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MANAGEMENT OF LARGE COMPLEX PROJECTS
Presented to CMAA
September 2016
Bob PrietoChairman & CEO
Strategic Program Management LLC
2
Management of Large Complex Projects
• Learn how management endeavors to introduce regularity in a world that will never allow that to happen.
• Consider how large projects are dynamic, often chaotic, systems in a changing world of constraints and opportunities
• Recognize that Fayol’s plan (organize, direct, coordinate, and control) is now expanded to include confirming, monitoring, engaging, influencing, and evolving
• Learn how project management must create context, capacities, and capabilities
THINK ABOUT YOUR MOST RECENT PROJECT
At the outset of the project how would you score owner readiness?
Owner’s Readiness Index
Simplified Assessment Instrument
Readiness Area Maximum
Score
Pre-score Post-Score
Owner readiness
with respect to an
individual
program and
associated
decision
frameworks and
processes
40
Program
objectives and
criteria
30
Program planning
and execution
approach
20
Commitment to
sustained
readiness by
owner’s executive
and
implementation
team
10
Total 100
4
REALITY OF LARGE PROJECTS
5
POP QUIZ: WHERE IS THE GREATEST RISK IN THIS PROGRAM?
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2/3 LARGE PROJECTS FAIL
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THEORY
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HYPOTHESIS: LARGE, COMPLEX PROJECTS ARE DIFFERENT
Theory of PM does not draw fully on management theory
Large, complex projects not well served
PHYSICS: NEW THEORY REQUIRED TO ADDRESS SCALE
F=ma
MANAGEMENT ROOTS OF PROJECT MANAGEMENT
Scientific Management - Taylor, Gantt
Administrative Theories – Fayol
PMBOK, the Project Management Body of Knowledge, was intended to provide a management framework for most projects, most of the time. We may have lost visibility of this
important qualification, especially as projects have grown in scale, duration and complexity.
11
MANAGEMENT THEORY HAS CHANGED
Management theory has moved through four broad schools of thought: Industrial – encompassing Smith’s
division of labor as an approach to execution of work and scientific and administrative approaches to the management of execution
Human – encompassing consideration of human aspects as part of organizational behavior
Biological – representing much of systems theory and encompassing static and dynamic systems which exhibit more deterministic characteristics including chaotic systems
Evolutionary – representing non-deterministic complex systems
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PM THEORY MUST ALSO CHANGE (1/2)
Management endeavors to introduce regularity in a world that will never allow that to happen.Large projects are dynamic, often chaotic, systems in a changing world of constraints and opportunities
PM THEORY MUST ALSO CHANGE (2/2)
Fayol’s plan, organize, direct, coordinate, and control are now expanded to include confirming, monitoring, engaging, influencing, and evolving
Project management must create context, capacities, and capabilities
PM THEORY RECOGNIZES NEED TO CHANGE
IndustrialTraditional ApproachPrince2Process Based
Management
HumanAgile
BiologicalLeanCCPM
EvolutionaryExtreme Project
Management
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CORE CONCEPTS
Strengthen Foundations Provide clarity and rationale for
desired outcomes Shine a bright light on planning
bias
Manage Flows not just tasks Know your assumptions and their
current condition Value time Simplify Focus on emergent patterns Manage risk
Engage the environment Recognize the unbounded nature
of large projects Be transparent
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IN A NUTSHELL - TRANSFORMATIONAL PROCESS VIEW NOT ENOUGH
Semi-Permeable Boundary
Focus on Flows
Stronger Foundations
STRENGTHENED FOUNDATIONS
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PROJECT FOUNDATIONS ARE NOT WELL FOUNDED
Some framework processes are either absent, break down at scale or are not adequately addressed
Foundations must be strengthened in at least four ways:Owner readiness & SBOs
Project baselines
Risk models
Risk focus
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HEIGHTENED AND STRUCTURED FOCUS ON OWNER READINESS NOT JUST PROJECT READINESS IS REQUIRED Three aspects must be addressed
Strategic Business Outcomes/Objectives (SBOs) must be clearly articulated, agreed to and continuously communicated
Owner’s framework processes for decision making and approvals must be strengthened and streamlined
