Large Complex Projects (PMI-MY presentation Sept 2012)

Project Value Delivery

Large, Complex Projects:
a different ball-game

Jeremie Averous
September 2012

© Project Value Delivery, 2012
www.ProjectValueDelivery.com


Intercultural leadership Project Soft Power Team effectiveness
Project Coaching Unleashing Value Leadership development
from Your
Project Control and Reporting Large, Complex Project Recovery
Project Startup support Projects Advanced project training
Support systems integration Project Health Check
Remote sites integration Advanced risk management
Organizational maturity Convergence planning

We Empower Organizations
To be Reliably Successful in
Executing Large, Complex Projects
Discover more on

Specifics of Large, Complex Projects

www.ProjectValueDelivery.com 3


• What is the difference between day-trekking and
climbing Mt Everest?

ORGANIZATION / SYSTEMS / PROCESS
TEAM EQUIPMENT



Running a Successful
Large, Complex Projects
Company is

fundamentally
different
from running a Successful
Simple Projects
Company


• What is a Large, Complex
Project?
• Convergence process

Contents • Organization
• Survival
• Project Controls
• Systems
• Project Soft Power: Project
LEADERS
• Conclusion



What is a Large, Complex
Section Project?

1 About size and complexity


What is a Large, Complex Project?

• What is complexity?



• Complex System = System with many independent
components and strong interactions


In the Offshore Construction Industry
• Complex ~ EPIC project
• Sizeable Complex Procurement & Fabrication & related
engineering (30, 40%+ of revenue)
• Large
– ~ 300 MUSD+ in offshore industry
– ~ 200 MUSD+ in onshore industrial construction

• Risk ownership varies – not important
– lump-sum projects = risk & opportunity with
Contractor = higher potential margins

Business Benefits
– Leverage revenue / asset base
– Lump sum – higher potential margins
– Multi-year predictable activity / revenue / cash
– Market premium & market leverage
– Increased organization capabilities allows to
tackle new developments



• MINDSET ISSUE
• How do you recognize easily a company which
mindset is only one of Simple Projects?



Convergence process
Section

2
The Key To Successful Large,
Complex Projects


Convergence process

Simple Project Complex Project


Convergence process
Project Performance Driver
(or, what kills a project)

Simple project Large project

Efficiency Convergence
+20%
±10% Potential upside/
downside
- 30, -50, -100%

Convergence process

• For Complex Projects, the focus of project
management needs to be on convergence
– Main driver: avoid standby of project & major
assets
– Project management is geared on timely delivery
of all required deliverables
– This might require investment = additional cost
upfront

• Very different project management focus & process
than Simple Projects


Convergence process

• Real life examples
– Africa, 2006: A late 0.5MUSD item causes a
60MUSD loss on a 800MUSD contract
• Delay impacted First Oil: huge organizational disruption
• Loses next contract with same Client

– Numerous examples of lump sum projects
finishing at cost x2 or x3



Organization
Section

3
Large, Complex Projects Require
Specific Organization Patterns


Organization

• An integrated team
– Geographically
regrouped
– Team effectiveness

• Direct report to top
management
No Part-time job!
• Functions support project Integrated team
– Resourcing
– Processes and tools
away from
departments!

Organization

• An experienced Project Manager of Simple Projects
is not necessarily suitable to lead a Complex
Project
– Different skills required

? 20

Organization

• Different skills required also for
Procurement

Engineering



Survival
Section

4


Survival

• With a Large, Complex
Project, the very survival of the
company is at stake.

Mt Everest claimed 219 lives… so far 23

Risk Pattern of Complex Systems

• In Complex Systems, freak
events happen regularly

Moon

www.ProjectValueDelivery.com Tornado intensity 24

Risk Pattern of Complex Systems

IN COMPLEX SYSTEMS

• Freak events happen
much more often than
you would expect

• Their intensity/
consequence is much
greater than expected
normal distribution range


Failure rate of mega-projects

65%
• New Technology +10%
• Remote site +8%
Main failure factor: operability

© Project Value Delivery, 2012 Source: Industrial Megaprojects, Edward E. Merrow
26

In Large, Complex
Projects, one
single project that
gets bad can
kill your
company


Project risk management is
key to understand
the current environment
– Identify all relevant risk & opportunities
– Prioritize
– Take action


Minimizing Risk in Complex Projects

• 2 specific ways of diminishing risk
–Diminish Complexity
–Diminish Natural Variation



• Diminish complexity
– Minimize the number of contributors
• Integrated teams
• Integrated work package / subcontractors
– Diminish the number of convergence ‘meeting
points’
– Improve contributors’ alignment
• Familiarization, alignment workshops
• Incentive schemes



• Diminish the effect of Natural
Variation
– Start as early as possible the most variable
activities and protect convergence point with a
buffer
– Minimize variation in the process


Project Controls
Section

5
Where are we?
Where are we heading?

From the past to the future


Project Controls
is about
avoiding
the
Crash


In projects, we are
exploring new
territories


Projects

In projects,
unexpected
events happen

A mega-project is always highly
A project is disruptive DISTRUPTIVE
The environment will
FIGHT change


We need
to
anticipate
and react

What is Project Controls?

