Complexity - Advanced Engineering Project Management

COMPLEXITY & Project
Management
Advanced Engineering
Project Management
Techniques for Avoiding Project
Failure
1
© MDCSystems® 2011 All Rights Reserved

The Approach
• Forensic Project Management
• Systems Thinking
• Complexity
• Leadership Traits for Project Success
• Examples of Failure and the Root Causes

The Sequence of the Beginning
• Traditional Project Management
• Scope, Schedule & Budget
• Common Characteristics of Troubled Projects
• Forensic Project Management
• Systems Thinking Concepts
• Case Histories/Studies
• Simple Case - Ras Tanura - Refinery Rebuild
• Complicated Case - Industrial Coke Manufacturing Facility
• Complexity Case - Highway Traffic Control System (“Big Dig”)
• Joint Stars – Aircraft Procurement and Modification
• Saudi Arabian Air Defense System

Traditional Project Managers
• Trained in Analysis
• Trained to Utilize “The Scientific Method of Inquiry”
 Observation
 Model or Analysis of the Problem
 Prediction of Behavior Based on the Model
• Trained to Utilize Models (Primavera Schedules, 3D-CADD)
• Encouraged to Sub-Optimize (Parts of the Process)
• Failure Modes and Effects Analysis
• Project Models Fail Because Project Processes Are Non-
Linear Self Organizing Processes and Reconfigure Their
Interactions Based Upon Uncontrolled Feedback From the
Last Set of Interactions
• Not Aware of Systems Thinking Concepts
• Provides Reactive Management Based Upon
Recorded/Developing Data Analysis

New Paradigms
• Simple Project Context - Domain of Best Practices -
PMBOK1
 Known – Knowns; Agreement on right solution to problems
• Complicated Project Context – Domain of Experts
 Known – Unknowns; At least one right answer to problem
• Complex Project Context – Domain of Emergent
Theories
 Unknown – Unknowns
• Chaotic Context - Unknowables
1 – Project Management Body of Knowledge
“A Leader’s Framework for Decision Making”
by David J. Snowden & Mary E. Boone
Harvard Business Review - 11/2007

The Modern Project Management Challenge
• Contract Management
• Scope Management
• Schedule Management
• Procurement Management
• Cost Management
• Integrate New Tools and Technology
• “Time is of the Essence”
• Project Close-out – Negotiation

Traditionally Why Many Projects Fail!
• Flawed Assumptions
• Project Environment Changes (External Factors)
• Top Down Planning
• Project Planning vs. Business Planning
• Ambiguous Communications
• Ambiguous Goals
• Static Project vs. Dynamic Project Environments
• Inability to Adapt to Changes
• Uncoordinated Incentives for the Participants
Failure = either + or – , 10% Cost and or Schedule

Forensic Project Management®
Project participants often relate the:
• Symptoms
• Analysis
• Synthesis
• Systems Thinking
The goal of the above investigation is to determine
the disease

Forensic Project Management Tools
• Analysis
 Planned vs. As-Built Comparisons
 Schedule
 Cost
 Change Order Analysis
 Documentation Review (Timelines)
 Time Impact Analysis® (TIA®)
 Damage Calculations
• Systems Thinking Approach to Understanding
 Synthesis (Holistic)
 Advanced Modeling Concepts

Spectacular Project Failures
• Advanced Automation System
 Air Traffic Control
• “Big Dig” Boston Central Artery Tunnel Project

Obit on AAS
Related Story

The Power to Manage a Project
Derives from the Contract
• Key Contract Clauses
 Scope Definition
 Schedule
 Price for the Work
 Performance Requirements
 Changes Clauses
 Notice Provisions
 Force Majeure
 Disputes and Resolution

Assumptions for the Work
(Bidding and Planning)
• Assumptions (Explicit or Implicit) More Important
Than Forecasts
 Manpower Availability
 Materials availability
 Environmental Influences
 Commodity Pricing
 Team Continuity
 No Intervening Circumstances
 Lack of Common Agendas (Incentives)
• PM - Early Recognition of Flawed Assumptions

Trouble at the Project Interaction Points
(Friction at work Scope Boundaries)
• Contractor Coordination
• Engineering Deliverables
• Long Lead Equipment
• Mobilization (Getting Resources in Place)
• Interfaces (Between Parts of the Project Team)
• Interfaces (Between Defined Work Scopes)
• Start-Up Testing/Commissioning
• Initial Operation and Operator Training

How do I load this new
project management
software into my
crystal ball?
Are the new PM tools good enough?