Project SBOs must be committed to by all owner elements including legal, procurement, contracts and accounts payable
Project readiness must be further strengthened along the lines of traditional readiness elements but also be expanded to ensure SBO alignment and the utilization of Big Analytics starting at the planning stage
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VALUE OF TIME STORY #16
Delay can drive project costs up by 2.25% per month, excluding retrograde productivity
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PROJECT BASELINES MUST INCLUDE AN EXPANDED BASIS OF DESIGN (BODX)
Encompasses not only the traditional basis of design associated with meeting the owner’s project requirements but also:
A Construction Basis of Design (CBOD) that reflects desired means and methods (prior to the start of design; more than just a constructability review) such that a project is designed to build. Safety is taken to a new level through hazard elimination rather than mitigation during construction. Incorporation of a CBOD changes design packages requiring more granularity in design package definition
An Operations & Maintenance Basis of Design (O&MBOD) that brings life cycle consideration to the very front end of the project, influencing design choices from the outset rather than seeking to improve the O&M characteristics of a developed design at a later stage.
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#20 -TOOLMAKINGLEFT COAST LIFTER - SFOBB
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TAPPAN ZEE CBOD CASE HISTORY
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CONSTRUCTION BASIS OF DESIGN CONSIDERATIONS
Labor – Minimize marine work and work over water
Equipment – Select equipment that reduce dredging requirements
Materials – Lightweight structure to reduce foundation loads on friction piles
Means and methods – Take advantage of larger lifts possible with Left Coast Lifter
Management processes and practices – Drive engineering with construction focus on total cost and schedule
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IMPACT OF CONSTRUCTION DRIVEN EXECUTION
LCL enabled double and triple lifts
Reduced work over water
Reduced work over active railroad line
Higher productivity at grade
Improved labor logistics to work face
Reduced marine equipment requirements
Shorter schedule (5 months)
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IMPACT OF CONSTRUCTION DRIVEN EXECUTION
LCL simplified demolition Whole section removal vs. multiple cuts over water Reduced demolition time Minimized disruption to passenger rail
Marine equipment selected to reduce dredging requirements Reduced dredge materials (1,000,000 yards) Reduced dredging time Reduced disposal cost Reduced environmental protection costs
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IMPACT OF CONSTRUCTION DRIVEN EXECUTION
Focus on lightweight structure influenced designSteel selected over concrete to reduce weightWebbing designed to spread beams further apart (less beams) and to allow for standard (non-custom) beam dimensions
Lighter superstructure produced substantial savings in piles, especially in friction pile zone
Reduced tower height and composite deck lowered main span foundation loads
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IMPACT OF CONSTRUCTIONDRIVEN EXECUTION
Construction focus drove:
Schedule – Reduced general condition costs
Quantities – Reduced weight and dredging
Productivity – More work at grade
Safety – Less marine lifts; work over water
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VALUE OF CONSTRUCTION DRIVENEXECUTION (MILLIONS – NOMINAL)
Reduced dredging and disposal $140
Lightweight design (steel) $150
Labor productivity $ 35
Demolition $ 30
General Conditions $ 45
TOTAL $400
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RECOGNIZING THE INADEQUACY OF CURRENT RISK MODELS
Foundations must further strengthen project baselines especially for large, complex projects where 2 out of 3 fail by recognizing the inadequacy of current risk models that ignore the observed “fat tails” and optimism bias in project performance
Risk models must avoid screening out risks prematurely and provide for Monte Carlo risk modeling with “fat tail” distributions such as a Cauchy distribution
Optimism bias must be addressed through the increased use of reference class forecasting for cost and schedule
Assumption capture and tracking to address assumption migration in long duration projects
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WHERE IS THE GREATEST RISK IN THIS PROGRAM?
