Project Fantasy v Reality Check

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There’s a common fantasy in Project Teams that ‘the worst is behind us’ coupled with ‘the future is bright’.

Nothing wrong with a spot of optimism but on projects the past really does predict the future.

If you get off to a bad start it’s difficult to turn that around. The genesis of your problems will cast a long shadow onto future events. Small problems loom large.

The scenario can go like this. The project is rocky. A few senior people take the fall and are replaced. Corporate oversight is increased. More effort is applied. Progress is tracked more closely. But if the root causes of the chaos (it’s rarely only one root cause) are not examined, discussed and fixed then the chaos will continue.

If (say) project funding is a problem then changes to the project team will only increase the chaos.

 

Sources of Chaos

Let’s look at some of sources of chaos and see how they affect projects. I’ve went through every one of these and came out covered in scar tissue btw.

To start – ‘projects are temporary organisations established to manage an established outcome whose scope, duration and budget are rationally derived’.

The temporary aspect generates serious issues. The scramble to kick off a project has to be seen to be believed.

1: Location Location Location

A) I was once part of a world-class bid that failed because the proposed location for the project office was driven by a corporate need to fill an empty building under lease, not because it made project sense. The potential client was not amused. But, if we’d won the job then the hapless Project Manager would have struggled to get people to work on the ‘wrong-side’ of the city. Which is why the property was unoccupied in the first place.

B) I started a project where there was no office available for us or the client. The only suitable office was occupied by another project. Appealing to Corporate I was told to ‘fight the incumbent PM and take the space’. When I went to see ‘my director’ to say that my appeals had went unnoticed he said, ‘no Jim, I mean you will actually have to physically fight him’. I couldn’t box eggs – so it wasn’t a feasible scenario.

C) I had a project where my team, the client and the site were in 3 different countries. The outcome hardly needs to be aired in public.

Two: Project Funding

A) Projects are often under-funded. The mechanism may be that the project outcome cost was kept low to get through the funding committee. The PM has to live with that one.

B) The decision on the draw-down of funds is held by someone not on the project. They can save their company money by slowing funds to a trickle. “PMs are such needy people anyway, always overstating the case”.

Three: Project Personnel

Often projects are loaded up at the start with sub-optimal people because…

a) other projects are trying to shed them

b) they’re on the shelf in Corporateland (because they’re not wanted on projects)

c) it’s all that the resourcing guys could find at short notice (there is no other kind of resourcing notice)

Four: Readiness to Launch

Chaotic precursors (at various stages)

A) No/Slow-start because the basic elements of a project are not in place.

B) Permissions to start work not complete. Clients often urge a quick start before the paperwork is completed.

C) Changes to scope. Usually from 2 sources. The changes held back because the bid process was ongoing and changes emanating from the incomplete design (eg concept)

Five: Others Worth a Mention

  • Purchasing started before the design is complete
  • Client’s team nowhere in sight
  • Client offloads all his scrap onto your project

Six…. well you get the message. The genesis of chaos is right a the start of every project, often well before the project is sanctioned

The Bad News.

There is no way to avoid these problems. No way in hell.

 

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Project Disaster? Just Add Politics

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Not Stopping at Your Station Anytime Soon

In England there is great debate about building a high-speed railway link between 2 cities. Birmingham to London. The distance is about 200 kilometres, give or take how far a horse could spit. It’s called the HS2 Project. And it’s beset by politics.

If I was inclined to write a book called ‘How to Totally Banjax a Project’ I could describe this one and put it between 2 hardcovers with no comments added.

And it’s not started yet.

As a primer – have a butcher’s hook at this.  That’s the 2014 numbers at £50.1 billion ($65.8 billion in real money) and incredibly is a P95 estimate. That means there should only be a 5% probability of exceeding the total. It’s the first time I’ve seen a P95 used in my entire working life. It’s a worthless measure.

In 2018 the estimate is now £65 billion with a Cabinet and Treasury Department claiming it should be £80 billion. So far so normal for politically motivated projects. But it’s what the agency also said about the project that caught my eye.

