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Why Major Projects Fail and What We Can Do About It
MARK JERGEAS P. ENG, PMP
PMI
PMI-SAC Conference
November 2019
Calgary
Mark Jergeas P. Eng, PMP
• President of iProjects – PM Consulting Firm
• Mechanical Engineer (P. Eng.) – U of C 2004
• Project Management Professional (PMP) - 2010
• Experience working for engineering, construction,
and owner organizations (TC Energy, Spectra,
AltaGas, Bantrel/Bechtel)
• Project Manager / Program Manager on 9 projects
throughout career ranging from $25 to $750 million
• Expertise in team alignment, risk management,
lessons learned, PM training, gated process,
project chartering, and project execution
planning
2
Purpose
The purpose of today is to:
1. Describe the characteristics, challenges, and complexities
of major/mega projects
2. Provide selected strategies that you can use to mitigate
these challenges
3
Characteristics of Major Projects
• Millions or billions in capital investment
• High risk and complexity
• Interface Management - Many players involved such as the
owner, engineers, contractors, suppliers and vendors
• Thousands of people involved
• Lack of predictability in cost and schedule
a. Systematically do not deliver on time and on budget
b. 50-100% cost overruns in budget is the norm
• Environmental, regulatory, and community impacts
• Labour availability and labour management issues
4
Characteristics of Major Projects
• High visibility and reputational risk
• Delivered by a network of private and public entities and
stakeholders
• The scope keeps evolving and can affect the overall cost
and schedule
• Success has been difficult to achieve despite industry best
efforts
• Increased risks to investors/clients
• Other problems; employee burn-out, blame game, litigation
5
What does the research say?
6
7
8
11
Focus of Today 12
Problem MitigationLack of scope definition and proper
front-end planning. Not following project delivery system (gated
process)
Conduct comprehensive front-end
planning. Develop Project Charter and PEP
Ensure project delivery system is in
place
Lack of alignment, collaboration, and
trust amongst the team
Increase alignment and collaboration
through Partnering
Lessons learned are repeated Institutionalize a proper lessons
learned program
Project Delivery System 13
14
What is Partnering?
• A structured management approach for transforming contractual
relationships into a cohesive, cooperative, team-based relationship
with common goals.
• Commitment between two or more organizations to facilitate
teamwork and is based on trust, dedication to common goals, and
understanding of each other’s individual expectations and values.
• Partnering and a “one-team” concept
• Facilitates open and honest communication
• Establish/improve working relationships amongst all players
• Forge common goals and objectives
15
What is Partnering?
Youtube Video:
Title: Why do Major Projects Fail?
https://www.youtube.com/watch?v=-nOEKzUEnvM
16
What is Partnering?
• Create mechanisms to not only build but to sustain collaboration
throughout the project
• Establishes frameworks for resolving issues or disputes in a timely
manner
• Not a legal agreement, nor does it replace contractual agreements
• Create an environment of trust and teamwork
• Results of Partnering sessions form the Project Charter
• Partnering must be started early in the project
• Applies throughout the project lifecycle
17
Key Components of Partnering
Partnering entails developing the following:
• Challenges and expectations of team
• Team vision or goal statement
• Project objectives
• Success criteria
• Identification risks and stakeholders
• Organization structure and lines of communication
• Project health checks
• Dispute resolution mechanism
• Ground rules
18
Examples: Vision Statements
• We, the Project Team, commit to a collaboration and mutual success
• We, the Project Team commit to being a good neighbour and delivering the project as one collaborative team, to meet the following milestone dates:
• Start Date of June 1, 2019
• Traffic Availability by Oct.1, 2022
• Construction Completion by Oct. 1, 2023
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Example: Stakeholder Management Plan 20