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RISK FOCUS MUST BE EXPANDED
Risk focus must be expanded to address:
White space risks that exist in complexity
Stakeholder risks which act on today’s more unbounded project
Changed risk profile associated with required tighter supply chain integration
Changed risk profile associated with data and tool sharing such as seen in shared BIM models
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STRENGTHENED RISK FOUNDATIONS
Owner’s readiness
Optimism bias addressed
Realistic risk registers, models, and modeling
White space, fat tail distributions, assumption migration, and constraint coupling
Recognize, address, and measure complexity
Probability of the Improbable
Normal Cauchy
5 sigma event 1 in 3.5 million 1 in 16
30 sigma event 1 in 2.0 x 10 197 1 in 94
FLOWS
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RISKS IN IGNORING ARROWS (1/3)
•Project delivery heavily focuses on decomposing a project into a series of interrelated tasks and then managing the activities within each task.
•Tasks are reflected on schedules and network diagrams with little arrows showing directional flows.
•Arrows are not dimensionless and inadequate attention to flows is a significant source of project disruption and degraded performance.
37
RISKS IN IGNORING ARROWS (2/3)
•Project management must strengthen its focus on flow management by:• Increased attention to interface identification and
management including identification of underlying constraints which may “couple” otherwise disparate tasks on a project•Recognition that previously established interface
requirements may change as underlying assumptions and conditions migrate over time•Greater use of “last planner” techniques and improved
workface planning from a knowledge enabled worker force
38
RISKS IN IGNORING ARROWS (3/3)
•Project management must strengthen its focus on flow management by:•Utilization of “knowledge assemblies” that bring together
all the informational resources required by a particular task together with the associated computational and analytical tools and methods•Recognizing the growing importance of flow management
as supply chains are more tightly integrated. This is in addition to the flow complexity associated with distributed execution and challenging project logistics both in remote and urban areas.
39
FLOWS (1/4)
Transformative Flows Inside a Task Influenced by systems level transformative flows from task to task which may act to change task timing and sequencing as well as modify system flow outputs required from the task operation
FLOWS (2/4)
Transformative Flows Between TasksSystem level Transformative flows influenced by the overall system state.
Transformative flows between tasks modified by: task level performance impacts of influencing flows directly on the
planned transformative flow impacts of influencing flows on other
transformative flows which are directly or indirectly coupled (through constraints)
impacts from induced flows
FLOWS (3/4)
Influencing FlowsFlows across semi-permeable project boundaries that arise from external stakeholders or changed project environment.
FLOWS (4/4)
Induced FlowsCreated by the interaction of one or more influencing flows on various system elements (task; transformative flows) or the interaction of transformative flows with each other as a result of the effects of Influencing flows.
Large complex projects require a strong
outcomes focus, not just an outputsfocus, as suggested by more traditional
management practice.
LARGE COMPLEX PROJECTS DO NOT FOLLOW CLASSICAL TRANSFORMATION
THOUGHTS ON FLOWS
Large complex projects do not follow classical transformation models
Temporal coupling now represents a new risk point given the various influencing flows that a large complex project faces.
Precedences must be minimized, or at the very least limited, and clearly understood. Tasks must be increasingly decoupled.
The non-linear dynamics of the complex processes and relationships which define this class of projects means that the links between cause and effect may be almost impossible to detect.
While not predictable, perturbations in flows become signatures of the direction of likely system emergence.