Quote 1 “The report (classified as “official-sensitive” and “not for publication”) attacks HS2 management for “lack of cohesion and common vision” and says the executive team has “no credible plan by which to gauge or manage progress”. It notes “destabilising” turnover of senior staff despite paying some of the “highest public-sector salaries in the UK”.

Quote 2 “highly likely to significantly overspend by circa 20-60% with the likely cost increasing . . . to more than £80bn”.

I wont go into the schedule except to say whoever produced it should have their crayons confiscated immediately!

Remember that the contractor who wins this project will be the one with the lowest price and the shortest schedule, and a great curse will fall over them.

Politics – the biggest killer of projects known to man.

 

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NATO – I hope these guys don’t intend to fight a war any time soon

images-2The NATO Headquarters will be in the news this week. For all the wrong reasons.

 

 

Most of the project tools we use originate from the military. Critical Path Networking (Nuclear Submarines), Supply Chain Management, Cost Controls, etc.

But it seems that when it comes to using these tools to build a new headquarters the tools weren’t applied.

BUT – any project launched by an organisation of 29 countries to be run by the Belgian Authorities has one foot in the grave and the other on a skateboard.

The project was sanctioned in 1999. The project got underway in 2010.

The original budget was Euro 457.6 Million. A UK company called BAM UK won the contract at Euro 650 million but the Belgian Authority squeezed that down to Euro 240 million.

BAM UK ‘s motto is ‘we deliver what we promised on time and on budget. The final price will be in excess of Euro 1.4 Billion and it’s 4 years late.

The original project duration was 4 years. BAM UK managed to have that increased to 6 years. So, completion in 2016. It’s being opened this week mid-2018.

The NATO Secretary General Jens Stoltenberg said last week ‘that the building met it’s original budget and is only a year late’.

I suspect that the building is far from complete and that all cranes have been taken off site until President Trump goes to hit the white ball. But before he leaves that Euro 1.4 billion is going on Twitter.

A thought. Would your company have taken that project on?

My view?  I’d have grabbed that baby with both hands and dived in head first from a very great height.

Because. 1) NATO pay their bills 2) growth couldn’t be anything else but exceptionally high 3) the project would never be cancelled (too political) 4) it’s managed by the Belgian Authorities (Yahooooooo!!!!)

As I said in a previous blog What if a Risk Was An Opportunity in Disguise? This is a good example.

All it would remain to do is to mobilise a Claims Director as the first person on the project.

Ends.

 

What If a Risk Was Actually An Opportunity in Disguise?

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Companies in general identify project risks and look at ways to avoid them. Often the risk is too big and they step back to let someone perceived as foolhardy to take the job. But what if your company could take risks that no other company would touch with a bargepole?

What if the risks other companies saw as too dangerous were risks that you saw as an opportunity?

Take a look at this incredible feat of risk taking

Now, the question. How did he do that?

My quick run through

  • he was fit
  • he was in charge of the entire stunt at all stages
  • he had previously done many smaller jumps
  • he had the right equipment
  • he had trained
  • he had the right people around him
  • he had practiced the jump before filming started

There’s nothing in the list about him being totally insane or stupid.

And my point is?

True Risk Management isn’t about avoiding risks, it’s about assessing them and looking for ways to accept them, ways to take them on such that they can be done. Ways to make a healthy profit by doing things that ‘normal companies’ can’t do.

And the advantage of that approach? Your company could then take on projects that other companies think you’re mad to even accept the Invitation to Bid.

(I know lots of companies take on very risky projects – but that’s more about corporate stupidity than risk management).

So, have a think about that. What would your company have to do to take on the equivalent of what is shown on that video?

My top answer is ‘be fit’.

Could your company ever be that ‘fit’?

And why not?

 

Ends

 

 

 

 

 

Zen and the Art of Projects

In 1976 a American professor called Richard M. Pirsig published his book Zen and the Art of Motorcycle Maintenance. It was a massive hit around the world.