Stakeholder Objectives How They OperateWhat do they need? What do
they consider “wins”
How will we engage them to
increase their favorability
HSE Compliance with HOIMS
Regulate operations through legal
regulations, insuring compliance
with health, safety and environment
Zero lost time incidents
Considered in design, a focus in
construction and carried out
through operational lifetime
Operations Operability, Maintainability and
Reliability
Minimal downtime with ease of
operationThe best version of everything
Keep involved in the design phase,
model reviews and tollgates
Leadership Team Make money View projects on a return basis On time, on budgetAchieve project deadlines and stay
within budget PF=1
Regulatory /Surface
Land/Community/AR/
Aboriginal Affairs/
Community
Keep Husky compliantModerate and oversee
design/construction
Need to be informed and engaged,
need reassurance of compliance in
construction and after reclamation
Be very open with our design,
validate compliance at required
project stages
Internal Stakeholders
(SCM/Legal & Risk)
Compliance with Client’s
policies and procedures to
minimize liability
Focus on contract indemnification,
protection and maximized value
Use Client “paper”, zero risk,
maximum value
Early engagement, detailed vendor
spec, realistic timelines,
collaboration
EPC & other contracted
vendorsMake money
By working to the design basis and
SOW of the project to deliver the
product in a way that maximizes
rate of return
Deliver the project in a manner that
achieves their anticipated profit
margin
Clear SOW, design basis and
execution plan to minimize change
orders and maximize efficiency
Health Check ToolCOMMUNICATION
1 Communications are… difficult, 1 2 3 4 5 open
2 Information flow is… restricted 1 2 3 4 5 free, open
3 Timeliness of information late 1 2 3 4 5 on-time
WORKING RELATIONSHIPS
4 Cooperation bet. parties poor, 1 2 3 4 5 good,
5 Issues and concerns are ignored 1 2 3 4 5 dealt quickly
6 Responses to issues become
personal 1 2 3 4 5 project problems
7 Disputes are addressed ineffective 1 2 3 4 5 efficiently
8 Problems are resolved by senior mng. 1 2 3 4 5 lowest level
TECHNICAL REQUIREMENTS
9 Safety performance is… NA 1 2 3 4 5 acceptable
10
Overall quality is… NA 1 2 3 4 5 acceptable
11
Value for money is NA 1 2 3 4 5 acceptable
STAKEHOLDER & EXTERNAL ISSUES
12
Public complaints are… frequent 1 2 3 4 5 infrequent
21
22
Team Self-Evaluation Results (Combined)
04-Dec-09
0.0
1.0
2.0
3.0
4.0
5.0
1
2
3
4
5
6
7
8
9
10
11
12
Team Alignment Overall
Problems, issues or concerns
1. Communications
2. The flow of information
4. Cooperation
5.
6. Responses to problems
7. Disputes/problems
8. Problems are resolved
3. The timeliness of information
9. Construction safety performance
10. Design and construction quality
11. Value for money
12. Public Complaints
23Team Alignment by Company
0.0
1.0
2.0
3.0
4.0
5.01
2
3
4
5
6
7
8
9
10
11
12
Team Self-Evaluation Results (By Company)
cc
Problems, issues or concerns
1. Communications
2. The flow of information
4. Cooperation
5.
6. Responses to problems
7. Disputes/problems
8. Problems are resolved
3. The timeliness of information
9. Construction safety performance
10. Design and construction quality
11. Value for money
12. Public Complaints
24Issue Resolution Mechanism
• Mechanism for resolving issues
• Resolve at the lowest/working level
• Escalated when appropriate to the next level of
management
• No action is not an option
25
Corporate Level
1.
2.
Stage One
At Site Level
Names:
1. __________
2. __________
Stage Two
At Project Level
Names:
1. _________
2. _________
Stage Three
At PM Level
Names:
1. __________
2. __________
Issue Resolution Mechanism
Problem becomes
apparent
Solution to problem
offered by those who
are directly involved
with it
If problem not resolved,
go to stage two.
If solution agreed, do
not go to stage two. If
changes affect other
project parties, record
them into a form for
circulation.
Problem discussed at
progress meeting.
Solution to problem
offered by project team.
If solution to problem
cannot be agreed at
progress meeting, go to
stage three.
If solution agreed, do
not go to stage three.
Solution to problem
recorded in meeting
minutes.
A resolution committee
comprising a
representative from
each of the project
parties is formed.