STRENGTHEN FOCUS ON FLOW MANAGEMENT (1/2)
•Project management must strengthen its focus on flow management by:• Increased attention to interface identification and
management including identification of underlying constraints which may “couple” otherwise disparate tasks on a project•Recognition that previously established interface
requirements may change as underlying assumptions and conditions migrate over time•Greater use of “last planner” techniques and improved
workface planning from a knowledge enabled worker force
47
STRENGTHEN FOCUS ON FLOW MANAGEMENT (2/2)
•Project management must strengthen its focus on flow management by:•Utilization of “knowledge assemblies” that bring together
all the informational resources required by a particular task together with the associated computational and analytical tools and methods•Recognizing the growing importance of flow management
as supply chains are more tightly integrated. This is in addition to the flow complexity associated with distributed execution and challenging project logistics both in remote and urban areas.
48
UNBOUNDED PROJECT
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UNBOUNDED PROJECT & INFLUENCING FLOWS
•Today’s largely unbounded project is subject to the debilitating impacts of stakeholder derived influencing flows that sweep across a project’s semi-permeable boundary, impacting not only the project’s tasks but perhaps more importantly its various transformational flows.
•Addressing this challenge requires:
•Development of a new paradigm for project control
•Shifting our stakeholder perspective from one of management to one of engagement.
50
NEW PARADIGM FOR PROJECT CONTROL
•Development of a new paradigm for project control •Includes equal attention to potentially impacting
flows arising from changes outside the project proper.•New paradigm will require increased use of big
analytics not only on project performance data but also on a myriad of external data sources. •Project controls must also be outward looking
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SHIFTING OUR STAKEHOLDER PERSPECTIVE
•Shifting our stakeholder perspective from one of management to one of engagement. This begins by: •Posting outward looking “sentries” (new project control
efforts)•Looking over the horizon with “scouts” to ascertain
changes that may lead to potentially impactful influencing flows (big analytics)•Engaging the broader stakeholder “mesh” that
surrounds the project with “ambassadors” who seek to influence stakeholders and control “time”, the rate at which a change unfolds.
52
STAKEHOLDERS
• Boundary conditions are non-
deterministic
– Semi-permeable
• Engage not manage
– “The map is not the territory”
• Alfred Korzybski; General semantics
• Sentinel – Scout – Ambassador
– Alert, seek out, shape
“influencing flows”
RECAP ON MANAGEMENT OF LARGE COMPLEX PROJECTS
54
THOUGHTS
Large complex projects learn and adapt to the realities that they encounter
Multi-finality is a reality
Importance of knowledge as a currency for project success
Controls focus is inadequate Historical vs. Predictive
Inward vs. Outward
Performance vs. Change
Extended Focus of the Theory of Large Complex Projects
Classical Focus Extended Focus
Project readiness Owner readiness
Output focus Emergent outcomes (Multi-finality)
Tasks and transformative flows Flows including emergent influencing and induced flows
Stakeholder management Stakeholder engagement (partners in success)
Organize, direct, coordinate, and control
Confirm, monitor, engage, influence, evolve
Management of Large Complex Projects
Require Changed Leadership Behaviors
Traditional Leadership Behaviors New Leadership Behaviors
Individual leadership vs. Group leadership
Control and order vs. Motivation and movement
Scientific management vs. Transformative leadership
Outputs focus vs. Shared outcomes focus
Assignment and directive vs. Agreement and acceptance of goals
Hierarchical and siloed vs. Flat communication and information structures
Acceptance of normative vs. Questioning (assumption, process, outputs)
Adversarial or transactional approach vs. Collaboration and information sharing with stakeholders
Management of tasks vs. Management of flows
Centralized decision making vs. Engaged and decentralized decision making
THINK ABOUT YOUR MOST RECENT PROJECT AGAIN
At the outset of the project how would you NOW score owner readiness?
Owner’s Readiness Index
Simplified Assessment Instrument
Readiness Area Maximum
Score
Pre-score Post-Score
Owner readiness
with respect to an
individual
program and
associated
decision
frameworks and
processes
40
Program
objectives and
criteria
30
Program planning
and execution
approach
20
Commitment to
sustained
readiness by
owner’s executive
and
implementation
team
10
Total 100
58
59
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