With NBN Co reportedly looking to replace chief executive officer Mike Quigley, it’s worthwhile considering the challenges that face the current CEO and what his successor may have to deal with on assuming the position.
Building an ambitious project of the size and scope of the National Broadband Network was never going to be easy and so it has proved with the project running behind schedule, facing serious contractual issues and constant political interference.
Most pressing of the problems facing NBN Co are the contractual difficulties holding the project back. Three major contractors – Silcar, Syntheo and Service Stream – are in financial difficulty and subcontractors are up in arms over payment schedules.
Resolving these issues and getting the project on track has to be the first order priority of a new CEO, the challenge in solving those contractual problems is that almost all the other issues within the organisation are related to those failing contracts.
It’s a truism in life that you don’t know what you don’t know and a lack of civil and construction industry management expertise at senior levels of NBN Co has cost the project dearly.
When all 14 bidders found to be too expensive after the initial construction tender in April 2011 it became apparent the organisation’s senior management had little understanding of the construction industry.
That the “different route” confidently taken by NBN Co following the failed tender has now itself failed shows the weaknesses in not having management experience in the critical fields of construction contracting and logistics.
While the most serious immediate problems lie in dealing with outside contractors, NBN Co’s new CEO has to also face difficulties within the organisation as morale in many divisions is poor in the face of inept middle management.
“This is not a place where you question management” a number of current and former NBN Co staff have told this writer. One said: “I have before never worked in an organisation where I cannot trust any of my managers to do the right thing by me.”
Such mistrust is reflected in the company’s staff attrition. In researching this article many former senior NBN Co employees refused to talk on the basis they had signed confidentiality agreements. It is also striking how many people within the organisation, or among contractors, are not prepared to talk on or off the record.
Undoing NBN Co’s internal culture of mistrust and secrecy will probably prove one of the trickiest challenges facing the incoming CEO.
Not all of NBN Co’s woes can be sheeted home to management however, during his tenure Mike Quigley has had to deal with many factors outside his control.
One of the reasons the Rudd government chose a fibre-to-the-premises option for the National Broadband Network was Telstra’s chronic underinvestment in the fixed line network over the previous decade. The asbestos duct problem is symptom of that lack of investment which has hamstrung contractors in the field.
Political interference, while expected on a project of this size, has been intense and these pressures have undoubtedly distracted management from focusing on critical workforce and contractual issues.
Opposition threats to change the scope of the project have also caused uncertainty which resulted in Quigley’s bizarre suggestion in February of having the design criteria re-evaluated by an industry group despite being four years into the decade-long project.
That the CEO has been required to bear the brunt of the political pressures is an indictment of NBN Co’s board and its former chair. Incoming chairman Siobhan McKenna’s reported insistence that the minister’s office communicate to the company through her is a welcome development for the organisation’s corporate governance that should take pressure off Quigley’s successor.
While McKenna’s move to bring a proper governance structure to NBN Co should be welcomed the over representation of bankers and management consultants on the board remains a weakness for the company.
Skilled as the board members are, they have insufficient experience in areas required to deliver the project and that lack of qualified oversight has undoubtedly been a factor in the personnel and contractual mistakes made by NBN Co’s management.
At the other end of the company, the lack of skilled installation workers will continue to hobble NBN Co and its contractors. This is a broader problem in the economy as state governments continue to slash TAFE spending and the federal government plans to limit self-education tax deductions.
The inability of Australian industry and the vocational education sector to meet the skill needs of a modern economy is something that should focus the entire nation’s attention.
Regardless of whether the government changes later this year, or even if Mike Quigley keeps his job, the challenges for NBN Co’s board and senior management are going to remain acute as they are tasked with keeping this massive infrastructure project on course.
Alan Kohler will be debating Malcolm Turnbull on Coalition NBN policy at a lunch at the Sheraton Wentworth in Sydney on August 1. To book go to moshtix.com.au and type: nbn.