It’s a simple tale by the professor who takes his son on a motorcycle trip from Minnesota to California. But the underlying theme is about the philosophy of quality. An investigation into what quality is and how it can be defined. That is somewhat more complex.

It’s All About Quality

Luckily for us project guys the definition of quality is not so ethereal or elusive as Mr. Pirsig imagined. He discussed the qualities of life, we only have to concern ourselves with the quality of a project.

I’ve found that Quality Assurance is not given its due status in the project world. I had a pretty casual relationship with it myself. And that was because I didn’t understand what it was really for. I didn’t understand (back then) that the Quality of what we were building was the most important part of the project.

Yes the project could be on time, under-budget with a great HSE record. But if it didn’t do what it was paid to do then all our efforts were for nothing.

To me quality was all about dye-pen testing and tracking the origins of steel and sifting through vendor documents, it was quality control. But its higher calling is to ensure that the project produces an end-product that is of the quality expected by the people who paid for it.

To understand that we have to go back to the Contract and the Specification.

Let’s say we’re going to build a water-treatment plant. The specification tells us what the water-in will probably be like and what the water-out needs to look like. Usually a range of values, upper and lower specifications. The design talks about the volumes of water to be processed, the temperatures and so on.

Quality is engineering, procuring, constructing and commissioning a water-treatment plant that delivers the required volume of water within the specification range demanded. And it has to keep doing it for its entire life-cycle.

Producing a plant that is of a lower quality or a higher quality is not what’s been paid for. The plant either doesn’t produce the right specification of water (lower quality) or it is too expensive (higher quality).

The old adage that you don’t expect a Rolls-Royce when you pay for a Ford kicks-in here. Conversely you didn’t pay for a Rolls-Royce for a Ford to turn up at your door either.

In our world Quality is not subjective, its a hard target.

If you’re interested in the quality of life, read the book – it’s still relevant. The road trip is engrossing, and disturbing.

Zen and the Art of Motorcycle Maintenance

Ends.

 

 

 

 

 

 

Probabilistic Project Risk Management versus Voodoo

Probabilistic Risk Management is the use of Stochastic Probability Theory to gauge the probable cost and duration of a project versus traditionally derived estimates.

To do this the Scope of Work, Schedule and Cost is examined and each element of the scope/ schedule/ cost is given a range of outcomes that reflect the risks associated with each event.

Still with me? Don’t worry, we don’t actually do that, we just say we do.

The actual methodology is to dance around a fire under the full moon chanting, shaking the femur bones of ungulates and throwing psyclobin dust into the flames. The answers are then handed down from the spirits via convulsions in dream-time.

For all the notice Project Managers take of the results? Either of those methods work.

 

 

 

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The One Plan Every Project Needs (But Few Have)

 

Mobilisation Plan
This Plan Needs Many Disciplines

Plans, plans, plans. Every project has them coming out their ears. But there is one that sets the success. Miss this one, or get it wrong, and the project is gone before it’s started. Gone, baby, gone. Continue reading “The One Plan Every Project Needs (But Few Have)”

Risk Management and Arkad

Risk and Management – two words that induce drowsiness in most people. Put them together and you have the antidote to insomnia.

There’s nothing ‘sexy’ or ‘edgy’ about it. But it can help you sleep by ensuring that you don’t sit up all night out of your mind with worry.

Risk Management is associated with ‘Brainstorming’ and ‘Risk = Probability x Severity’ and ‘Risk Matrices’. But not all risks are equal, some risks are so probable and so severe that your company’s not going to make it no matter how hot your product is or how smart you are. We could catagorise these risks as systemic. The system itself is the risk.

You know? I’m so bored by just writing the above that I’ll stop and have a coffee. Because I’m about to write another word that could induce catatonia in a hyper-active teenager.

OK, Back again. Where was I?

The catatonia word? Procedures.