The Miracle

CostInfluence
Ability to Influence Project Costs Over Time
Time
Cumulative
Cost
Relative
Influence
Data Source: Construction Industry Institute
Influence of Decision Making on
Cost over Time

Case Studies

Refinery Renovation and Expansion
19

20

• EPC contractor bids on a LSTK renovation and
expansion project in Saudi Arabia
• $113 million contract
 Basic engineering by owner (flow diagrams and P & ID’s)
 Detailed engineering by EPC contractor
 As-built data for existing underground by owner
 Operational site
 EPC retains a construction sub-contractor that has experience with both
owner and EPC contractor
• Sub-contractor mobilizes to refinery site and begins site
excavation
• EPC completes design for pipe rack system and begins
steel procurement

• Sub-contractor reports obstructions at each of the first
100 excavation locations
• Kobe earthquake strikes Japan
• Owner directs EPC contractor to design around the
obstructions
• World supply of steel disappears overnight as Japanese
production is halted and Japan becomes and importer of
steel

• EPC contractor discovers errors in Heat and Material
balances provided as part of the basic engineering by
owner (Flow Diagrams and P & ID’s must be redesigned)
• Owner promises action on proposed change orders
• EPC redesigns the pipe rack system to utilize the
available steel which can be procured (mixture of English
and Metric sizes)
• EPC designs new foundation locations due to
unavoidable underground conditions

• Sub-contractor submits a $ 18 million claim for delay
• Owner demands a recovery schedule to overcome the
delays caused by the EPC contractor
• Recovery schedule accepted by the owner eliminates the
predecessor/successor relationship between engineering
and construction
• Owner rejects the design of the tank farm instrumentation
and piping system and institutes an on-line blending/mixing
system for diesel, gasoline etc.

• 18 months of chaos elapse on-site
• EPC engineers are blaming their own construction staff
for the problems and vice versa.
• Sub-contractor submits a $ 60 million claim for additional
work
• EPC contractor submits a $ 110 million claim for all costs
incurred to complete the work
• EPC achieves substantial completion

Industrial Coke Manufacturing Facility
• Proprietary Process for Coke Ovens, in operation in
Virginia
• EPC Contractor selected to build a larger facility in
Indiana
• Site is adjacent to Lake Michigan and old disposal
site for blast furnace slag and steel making slag
• Project is completed six months late and $ 30 million
over budget
• EPC Contractor files claim to recover additional cost

27

• EPC Contractor alleges unknown site conditions
caused cost and schedule delay
• Owner counterclaims for defective design
 Draft from the furnace
 Ground Swelling and settlement
 Lost Profit
• Site Dewatering Issues
• Draft deficiency
• Ground swelling and settlement

Pic 2-5.jpg

Central Artery Tunnel
Automation and Monitoring System (Contract C22A2)
•Contract Value - $ 100 Million
•Two Years Late
•$ 90 Million over budget

• Incomplete work on C22A1
• System Architecture
• Delayed highway construction
• Obsolescence
• Construction Schedule Confusion
• Recoverable costs @ about $ 25
Million

• Central Processing
• Fibre Optic Loop
• Custom Software interfaces
• Off the Shelf Software
 Interactions control system operability
 Barrier to upgrading systems software
 Hardware changes restricted by custom software
 8 bit technology in central processing computer
IPCS Architecture

• HTSI properly bid the work
• CA/T knowingly or unknowingly provided
defective data and information

43

• Rapid changes 1992 to 2003
• Memory, Bandwidth, Storage
• Exhibit 6
• Requirement to upgrade to current
• Requirement to be expandable
• Piecemeal upgrades required by CA/T
• Sequential upgrades from 8 to 16 to 32 bit
technology
Technological change

45

User Expectations
• I saw a really neat GUI
• Graphic displays of computer games
• Gaming technology driving industrial
applications

Traffic Control System Project Failure
Due to:
• Poor computer System Design Architecture
• Cascade of Changes
• Incomplete Testing of Phase One
• Bad Scope Definition
• Technology Creep
• Obsolescence

Conclusions
1. The HTSI C22A2 bid was consistent with the understanding of
all the parties at bid time, based upon the information
contained in the bid documents and other information supplied
by the CA/T at the time of bidding.
2. The contract documents issued by the CA/T did not accurately
depict either the true state of the work of the C22A1 contractor
or the CA/T’s intended scope of work for the C22A2 contract.
3. The basic system design concept architecture was fatally
flawed in that it was neither easily expandable nor
upgradeable without major modification as contrasted to how it
was described in the contract bid documents.

Conclusions
4. The installation schedule for the IPCS issued by the CA/T was
not achievable nor did it accurately reflect the state of completion
of the general civil construction portions of the project when the
C22A2 contract was bid.
5. During the course of the project since the C22A2 contract was
awarded, the CA/T was advised of the existence of conditions 2,
3, and 4 above but either ignored them or directed HTSI to
ignore them. This failure of CA/T to ensure that the necessary
predecessor work was completed and properly documented was
a major initial contributing factor to HTSI’s schedule and cost
overruns.

