Predicting and Mitigating Institutional Costs in Global

VDT-IPredicting and Mitigating Institutional Costs

in Global Projects

Raymond E. LevittAshwin Mahalingam

Department of Civil and Environmental Engineering Stanford University

What is a Global Project?

April 25, 2002 Predicting and Mitigating Institutional Costs in Global Projects

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“Global Projects”:…are large scale projects developed by owners, contractors and engineers based in two or more different countries.…are typically high-profile endeavors that involve a multitude of participating organizations contributing toward their success. …involve participating organizations whose goals, values and cultures are not completely aligned with one another, nor with the norms and values of the governmental institutions that control and influence the project’s environment

Examples of Global Projects

Intel Assembly/Test Facility US, Ireland, Malaysia, …

Intel Assembly/Test Facility US, Ireland, Malaysia, …

Planet Hollywood restaurants in Asia,

Australia and S.Africa

Planet Hollywood restaurants in Asia,

Australia and S.Africa

Bechtel on-shore gas development projects in

Alaska, the UAE, …

Bechtel on-shore gas development projects in

Alaska, the UAE, …


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VDT-I SEED PROJECT GOALS


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Carry out case studies to develop insights about the effects of conflicts in goals, values, cultures on behavior of participants in global projects

Build a proof-of-concept agent-based simulation model that can predict performance of project organizations on global projects

Use observational data and proof of concept model to support development of a substantial external proposal


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How Project Design can Improve the Outcomes of Global Projects

0%

100%

Level of InfluenceLevel of Influence

PlanningPhase

ImplementationPhase

Closeout &Learning Phase

Expenditure of Funds Expenditure of Funds

OutcomeKnowledgeProject DesignOutcome

Predictions

Scientific Challengesfor VDT-I

Existing project organization modeling and simulation tools address engineering projects, whose participants have congruent goals, culture, norms & technologies

Coordination Complexity

Production Costs

Coordi-nation CostsInstitutional

Complexity

InstitutionalCostsGlobal Projects to develop civil,

petrochemical, telecommunicationsinfrastructure etc, have conflicting goals, cultures, norms and technologies


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Points of Departure (1)


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Virtual Design Team (VDT) Research Program at Stanford: 1987-present

Developed theory, methodology & tools to optimize design of project organizations for fast-paced, product development projects

VDT Theory, methodology and tools widely disseminated

SimVision® software, based on VDT, commercialized starting in 1997

VDT Helps Managers Design their Project Organizations

Model


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Backlog

Quality

Schedule

Cost

Simulation Results

Start Fab Test& Deliver

DesignCoordination

DevelopSpecification

Insert Scan

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FloorPlanning

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Sim GatesAssemble RTL

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Generate TestVectors

Synth_B1RTL

Activities


Project Lead

Marketing Team Chip Architect TestEngineering St Foundry Lead

Logic DesignTeam 1 Foundry Test

EngineerFoundry Layout

Engineer

VerificationTeam

DesignCoordination


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Organization


Project Lead




Engineer

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Communication


Project Lead




Engineer

VerificationTeam

DesignCoordination


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Rework


Project Lead




Engineer

VerificationTeam

DesignCoordination


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ManagementMeeting

Architecture TeamMeeting

Foundry TeamMeeting

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Meetings


Project Lead




Engineer

VerificationTeam

DesignCoordination


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Assignments 1


Project Lead




Engineer

VerificationTeam

DesignCoordination


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Points of Departure (2)


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Knexus Research Program: Since 1998Used symposia, visiting scholars programs, etc. to seek out the most promising scholars worldwide to study organizations and institutions in GC projects

Assembled a superb team of scholars from social and cognitive sciences to work on Knexus Project

Identified and engaged the core team in the development of Knexus Collaboratory

Sources of Institutional Costin Global Projects


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Lack of legitimacyof relevantinstitutions

to participants

Participants’lack of

competence with

technology

Conflict between project developers’ culture vs.

participants’ cultural normsConflict between project goals vs.

participants’ goals

Participants’ perceived lack of freedom

to express dissent

Conflict between Project developers’

values vs.participants’ values

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ChangeChangeover Timeover Time

Beverly Hills, Singapore

Australia, HawaiiLas Vegas

Thailand

Asia

We would like you to help us with …


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Access to expertsWho have anecdotal experiences on the nature of institutional effects on Global Projects

Access to data from comparable projectsIndirect access in the form of access to company archives on Global Projects

Direct access in the form of visits to project locations during the summer and fall quarters

Initial Case Study – Planet Hollywood


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Goal conflicts with the local residents led to high costs and delays at Beverly HillsLocal community opposition in Hawaii translated into a large source of institutional cost and delayLack of enforcement agencies and ingrained values made it difficult to enforce safety standards in ThailandJapanese cultural attention to precision and detail forced work to take much longer

VDT-I: Ideas for Implementation


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Goal Conflict

Lack of Competence

with Technology

Lack of freedom to

express dissent

Lack of legitimacy of

relevant institutions

Values conflict

Culture conflict

‘Extra Work’(Add Activity)

Beverly Hills,

S’pore

Las Vegas, Asia, Australia

Asia

Motivation factor, loss of efficiency

Asia, Japan, S’pore

Meetings increase VFP

Institutional Uncertainty

Hawaii, Asia

High Skill mismatch

Reduced communications Thailand Asia

Increased workflow Asia

Higher rework Thailand


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Timeline

S t a r t O b s e r v a t io n a n d lit e r a t u r e s u r v e y

Fin is h

A s h w in M a h a lin g a m

R a y L e v it t C IFE M e m b e r s

P r o je c t P a r t ic ip a n t s

M o d e lin g

T e s t in g

A n a ly s is

Timeline

My predictionMy prediction


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VDT SimulationVDT Simulation


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QuestionsQuestions

Documents

Predicting and Mitigating Institutional Costs in Global