Project Controls is about building
information sensors, and making
sense of the information that is
generated so as to pilot safely the
project to its ultimate destination. 38

The Three Fundamental Questions
WHERE ARE WE?
(ARE WE ON COURSE?)

WHERE ARE WE GOING?

WHAT DO WE NEED TO DO TO BE BACK ON
COURSE?

In Manufacturing,
the future is
an extrapolation
of the past


In Projects,
the future
needs to be
re-forecast


Cost control is not accounting

• TWO VERY DIFFERENT DISCIPLINES

COST CONTROL ACCOUNTING / FINANCE

- Focus on the future - Focus on the past
- Understands the business - Same for any business
- Follows commitments - Follows invoicing and
payment
- Fixed exchange rates - Variable exchange rates
- Cash flow management
- Focus on project end - Focus on reporting period
point end point (PoC accounting)


• Cost control is fundamentally about

NO SURPRISES


Organization

• PVD recommends that Complex Projects be
executed in a different Business Unit than Simple
Projects

– Complex Projects have different drivers
compared to Simple Projects

– It is a consistent mistake to try to manage both
types of projects in the same organizational
structure, with the same processes


Project success is determined at
the beginning.
The first year Project Controls
setup is critical

Project Control key

• Management
of Change (and
interfaces) is
key to effective
Project Controls


• Lack of interface
management can be a
disaster


Project Control traps

Too much detail!
Not enough time for
analysis



Systems
Section

6
Large, Complex Projects Require
Another Realm Of System
Capabilities


Large project = large number
of parameters to control


The Three Fundamental Questions

WHERE ARE WE?
(ARE WE ON COURSE?)

WHERE ARE WE GOING?

WHAT DO WE NEED TO DO TO BE
BACK ON COURSE?

Summary

Project Controls is
about Navigation

• T


You can’t control
a large, complex project
with an Excel spreadsheet


Systems

• Manual systems are overwhelmed, high error rate
• Need to:
– manage inter-office remote work, remote sites
– guarantee data correctness and accurate
reporting
– have sound forecast over project span


Systems

• What systems?
– Cost control
– Commitments
• SCM
• Logistics
• Travel, HR
• Timesheets
– Scheduling & convergence planning
– Document control & Correspondence control


Systems

• What Investment?
– Systems: 2-5 MUSD
– People


Systems: the WBS is key

COST CONTROL ACCOUNTING

SCHEDULE
1
PROCUREMENT
WBS
TIME CONTROL


Project Soft Power
Section

7
Large complex Projects
require Project LEADERS


More on the Fourth Revolution?

• Book

• Blog:

www.TheFourthRevolution.org


The organization transformation


Industrial Age = rational IQ

1920’s

Collaborative Age = EQ
Emotional Work


Project Manager vs Project Leader

Doing things right

Vs

Doing the right thing

SOFT
ENTREPRENEUR TEAM
COACH
PROJECT SPIDER POWER
KUNG FU
PEOPLE
MASTER
CATALYST

The SPIDER

• Develop a specific
network for your
project
• Cover relevant
stakeholders /
priorities
• Maintain and
develop…

At an emotional
level

Focus:
Theory of constraints, 80/20 rule


Project Control traps

Too much detail!
Not enough time for
analysis


The KUNG FU MASTER

• DISCIPLINE: run the
project management
processes against all odds
• FOCUS: the 2+1 rule:
– 1 medium term
objective
– 1 long term objective
– Always enhance the
team

WHAT ARE YOU READY TO STOP DOING?

Invest at the beginning


The ENTREPRENEUR
• Don’t hesitate to invest early
– Systems and processes
– Anticipate convergence
early and invest if
necessary


What makes an effective team?


The TEAM COACH

• Build an effective team
– No divas
– Emotional connection
– Creative conflict
– Tough discussions


The PEOPLE CATALYST

• Know the people
• Use far more of people’s talents
• Leverage on people’s talents


Project Soft Power
Skills
can be learned

What does it take to become a
GREAT project manager?

TRAIN HARD

GIVE A GIFT: Feedback technique

1. Be present
2. Ask permission
3. State purpose and
positive intention
4. Share personal perception
of performance or behavior
5. Provide suggestions for improvement
6. Ask open question to get remarks
7. LISTEN attentively
8. Jointly decide action



Large Complex Projects
Transformation:
Conclusion Hard and Rewarding



On average, people spend
more than 1 year to prepare
for an Everest climb

More than 3,000
people have made it


Tackling Large, Complex Projects
• To tackle Large, Complex Projects
– Transform the organization and its mindset / focus
• Corporate and governance level
• Project leadership level
– Invest in the right tools, processes and people

• It is possible to do it with the right process,
organization and tools

• It takes effort and practice

• It pays off

Tackling Large, Complex Projects

• PVD recommendations
– It is an investment over several years. Are you
ready for it?
– Change the organization’s mindset first
– Change the organization structure: specific B.U.
and career path for Complex Projects
– Implement specific Processes for Complex
Projects in particular in scheduling &
convergence
– Implement appropriate Systems that can also be
used for other activities



• Welcome to the top!



THANK YOU!

We Empower Organizations
To be Reliably Successful in
Executing Large, Complex Projects
Discover more on

Large Complex Projects (PMI-MY presentation Sept 2012)

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