Conclusions
6. Changes in technology since the C22A2 project was originally
designed (1992-93), updated (1997-98), and bid (1999) have made
the implementation of the project as it was bid no longer either
practical or possible.
7. Given that (a) there was no material error in HTSI’s part in initially
bidding the C22A2 project (No. 1 above), that (b) HTSI was
fundamentally misled (knowingly or unknowingly) during the course
of its attempts to execute the work of the contract (No. 2, 3, and 4
above), and that (c) changes in technology over time have rendered
the original design commercially impracticable or technically
infeasible (No. 6 above), MDC has concluded that the C22A2
contract should be converted from a fixed price to cost reimbursable
type of contract.

Conclusions
8. The CA/T Master Project Schedules do not contain the necessary information
to adequately status and manage the C22A1 and C22A2 contracts or to
coordinate these contracts with the work of other contractors upon which they
are dependent.
9. The CA/T Master Project Schedules are not useful to either understanding or
managing the CA/T project as a whole or providing a basis for analysis and
quantification of HTSI’s damages.
10. Systems testing was disrupted, delayed and became iterative in nature due
to the same system interaction issues driving the software and field
installation work.

Joint Stars
Aircraft Procurement and Modification

• New application of Side Looking Airborne Radar
• Grumman develops the Radar and software
• Boeing Military Aircraft procures and militarizes two used
707 aircraft
• Aircraft are delayed in initial procurement and
modification
• Oil price declines to $ 9.00 per barrel
• Aircraft procured are in poor condition
• Actual quantity of repair and new parts for the aircraft are
10 times the bid estimate by Boeing
Joint Stars

• Boeing submits claim for cost impact $ 100 million
• Boeing asserts cost increases due to requirements
changing for Radar power and mounting
• Boeing utilizes “parametric estimating methods” to justify
it’s claim
• Aircraft flight delays impact Radar testing
• Grumman rejects Boeing claims after technical and
schedule analysis
Joint Stars

• Why did Boeing need so many parts?
• Why did Boeing procure/manufacture new parts and
then rework all the parts for both aircraft?
Joint Stars

Future Implications for Projects & Project Managers
Why do Systems Fail?
Large Complex Systems are Beyond Human Capacity to
Evaluate
“In general, we can say that the larger the system
becomes, the more the parts interact, the more difficult it is
to understand environmental constraints, the more
obscure becomes the problem of what resources should
be made available, and deepest of all, the more difficult
becomes the problem of the legitimate values of the
system”
Source: C. W. Churchman

• Emergence
• Complex dynamic feedback gives rise to an emergent
entity that is qualitatively different from that of its
elements. Sand dunes are far different from grains of
sand, both in scale and in behavior.
• A marketplace based upon money rather than barter is
qualitatively different because easily communicable
prices emerge that create relationships between all
goods and services. More specialized goods and
services can participate on an equal footing with
everyday commodities.

• And, the emergent behavior called the Web is
dramatically different from communities that swap files
by FTP even though the technical differences between
FTP and HTTP are relatively minor.
• How big does a system have to be before feedback
loops become nearly inevitable? It turns out that it
depends upon how complex their interactions are – the
simpler the elements and their interactions, the more of
them are needed to give a high probability of
emergence.

Saudi Air Defense System
• US Air Force Management
• Hardware, Software and Ground Facilities
• Five Year Software Development Project

• At year five, Boeing predicts five more years for development
• Boeing was required by “CDRL” to utilize software planning
tool “COCOMO”
• Boeing monthly reports from year two onward predict software
slip due to code growth
 New Threat Assessments
 New response criteria
 More sophisticated software routines
• Boeing Contract is terminated

• Northrop hired to complete the project
• Northrop completes at year ten

Complexity

New Approaches for Dealing with Complexity
Expanded Capacity
1.Systems Thinking
2. PMBOK
3. Action Learning
4. Advanced Project
Management Capability

Complexity as a Condition
What is interactive complexity
and why should you care?

How to Think About Complexity
• A large number of elements
• Many interactions
• Attributes are not predetermined
• Interaction is loosely organized and probabilistic in
behavior
• The ‘system’ evolves over time
• ‘Sub-systems’ are purposeful and generate their
own goals
• The ‘system’ is largely open to the environment

Complexity
• It is the number of parts and the ways in
which they interact that define the
complexity of a given system
• Two different kinds of complexity
 Structural complexity
 Interactive complexity

Structural Complexity
• Based on the number of parts in a system
• A system can have many parts, but no interactive
complexity
• Machines function this way
• Such systems demonstrate:
 linearity
 proportionality
 replication
 additive
 demonstrable cause and effect

Interactive Complexity
• Determined by the behavior of the parts
and the resulting interactions
• Attributes of Interactive Complexity
 unpredictable
 non-linear
 non-additive
 the link between cause and effect is ambiguous
 unstable, irregular, and inconsistent

