
· Complex systems exhibit the ability to process information sensed from the environment and
react to it based on internalised models. It creates interacting feedback loops, which cause
highly non-linear behaviour.
Engineering, Procurement, Construction (EPC) projects in the Construction sector
The lifecycle of an asset has many phases including: Concept, Development, Design, Construction,
Commission, Operation, and Decommissioning. The Design phase usually includes Engineering and
Procurement activities. This article will focus on Design, Construction, and Commissioning phases of
projects.
Engineering or Design: This phase usually interfaces with the Concept or Development process
which generates the project brief and is the pre-cursor to an EPC project being initiated.
Planning, product design, innovation from the supply chain, and risk and opportunity
optimisation are key activities that define this phase.
Construction: This phase is primarily defined by the focus on disciplined delivery and creating
certainty in the commercial outcome of the project. It also incorporates procurement.
Commissioning & Start-up: This phase is the validation and verification of what has been
designed and delivered. Requirements can be driven by the customer (e.g. fit for purpose),
certifiers (e.g. fire, electricity), authorities (e.g. state or federal), or other stakeholders (e.g.
equipment supplier, user groups).
Figure 1 demonstrates an indicative project life cycle phases by project effort (defined as “cost to
complete”).
 Figure 1: EPC project life cycle phases
The phases of an EPC project overlap, with most work inter-related and taking place in parallel and
(usually) managed through a sophisticated governance system. An example of the inter-relation
between Design and Construction phases is the design buildability process which ensures that work
methods are integrated into technical solutions.
Complexity in EPC projects
While a general indication of complexity can be identified at inception, feedback loops, social
dynamics, and health of systems will dramatically alter how a project reacts to an event or any other
change. The interplay of two or more aspects of a system over time will also increase the risk of a
compounding effect taking place, adding to the complexity of the project.
Numerous models and frameworks have been proposed for complexity including Mitleton-Kelly’s
Ten Principles (2003), Curlee and Gordon (2011), Oberthur and Stokke (2011) and many others.
Remington & Pollack define complexity by four key attributes:
1. Structural: difficulty in managing and monitoring many different interconnected tasks and
activities.
2. Technical: unique design challenges or techniques without precedents.
3. Directional: hidden agendas, mis-aligned goals, or poor project definition.
4. Temporal: shifting environmental conditions outside the control of the project team
In EPC projects, assumptions can be made of how likely inputs to a scenario will result in a
compounding effect occurring, which in turn contributes to the complexity of the project.
In the following sections we bring together all the concepts defined in this paper. The inputs
inherent in EPC projects will be overlayed with the aspects of complexity and the four attributes of
complexity will be used to define the output risk profile.
1. Structural complexity trend in EPC projects
Structural complexity is a result of a project having many different interconnected tasks and
activities. The key factors in an EPC project that contribute to this characteristic are:
· In the early Design phase, complexity risk is driven from interfaces with external stakeholders
o Numerous State and Federal authorities
o Capacity upgrades for infrastructure and utilities
o Understanding community impacts (e.g. pedestrians & vehicles)
· In the Construction phase, complexity risk is driven from the large number of tasks
o Size of the project and peak effort level
o Time constraints potentially driving an increase in work fronts
o Size of the project team
o Complex supply chains devolving responsibility for competence
o Access, logistics, progressive staging
· In the Commissioning phase, complexity risk is again driven from interfaces with external
stakeholders
o Independent certifications (fire services, electrical, water, etc.)
 o Fit outs and equipment
o Customer validation and verification requirements
Figure 2 demonstrates a probable risk trend of structural complexity.

Figure 2: Structural complexity risk trend in EPC project life cycle phases
2. Technical complexity trend in EPC projects
Technical complexity is a result of a project having unique challenges without precedents. The key
factors in an EPC project that contribute to this characteristic are:
· Most technical challenges are identified and managed in the Design phase. The heightened
complexity comes from the need to support discovery while maintaining a schedule.
o Ambiguity around alternative options
o Communications between highly skilled individuals
o Integration of solutions into the larger system
o Impacts on existing infrastructure
· In the Construction phase, complexity risk is driven from the secondary impacts of scope
changes.
Figure 3 demonstrates a probable risk trend of technical complexity.

Figure 3: Technical complexity risk trend in EPC project life cycle phases
3. Directional complexity trend in EPC projects
Directional complexity is a result of a project having unclear or competing goals or political agendas.
The key factors in an EPC project that contribute to this characteristic are:
· Leadership impact on the project team forming process. This is more pronounced in the
start-up of the Design and Construction phases.
· Identities of key personnel and their ability to react to challenges both individually and as a
team
· Tensions between desires for design innovation and minimizing risks in delivery
· In the Construction phase, complexity risk contributors include:
o Project sub-teams are continuously forming to deliver various scope elements
o Contracting mechanisms at play
o Supply chain robustness
Figure 4 demonstrates a probable risk trend of directional complexity.
 Figure 4: Directional complexity risk trend in EPC project life cycle phases
4. Temporal complexity trend in EPC projects
Temporal complexity is a result of a project’s uncertainty in the anticipation of a shift in
environmental conditions. The key factors in an EPC project that contribute to this characteristic are:
· Robustness of change management processes
· Agility of the project team (structure, protocols, and decision rights)
· Social interactions with stakeholders and experts, with each reacting to information
potentially resulting in the emergence of new behaviours
· Turnover rate of key leadership roles
· Supply chain performance and power dynamics
Figure 5 demonstrates the risk trend of temporal complexity.

Figure 5: Temporal complexity risk trend in EPC project life cycle phases

Conclusion
Complexity is not a single characteristic of a project; it is a dynamic attribute that ebbs and flows
over time. Aligning project governance and oversight efforts to this rhythm will allow a business that
manages a portfolio of projects to improve how they perceive and react to the various risks that this
complexity poses. A framework of business and EPC project tools can be created, each relevant to
the lifecycle phase and type of complexity. This framework will be the focus of the next (second)
article in this three-part series.
References
Tools for Complex Projects, Kaye Remington and Jullien Pollack, Gower Publishing, 2007
Design and control of self-organising systems, Faculteit Wetenschappen, Carlos Gershenson, C., 2007
On Purposeful Systems, Russell L. Ackoff and Fred E. Emery, Transaction Publishers, 2006
Complex adaptive systems: Concept analysis, Journal of Advanced Nursing 2005 Dec; 52(6):651-7,
Lela Holden, 2005
Chaos, Complexity, and the Military, John Gore, National War College, 1996
The implications of Complex Adaptive Systems Thinking on Future Command and Control, Donald
Lowe and Simon Ng, Defence Science and Technology, 2006
Ten Principles of Complexity & Enabling Infrastructure, Eve Mitleton-Kelly, Elsevier, 2003
Complexity Theory and Project Management, Wanda Curlee and Robert L. Gordon, John Wiley &
Sons Publishing, 2011
Managing Institutional Complexity, Sebastian Oberthur and Schram Stokke, MIT Press, 2011