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Successful Program Delivery Starts Long Before the Program Does – Part 3

FEATURED PAPER

By Frank R. Parth, MS, MSSM, MBA, PMP

CEO Project Auditors

Rancho Santa Margarita, CA, USA


The final paper in this series follows parts 1 and 2 by proposing new approaches to developing these complex projects. The emphasis is on treating these projects not as projects, but as starting a new business. We will also examine changes in the risk management, stakeholder management, and the procurement process to make these projects more successful.

  1. Proposed Development Stages for Programs

6.1     Top Level Stages

Before anything else gets decided, the buyers/owners must ensure they are prepared to manage an effort that will require years of commitment under changing conditions and cost huge amounts of money. The readiness of the entire owner organization, from the Board of Directors to Senior Executives, to commit to this requires that they champion the effort to make it past upcoming obstacles.

The owner must have mapped out their strategic business objectives and show the relationship to the long-term strategic plan. This ensures that everyone involved understands the goals of the project. While this is necessary, it is not sufficient. The owner must be prepared to forecast annual costs over the duration of the project and ensure the financial resources will be available when needed. Access to the financial decision-makers must also be developed so they can be involved in decision-making when the environment changes, costs change, or the project overruns its planned budget.

How is the owner prepared to manage the work over the duration of the project? It is common to hire an integration contractor to oversee the work and an external consultant to act as the owner’s representative. Again this is also necessary but not sufficient. The owner’s organization must prepare itself in the same way as they would start a new business line. They must organization in a flexible manner so that as things change in the future they can adapt.

  • How much risk are they willing to accept?
  • How are business benefits measured throughout the duration of the project?
  • What organizational changes are needed to ensure effective oversight and control of the project from initiation through commissioning and acceptance?
  • Are they flexible enough in the procurement process to offer different types of contracts for the different types of work involved?
  • What is the decision-making line of authority internally?
  • How, and by who, will audit the project to ensure an independent assessment of progress?
  • Does the owner intend to use their own internal QA/QC group to ensure high quality of the deliverables?

All of this must be decided and defined before any other work on the project begins.

The financial performance of these megaprojects is inherently fragile. Due to their complexity and their environment their response to an input is not a linear relationship to that input due to interactions among the multiple components. The behavior of these systems is better described by chaos theory than by classical project management. Chaotic projects can suffer huge changes in their behavior with small changes to their inputs. For example, a large greenfield oil development project can financially fail if the local government decides to withhold permits unless more money is paid to certain government officials (a common occurrence in Russia and in some South American countries), or if the feedstock for a refinery is not exactly as expected. Perhaps a better term for such semi-chaotic projects is that promulgated by Rittel and Webber and by D.J. Hancock. These projects are too often “wicked messes”.

Our normal approach to project planning spends a great deal of effort on increasingly accurate cost and schedule tools and techniques. But the approach assumes perfect predictability and so builds rigidity into our management approach by incorporating schedule and cost deadlines into contracts. Locking in the approach through contracts makes sense from a pure planning standpoint, but it creates barriers in our ability to respond to future unknowns and to changing circumstances. Freezing the future in such a way ensures construction claims resulting in schedule delays and cost over-runs when the future is not exactly how we assumed it would be. As Flyvbjerg (Flyvbjerg 2013) puts it,

“The traditional way to think about a complex project is to focus on the project itself and its details, to bring to bear what one knows about it, paying special attention to its unique or unusual features, trying to predict the events that will influence its future.”

With all this independent research by both academics, consultants, and commercial companies we have gained a fair amount of confidence that our normal approach to managing complex projects simply doesn’t work. There is a better way to approach this. Based on the previous discussion we have created a combined model, with an emphasis on the decision gates as shown here:

To read entire paper, click here

 


About the Author

pmwj28-Nov2014-Lotffy-Parth-PARTH
Frank R. Parth

Rancho Santa Margarita
California, USA

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Parth
, MS, MSSM, MBA, PMP is the President of Project Auditors LLC, a past member of PMI’s Board of Directors, and is currently on the core management team for PMI’s PMBOK Guide version 6. Mr. Parth brings 35 years’ experience in project and program management to his teaching and consulting work.

He had a first career designing satellite systems for the US government and in 1993 he set up a consultancy and began consulting in program management and systems engineering. He has created PMOs for several Fortune 1000 companies and for companies internationally. He consults to clients in multiple industry sectors, including telecom, construction, high tech, chemical processing, utilities, government, healthcare, mining, financial services, and aerospace. He is currently supporting Saudi Arabia’s Saline Water Conversion Corporation in improving their project management processes and in developing a PMO.

Mr. Parth teaches project management courses throughout the world and has taught over 4000 students worldwide in preparing for the PMP certification exam. He is a guest lecturer at USC’s Marshall School of Business, the University of California, Irvine, and at the American University of Sharjah (AUS) in the UAE, is an accomplished international speaker, and does pro bono teaching of project management in Vietnam.

He has co-authored or contributed to multiple books on project management and has published numerous papers in project management and systems engineering. He is actively involved with PMI, serving on local and national committees and was PMI’s Project Manager for the Standard for Program Management, 2nd edition published in 2008. Based in California, Mr. Parth can be contacted at [email protected].

To view other works by Mr. Parth, visit his author showcase in the PM World Library at http://pmworldlibrary.net/authors/frank-parth/