The New Worldview of Complexity
• No certainty
• A lack of predictability
• A dynamic condition that is to a large
degree unknowable
• A change in worldview or mindset is
fundamental to engaging with interactive
complexity

What does this mean to Project
Managers?
• A very different set of competencies is
required
• Complexity cannot be successfully
decomposed
• Detailed long-term planning is impossible
• Rigid structures and elaborate control rules
are counterproductive
• Traditional PMBOK will drive the complex
project towards failure faster

The Project Manager’s Challenge!
How do you recognize and deal effectively
with emergent conditions of interactive
complexity?
Success depends more on one’s philosophy
or "world view" than on one’s mastery of
science and technology

The Difficulty of Shifting
One’s World View
72© MDCSystems® 2011 All Rights Reserved

The Worldview Shift…..
From a mechanistic worldview…..
……….to a systemic worldview
“The mistake of science is to pretend everything is a
clock when the world is more like a cloud.”
- Jonah Lehrer

Traditional Project Management
• Project Management Body of Knowledge (PMBOK)
Fundamentals
• Trained in Analysis
• Trained to Utilize “The Scientific Method of Inquiry”
 Observation
 Model or analysis of the problem
 Prediction of behavior based on the Model
• Trained to Utilize Models (Primavera Schedules) (CADD
Models)
• Encouraged to Sub-Optimize (parts of the process)
• Failure Modes and Effects Analysis (Cause and Effect)
• Not Aware of Systems Thinking Concepts
74

…….Complexity requires a more holistic
leadership perspective
Concerning Toyota:
“This is not a crisis of faulty brakes and accelerators, but a
leadership crisis.” William George, Harvard Business School
“In fact, the recent criticism of Toyota…demonstrates how
leadership holds the keys to success, and failure, to
organizational transformation.”
Alan Pang, Director, Aon Consulting Global Research Center.
It really is a question of Leadership….

How to Deal with Complexity
From To
Management Leadership
Predict and Forecast Anticipate
Analyze Data Recognize Patterns
Simplify – “KISS” See and Deal With The Whole
Pay Attention To Details Pay Attention To Relationships
Rational Thinking Intuitive Thinking
Learn a Skill Training Nurture Cognitive abilities
Think Algorithmically Think Heuristically
Analytical Thinking (scientific,
based on induction and deduction
thinking)
Design Thinking (based on
abduction thinking)

Leadership Attributes
• Self-control
• Cognitive fitness
• Ability to distribute attention over many
factors
• Ability to perceive dynamic relationships
• A contemplative turn of mind
• A high level of intellectual development
• Ability to think concretely

• A powerful memory for the project vision
• Powers of synthetic thinking and
imagination
• Pattern recognition
• A disciplined will
• Potentiating
• A highly active intellect
• Disciplined emotions
• Self-confidence
Leadership Attributes

When PMBOX Fails
A Model for Understanding
Complexity
How do you recognize complexity and
why does PMBOK fail?

The Cynefin Framework

Why Many Projects Fail!
• Project Environment Changes (External Factors)
• Top Down Planning & Project Planning vs. Business Planning
• Ambiguous Communications
• Ambiguous Goals
• Static Project vs. Dynamic Project Environments
• Inability to Adapt to Changes
• Uncoordinated Incentives for the Participants
Failure = Greater than either +10% Cost and/or Schedule overrun

Trouble at the Project Interaction Points
• Parts vs. Whole
• Contractor Coordination
• Engineering Deliverables
• Long Lead Equipment
• Mobilization (Getting resources in place)
• Interfaces (Between parts of the project team)
• Interfaces (between defined work scopes)
• Start-Up Testing/ Commissioning
• Initial Operation and Operator Training

Snowden’s Decision Making Context
• Simple: The Domain of Best Practice
• Complicated: The Domain of Experts
• Complex: The Domain of Emergence
• Chaotic: The Domain of Rapid Response
– Source: David J. Snowden, Mary E. Boone, “A Leader's
Framework for Decision Making,” Harvard Business
Review Article, Nov 1, 2007

Characteristics
• Clear cause-and-
effect
relationships
• The right answer
exists; fact-
based
Danger Signals
• Complacency
and comfort
• Entrained
thinking
• No challenge of
wisdom
• Overreliance on
best practice
Simple Context
What are simple cases, how do you recognize
them, and how are they handled?