Problem resolution
meeting called for
committee.
Mutual way forward for
project greed by
resolution committee.
Statement of way
forward recorded and
issued.
Finish FinishFinish
ADRLitigation
Problem
Identified
Failure!!!
• Lessons Learned: Is the learning gained from the process of performing
the project – PMI, 2004, p. 363
• The objective is to to improve project performance over time by
communicating and institutionalizing: o Successes that should be repeated
o Opportunities for improvement that should not be repeated
• The vision of lessons learned is to build a culture of learning
Lessons Learned Process 26
HISTORYHISTORYHISTORY
History Repeats Itself
27
What is the Number 1 problem? 28
Lessons Learned Process
• Lessons need to be captured in a clear and detailed way
• Lessons must be transferable
• Lessons should be both successes and opportunities for improvement
• Should have both formal and informal elements
• May involve subcontractors or be internal to organization
Keep doing, Start doing, Stop doing
29
Keys to Success
• Lessons learned procedure should be simple
• The team is accountable to follow it
• Focus on significant lessons
• A searchable database is required
• Don’t wait until the end to collect data
• Provide solutions
• Institutionalize by changing policies,
standards, specifications, procedures, etc.
30
iProjects
• iProjects is a project management consulting and advisory firm
• Our vision is to help our clients achieve predictability in cost and
schedule on major projects
• We have services in areas ranging from project governance, risk
management, training, facilitation, and general PM support
• A start-up based in Calgary
• Website: www.iprojectsinc.ca
31
iProjects
GovernanceDeveloping or streamlining fit-for-
purpose project delivery or stage-gate systems to provide a structured project management execution model.
Creates governance structure to help organizations gain greater predictability and success on projects.
FacilitationConduct facilitation in:
• Partnering Sessions
• Alignment/Team Building sessions
• Strategic Planning
• Risk Management
• Lessons Learned
• Project Health Checks
• Project Performance Auditing
• Project Readiness Reviews
(PDRI)
• Process Simplification
Training & SupportCreating customized training
programs for organizations in areas such as project management, leadership, risk management, contract administration, etc.
One-on-one mentoring and coaching for project managers.
Development of key documents:
• Project Charter
• Project Execution Plan (PEP)
• PM Tools and Templates
32
References• A Framework for Performance Based Competency Standards for Program Managers, Sydney: Global Alliance for
Project Performance Standards, GAPPS, 2011.
• A Guiding Framework for Project Sponsors, Sydney: Global Alliance for Project Performance Standards, GAPPS, 2015.
• Alberta Report II, COAA Major Projects Performance Assessment System, Project Performance Engineering Productivity Construction Productivity, June 2014.
• Alberta Report III, COAA Major Projects Performance Assessment System, Project Performance Engineering Productivity Construction Productivity: A Best Practice of the Construction Owners Association of Alberta, May 2019.
• Analysis of the Front-end Loading of Alberta Mega Oil Sands Projects”, Project Management Journal, Volume 39, Issue 4, December 2008, George Jergeas.
• Benevolent Dictatorship for Major Capital Projects, LearnAcademy, 2017, Amazon.ca, George Jergeas and Jim Lozon.
• Performance Challenges of Mega Capital Projects, a report to Productivity Alberta, Go Productivity, November 2014, Alberta, George Jergeas and Jim Lozon.
• How to Create Predictable Cost and Schedule Estimates, 58th Western Winter Workshop, San Francisco & Southern CA Sections of AACE International, March 21 – 24, 2019. Dr. Nick J. Lavingia.
• Project Risk and Opportunity Management, The Owner’s Perspective, Routledge, Taylor & Francis Group, 2019.
• Risk Navigation Strategies for Major Capital Projects: Beyond the Myth of Predictability, Springer, 2011 by Per Willy Hetland, George Jergeas, Asbjorn Rolstadas, Dick Westney.
• The Fast Track Manual: A Guide to Schedule Reduction for Clients and Contractors on Engineering and Construction Projects. Loughborough, UK: European Construction Institute, 2002, Eastham, G.
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