Dennis Chung, Contributor
CHUNG
I AM sure that everyone has, at some time, heard reference to 'Jamaican time'. This is used in explaining why an event is later than initially planned and usually in a light-hearted manner. This issue of Jamaican time is a serious one, however, and sometimes it seems an acceptable norm. Problems with not respecting time include additional cost and inconvenience to others.
This problem is applicable at a personal, organisational and national level. It seems as if everyone is oblivious of the costs of delayed meetings and projects. It is as if there is no respect for the time of others, as well as the obvious costs of time delays. This is even more pronounced in light of increased competitiveness faced from globalisation. Companies in other countries do not waste time in implementing cutting-edge solutions, as they have to keep pace with the competition or try to get ahead.
ROOT OF THE PROBLEM
What causes timing problems, however, is not technology or operations, which seem to be blamed for everything, but people. It is people who drive timelines, not machines or procedures. You could have the best technology and documented procedures in the world, but if the people are not right, then the project will fail. As the chairman of my company recently said to me, if you have a great project planned and put 1,000 different persons on it, maybe only one will succeed at implementing it correctly and on time. No doubt, project implementation skills are precious. Anyone can create a project plan, but not many can implement one in time.
SANDALS WHITEHOUSE
This argument, of course, is relevant to two very important costs today, Sandals Whitehouse and Air Jamaica. In the former, some have alleged corruption. The project shows a direct overrun of approximately US$45 million, and add to that the revenue lost from opening late. The problem with this project may not be corruption, but poor management and execution, which may have led to much of the excess costs facing us today.
The Whitehouse project is reported to be some 18 months overdue, and was supposed to have been completed in two to three years. This accounts for an almost 100 per cent delay on the projected time. The fact is that there are many costs that are time-related and, on the face of it, should contribute to significant cost overruns.
As an example, the table shows the budgeted cost of a project for 24 months versus 42 months. If the project overruns, then there are time sensitive costs that must be considered, which include labour, management fees, utilities, equipment rental and inflation. This example shows that if these costs were prorated by time taken then this shows a 29 percent increase over budget due to time delays only.
This certainly may be a significant factor in the Whitehouse overrun and stresses the importance of proper time management. In Jamaica, however, we do not understand the importance of proper time management and tend to ignore this. This also speaks to the way in which allegations are made, that is without proper investigations, which may be applicable in the Whitehouse project. The fact is that the cost overruns may be due to improper time management rather than corruption or over charging and it is therefore very important to make this distinction as there is a substantial difference in the effect on one's reputation. It is one thing to accuse someone of bad management and another to accuse them of corruption.
Project viability
The underlying principle, however, is that the partners in the project, and particularly government, needs to hold the project managers accountable for time and cost overruns. When a project overruns time and costs, it can significantly change the return on investment and can make the difference to a project's viability. As an example if a project is projected to cost $100 over one year to establish, and for the next three years will show a return of $300 then the payback period averages one year. If on the other hand the project extends to two years and ends up costing $200 then to the end of the originally projected three year return period it may only generate $200, as the revenue remains the same over a lesser period (two years) as set-up has eaten into the operating time. The payback period now changes to two years and when compared against the opportunity costs it may not be a viable project anymore.
These are the factors that need to be considered in the governance of public funds. This is especially so in the current tight fiscal position Jamaica faces. As a people we need to demand more prudent management of public funds from government even before we consider any possible corruption. The fact is that there may be more poor management than corruption. The same situation holds true for the Highway 2000 project, which seems more like Highway 3000.
Air Jamaica
This concept is similar in the case of Air Jamaica. Not because of cost overruns but the fact that it is taking so long to come out with a proper plan for going forward means that during the delay period it could be costing us monies that we do not necessarily have to incur. Everything should have been done to complete the business plan in short order so that we can stop the haemorrhaging as soon as possible by making the necessary structural adjustments or closing it down.
The arguments above show the importance of proper time management and execution. One problem is that we tend to select persons for jobs based on political connections and friendship rather than skills. The result is that our products lack competitiveness and Jamaica faces costs that could have been avoided.
The onus must rest with the government, as they are the ones selected to look after Jamaica's interest. I would suggest that if more attention is paid to the problem of "Jamaican time" then we could end up saving substantial sums.
E-mail: dra_chung@hotmail.com