Example: Gas Gathering Project
• Contract Provisions
• PMBOK Skills
• Project Monitoring
• Claim Situation Recognition
• Early Recognition of Metric Deterioration

Characteristics
• Expert diagnosis
required
• Causal
relationships are
discoverable
• More than one
right answer
exists; fact-
based
Danger Signals
• Overconfident
experts in their
own solutions
• Analysis
paralysis
• Viewpoints of
non-experts
excluded
Complicated Context

Example: Coke Manufacturing Plant
• Multiple Symptoms of Trouble
• No One Determinant, Cause and
Effect Relationship
• Multiple Parties Share Responsibility
• Successive Analysis Yield Different
Results
• No Coherent Relationship between
Scope, Schedule and Cost Outcomes

Characteristics
• Flux and
unpredictability
• No right
answers;
unknown
unknowns
• Many competing
ideas
• Emergent
patterns provide
instruction
Danger Signals
• Temptations to
regress to
habitual
command-and-
control
management
• Temptation to
look for facts
• Desire for
accelerated
problem
resolution
Complex Context

Example: Highway Automation
System
• Every Known Symptom of Project Failure
• Input to Output Models no Longer Work
• Cost Spiral without Control
• Progress is Impeded Across all Elements
of the Project
• Lots of opinions and finger pointing
• Demoralization of Management and Staff

Characteristics
• High turbulence
• No clear causal
relationships
• Unknowables
• High tension
• Many decisions
to make with no
time to think
Leader’s Job
• Act – Sense –
Respond
• Watch for what
works, instead of
right answers
• Provide clear,
direct
communication
Danger Signals Next Steps
• Set up parallel
teams to take
advantage of
opportunities
• Encourage
advisers to
challenge
leader’s point of
view
• Work to shift the
context to
complex
• Missed
opportunities to
innovate
• Applying
command-and-
control approach
longer than
needed
Chaotic Context

The Cynefin Framework
This is NOT a recipe – it is a
contextual “sense making”
guide.
All contexts can exist at the
same time. You just don’t
know it.
SENSE and RESPOND are
common. WHAT is sensed –
and when?

Simple Sense - Categorize -
Respond We know what we know.
Heuristic:
“We only need to know what we need to know
when we know it.” - David Snowden
CONTEXT0 THE LEADER’S JOB DANGER SIGNALS
RESPONSE TO
DANGER SIGNALS
SIMPLE
Sense, categorize, respond Ensure
that proper processes are in place
Delegate Use best practices
Communicate in clear, direct ways
Understand that extensive
interactive communication may
not be necessary
Complacency and comfort
Desire to make complex problems
simple
Entrained thinking
No challenge of received wisdom
Overreliance on best practice if
context shifts
Create communication channels
to challenge orthodoxy
Stay connected without
micromanaging
Don’t assume things are simple
Recognize both the value and the
limitations of best practice

Complicated Sense – Analyze - Respond
We know what we don’t know.
Heuristic:
“We can't solve problems by using the same
kind of thinking we used when we created
them.” - Albert Einstein
CONTEXT THE LEADER’S JOB DANGER SIGNALS
RESPONSE TO
DANGER SIGNALS
COMPLICATED
Sense, analyze, respond
Create panels of experts
Listen to conflicting advice
Experts overconfident in their
own solutions or in the efficacy of
past solutions
Analysis paralysis
Expert panels
Viewpoints of non-experts
excluded
Encourage external and internal
stakeholders to challenge expert
opinions to combat entrained
thinking
Use experiments and games to
force people to think outside the
familiar

Complex Probe - Sense - Respond
We don’t know what we don’t know.
Heuristic:
“…entropy eventually is nothing more nor less
than loss of information.”- Gilbert Newton Lewis
RESPONSE TO
DANGER SIGNALS
COMPLEX
Probe, sense, respond
Create environments and
experiments that allow
patterns to emerge
Increase levels of interaction
and communication
Use methods that can help
generate ideas
Temptation to fall back into
habitual, command-and-control
mode
Temptation to look for facts rather
than allowing patterns to emerge
Desire for accelerated resolution of
problems or exploitation of
opportunities
Be patient and allow time for
reﬂection
Use approaches that encourage
interaction so patterns can emerge
Open up discussion (as through
large group methods); set barriers;
stimulate attractors; encourage
dissent and diversity; and manage
starting conditions and monitor for
emergence

Chaotic Act - Sense - Respond
We don’t know.
Heuristic:
“The absence of evidence is not evidence of
absence, or vice versa.” - Donald Rumsfeld
RESPONSE TO
DANGER SIGNALS
CHAOTIC
Act, sense, respond
Look for what works instead of
seeking right answers
Take immediate action to
reestablish order (command
and control)
Provide clear, direct
communication
Applying a command-and-control
approach longer than needed
“Cult of the leader”
Missed opportunity for innovation
Chaos unabated
Set up mechanisms (such as
parallel teams) to take advantage
of opportunities afforded by a
chaotic environment
Encourage advisers to challenge
your point of view once the crisis
has abated
Work to shift the context from
chaotic to complex

Situation Awareness
What is Situation Awareness and
Why is it Important in
Conditions of Complexity?

The Cognitive “Continuum”
Bellinger
Ackoff
understanding

• Perception vs. Reality
• Need to “make sense”
– Ordered = analysis
– Categorization is a kind of analysis
– Fact-based relationships/cause-effect
– Unordered = action
– Probe is a kind of action
– Pattern-based relationships/interactions
– Disorder = no clear context
– Total loss of information – high entropy
– Asymmetric collapse
What are you really sensing?

“Sense making is the ability or attempt to make sense of an
ambiguous situation. More exactly, sense making is the
process of creating situational awareness and understanding
in situations of high complexity or uncertainty in order to
make decisions.
It is "a motivated, continuous effort to understand
connections (which can be among people, places, and
events) in order to anticipate their trajectories and act
effectively.”
- Gary
Klein
Sense = Sense making

The Situational Awareness/Situational
Understanding (SA/SU) Model
• Dealing with Interactive Complexity requires
understanding that failures occur when
uncertainties and interactions are not properly
accounted for.
• So what does the Leader need to do? Same basic
issues faced by:
 Pilots, Warfighters, Police, Doctors, Etc.
Leaders need to adopt
the Situational Awareness/Understanding mindset

Who
What
When
Where
(Why)
Achieving Situational Awareness
• Don’t boil the ocean – Avoid information overload
Information
(Answers to…?)
The first step..
Situation
(Avoid “boiling the ocean”)
Helps to
Define
Narrows the
process

…..next, Situational Understanding
Decisions are based on reducing Decision
Risk!
Who
What
When
Where
(Why)
How
(Decision)
Situational
Awareness
Situational
Understanding..Time to..
Sensemaking
(Decision Risk)

Example: Boyd’s OODA Loop SA/SU Model
Note the combination of
Analyses and Synthesis as
part of “Orientation”

Action
Scripts
Patterns
Clues
Situation
Mental
Simulation
Mental
Models
To affect the
generates
that let you
recognize
that
activate
which you
assess by
using your
Recognition-Primed
Decision Model
Gary Klein 2003

Application of SA/SU

• Second law of thermodynamics
 Entropy (a measure of disorder)
• Same principle applies to a program
 Over time, a program will become more
disordered if left alone and will move
through each context
 Systemic Events can cause a program to
move across contexts
 As events move into complexity, the first
law of thermodynamics comes into play:
“Heat” is transferred to the PM!!
Situational Awareness and “Program” Time
“Program” Time

Heuristics: SA/SU “Approach”
• Cognitive Focal Aids
• “Form follows function”: Louis Sullivan (Architect)
• Examples:
 If each part of a system, considered separately, is made to operate
as efficiently as possible, the system as a whole will not operate
as effectively as possible
 The performance of a system depends more on how its parts
interact than on how they act independently of each other
Heuristics help to focus quality thinking

Applying Heuristics
The challenge:
• To determine when and how to forego intuition for
the application of rigorous objective techniques for
decision-making
Example: Over-reliance on risk models instead of using
good judgment (Wall Street)
Heuristic: If it’s too good to be true, then it probably isn’t
true. (Example: Madoff, Enron, etc)

SA/SU Project Components: People and Technology
• 80+% of digitized information resides in individual hard
drives and in personal files and is unstructured, not
secure nor backed up.
• Employees get 50%-75% of their relevant information
directly from other people via technology – not face-to-
face
• Wasted Time is a key to ROI
• Intellectual Property
 Individual knowledge leaves with employees
 Leverage past experience to organizational learning

• No agreed upon definitions (shared context)
• Different tools and processes = different data
• Manual transformations and analysis
• Manual Audit Trails
• Poor Data Quality
• Poor Connectivity from applications to resources
• One Way Data Traffic (errors not corrected at the
source
• Same data stored in multiple locations
SA/SU Project Components: People and DATA

• Red Flag: “Don’t worry everything is (or will be) Fine”
• How does one achieve SA/SU?
– Make use of dashboards and scorecards
– What are you measuring and why?
– Ask questions: “Who, What, When, Where, Why and How?”
– Use heuristics to develop key questions
– Start a blog: Example – “CPL Cartwright”
– Take time to “walk around and listen”
– Communicate, Communicate and Communicate some
more – talk to the whole system
What does a Program/Project Leader do?

Applying Systems Thinking
How do you apply systems
thinking to project management
to mitigate complexity?

The Difficulty of Shifting
One’s World View

The Mechanistic View of the World
• In the Renaissance, when the science
as we know it today was born, a
scientific inquiry method called Analysis
was developed.
• Analysis comes naturally. Just watch
children taking apart new things, and
curious about the parts.

Analytic Thinking
• Take it a part - down to its indivisible
parts, elements
• Explain the behavior or properties of
each part taken separately
• Aggregate the explanations of the parts
into an explanation of the whole

A Systems Approach to the Capital
Project
• View a capital project as a social system
• Social systems are purposeful systems that contain
purposeful parts and are contained in a larger
purposeful system
• A set of constantly changing processes, relationships,
and components
• The way in which the elements of the system come
together can lead to outcomes that are materially
different from those planned

Definition of Systems Thinking
• Systems thinking is a “holistic approach to
understanding that focuses on the way that a
system's constituent parts interrelate and how
systems work over time and within the context of
larger systems”
• To understand systems thinking, we must first
understand systems

Systems Thinking: What is a System?
• Definition: System
 Whole which consists of a set
of two or more parts
 Three requirements:
Each part must affect
behavior
All parts must be
interconnected
All subsets must effect
behavior, none can act
independently

Steps to a Systemic Approach
• Synthesis vs. Analysis
Synthesis = putting things together
Analysis = taking things apart
• 3 Steps to Synthesis
1. Identify the containing whole (system)
2. Explain the behavior or properties of the containing whole
3. Then explain the behavior or properties of the subsystem and
its function within the containing whole

Analytical and Synthetic Thinking
• Analytical Thinking
The object is considered a whole to be taken apart
 Example: Calculus
• Synthetic Thinking
The object is considered as an integral part of a larger
whole
Leads to systems thinking

The Importance of Systems Thinking
• Helps to design smart, lasting solutions to
problems
• A more precise image of reality in its simplest
sense
• Encourages long-term thinking
• Founded on fundamental principles that
integrate all aspects of life

From Mechanistic
Thinking
To Social Systems
Thinking
Analysis
(An explanation of the whole derived from explanation
of its parts.)
Synthesis
(An explanation of the whole derived from explanation
explaining the role of the system in the larger system of
which it is a part.)
Reductionism
(The belief that everything can be reduced.)
Expansionism
(The system is always a sub-system of some lager system.)
Cause and Effect
(Environmental free theory of explanation, a cause
needs to both necessary and sufficient in order to have
the corresponding effect.)
Producer–Product
(Environmental full theory of explanation as opposed to
cause and effect where the importance of the environment
is stressed.)
Determinism
(Fatalism.).prior condition )
Indeterminism
(Probabilistic, observe and discover.)
Research
(The embodiment of the above to arrive at instructions
based on theory.)
Design
(The embodiment of the above to facilitate learning.
Designing the whole systems means creating a system
configuration that is optimum.)

Design – The Core Concept in
Systems Thinking
• Design – a method of problem solving
• Design is to the systems thinking as "continuous
improvement" is to scientific thinking
• Design - a process which requires the ability to
question prior or existing assumptions regarding
the ultimate state to be achieved.
● Source: Van Gigh and Warfield

All People are Designers
• Design is basic to all human activity
• Design is the conscious effort to impose meaningful
order
• The planning and patterning of any act towards a
desired, foreseeable end constitutes the design
process
• All that we do, almost all the time, is design
• Any attempt to separate design, to make it a “thing-
by-itself”, works counter to the inherent value of
design as the primary underlying matrix of life

Design Thinking
• The designers who can solve the most wicked problems
do it through collaborative integrative thinking, using
abductive logic, which means the logic of what might or
could be.
• Conversely, deductive and inductive logic are the logic of
what is.

Prospective Hindsight or
“A Pre-Mortem”
• Prospective hindsight, called a pre-mortem, is a
method which helps project teams identify risks
at the outset
 Research conducted in 1989, found that “Prospective Hindsight”
(imagining that an event has already occurred)—increases the
ability to correctly identify reasons for future outcomes by 30%.
• The System Was Destroyed Last Night!

Capital Projects As Social Systems
• Include all primary stakeholders - owner, designer, and
constructor as well as other stakeholders such as
subcontractors, material and equipment vendors, and
the end-user(s) of the product or service.
• The adoption of a social systemic approach to capital
project management has several implications. Three of
these implications are:
 alignment of purpose
 management of interactions, and
 learning and adaptation

Stakeholder Theory
• A Stakeholder is any group or individual
who can affect or whom is affected by the
achievement of the project’s objectives
• Stakeholder Theory describes the
principle of whom or what really counts
and to whom or what managers give their
attention.

Stakeholder Theory
Economic
Forces Ecological
Forces
Socio-cultural
Forces
Technological
Forces
Political
Forces
Project
Environment
Structure
Culture
Competencies
Resources
Transactional
Environment
Trade
AssociationGeneral
managers
Union/
employees
Varied
Instituions
Local, State
and Gov
Work package
managers Suppliers
Contractors
subcontractors
Customers
(users)
Corporate senior
managers and
directors
Functional
managers
Contextual Environment
Creditors
Employees

Alignment of Purposes - Changing Mindsets
• Requires a high level of commitment from all
stakeholders
• Purpose of the project must be aligned with the
purpose of the larger, parent organization
• The purpose of each of the parts must be
aligned with the project’s purpose

Team Alignment - Convergence of
Mindsets
Concerted Project Team Action
Concerted Project Team Action
Individual Mindsets

Alignment of Purposes
• Includes the purposes of the individual project team
members as well as their own individual parent
organizations.
• The stakeholder organizations (especially the designer
and constructor) must accept this approach to project
management.
• This buy-in is encouraged through the “win-win”
incentives
• Requires a substantial redesign of the contract
documents.

A Systems Approach
to Project Management
Application Examples

Symptoms are Often Mistaken for Causes
Why is this the case?
• Organizational structures are inflexible and not aligned for
performance
• People skill sets are lagging current needs
• Current process improvement efforts are largely
independent and reactive
• Insufficient technology resources being applied to
prepare for future (3-5 year out) problems
• Policy does not align with advances in technology
Need To Re-Factor The Way We Lead Programs

Abductive Reasoning
• ABDUCTIVE REASONING is a means for
design thinking
– Purpose - to balance analytical thinking
and intuitive thinking
– A mix of reliability + validity
– Neither analytical (deductive and inductive
reasoning) nor intuitive reasoning are
sufficient to maximize performance
– Abductive thinking is exploitation and
exploration
– Combines adjustment and analysis
– Encourages innovation and efficiency Abductive
Thinking
Designers, who live in a world of
abduction, “actively look for new data
points, challenge accepted
explanations, and infer possible new
worlds” (Martin 64-65)
Analytical
Thinking
Intuitive
Thinking

Analytical
Thinking
Intuitive
Thinking
Ackoff: “…wisdom, deals with the
future because it incorporates
vision and design. With wisdom,
people can create the future
rather than just grasp the present
and past.”
Abductive
Thinking
Abductive Reasoning

REFERENCES
1. Fooled by Randomness, The Hidden Role of Chance in Life and in the Markets, Nassim Nicholas Taleb, 2004
2. Harnessing Complexity, Organizational Implications of a Scientific Frontier, Robert Axelrod & Michael D. Cohen,
2000
3. The Fifth Discipline, The Art & Practice of the Learning Organization, Peter M. Senge, 1990
4. Thinking in Systems, A Primer, Donella H. Meadows, 2008
5. The Black Swan, The Impact of the Highly Improbably, Nassim Nicholas Taleb, 2007
6. Thinking And Deciding, Fourth Edition, Jonathan Baron, 1988
7. The Fifth Discipline Fieldbook, Peter Senge, Richard Ross, Bryan Smith, Charlotte Roberts, Art Kleiner, 1994
8. Leadership and the New Science, Discovering Order In A Chaotic World, Margaret J. Wheatley, 2006
9. Complexity Leadership, Part I: Conceptual Foundations, Mary Uhl-Bien & Russ Marion, 2008
10. Business Dynamics, Systems Thinking and Modeling for a Complex World, John D. Sterman, 2000
11. Complex Systems Leadership Theory, New Perspectives from Complexity Science on Social and Organizational
Effectiveness, James K. Hazy, Jeffrey A. Goldstein, Benyamin B. Lichtenstein, 2007

WEB SITES
1. Ackoff Collaboratory: http://www.acasa.upenn.edu
2. The Systems Thinker Newsletter:
http://www.thesystemsthinker.com
3. The In 2 In Thinking Network: http://www.in2in.org
4. hbr.org | November 2007 | Harvard Business Review 69
Snowden and Boone

Questions
1. What is interactive complexity and why should you
care?
2. How do you recognize complexity and why does
the basic PMBOK approach fail?
3. What is situation awareness and why is it
important in conditions of complexity?
4. How do you apply systems thinking to project
management?
5. How can a Systems Thinking approach mitigate
complexity?
6. How do you apply this knowledge to your projects?

7. Has anyone experienced what you believe
was complexity in a program?
8. If so, can you provide to share with us?
9. Did a solution emerge? If so, how?
10. What is emergence?
11. Do you think that more than one context can exist at a
time?
12. So how does a PM understand the different contexts?
13. What is abductive reasoning?
14. Why are assumptions so important to project success?
Questions

15. How many Black Swan events have you experienced in
PM?, in life?
17. Why are interactions the key to Complexity
18. If Complexity is not managed effectively, what results?
19. Who must assume leadership?
20. What is the OODA Loop?
21. What are the elements of situational awareness?
22. What are the three key elements to Project
Management?
Questions

Complexity - Advanced Engineering Project Management

Recommandé

Recommandé

Contenu connexe

Tendances

Tendances (20)

En vedette

En vedette (19)

Similaire à Complexity - Advanced Engineering Project Management

Similaire à Complexity - Advanced Engineering Project Management (20)

Dernier

Dernier (20)

Complexity - Advanced Engineering Project Management

Notes de l'éditeur