Yes. Risk and Management and Procedures all in the same sentence. Zzzzzzz.

But don’t drop off just yet. Let’s talk about something else. Let’s talk about a man called Arkad. He was (reputedly) the Richest Man in Babylon. He started as a slave and ended up loaning money to the Kings of Mesopotamia. And he wrote the book on Risk.

People who lend money are always good at risk because they manage a simple and tangible asset. There’s nothing complex or intangible about gold.  Any loan of it starts with a Risk Assessment which has two elements a) what is the probability of getting the gold back + interest and b) how do I get the money back if the loan goes bad?

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Read the Book !

Arkad had a fantastic is somewhat esoteric way of assessing his risks. He had a chest full of artifacts and before he made a loan he looked through them. Each artifact reminded him of a specific failure. One was a jewel recovered from a man with an avaricious wife – a lesson on how to look at why someone wants a loan. For every type of risk he had an artifact. He learned from his mistakes and reminded himself of them frequently. They were his ‘procedures’.

The money used to finance a project is a loan. The company expects the person entrusted with the project to return the money with interest.

Let’s go ‘off-piste’.

How many company managers and how many project managers understand that simple fact? Neither the company not the project is in business to (say) construct a pipeline. They’re in business to make money from the construction of a pipeline.

Understanding the difference is the Genesis of Risk Management.

Fast forward to Procedures. Just like Arkad and his esoteric box of artifacts a company needs procedures because they are the first line of defence against risk.

There is another expert on risk we should all re-read, his name is Sun Tzu. But that’s for another blog.

And I’ll not delve into Procedures because I need to stay awake for the next eight hours, but think about it. How can simple instructions on how to do something protect a company or a project from Risk?

Answers please on the back of a certified cheque made out to CASH (your first lesson on risk right there).

If you want to understand how to make money in a risky environment – read the book

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Subcontractors – A Clear and Present Danger to Projects

Many projects are managed by skilled PM Teams. They steer their projects through the vicissitudes of the project world and despite all odds come out on top. This blog addresses projects less fortunate. Projects that get gubbed.

Gubbed: Glaswegian for ‘punched in the gub (mouth)’

Being Gubbed
Mike Tyson knows all about being gubbed

Delving into the lesser discussed aspects of projects I had a rethink about subcontractors.

It’s a dull and dreich subject matter. An afterthought, a need-to-get-one-on-board, a pain in the back-facing nether regions.

But since clients, contractors and even subcontractors can’t afford to carry the full spread of project capabilities they have to rely on a lower order of contractor to make up the gap.

So, what could possibly go wrong?

Number 1? You often don’t get to pick the subcontractor.

As must be obvious, I work in the Middle East. That’s where clients have a ‘preferred contractors’ list. But even in locations where there isn’t a preferred list there can be pressure to use certain sub-contractors.

As a professional organisation you’ll no doubt do due diligence on the list of subcontractors you’re presented with. You’ll may conclude that none of them could fit a nut on a bolt but you’re stuck with what you’ve got. You could bring the matter up with the client if you feel the need for a pointless gesture at this juncture.

In any case get it written down that the project end-date and budget is at risk.  When you’ve written it down follow this link for the next step Subcontractor Impact on End-Date – Filing Procedure

Now you’ve watched that instructive video, here’s step 3.

Revisit the project schedule. Any float you had just went down the plughole. Isolate the activities you intend to subcontract and apply a multiplier to the duration. Start and 2 and work your way up.

For all activities described as ‘start-up’ (eg establish a camp) try a multiplier around 10 – and that’s after you move their ‘start on site date’ a considerable way forward.

I’m not painting a good picture here am I boys and girls? So let’s go through the round window today and we’ll draw up a list of what could be expected.

Establishing the Subcontract

Your pro-forma subcontract contract is of little use to people who own such companies. Their mixture of ‘bamboozle a Philadelphia Lawyer’ and ‘flutter Mother Theresa eyes’ trumps a mere contract that your lawyers have stuffed with ridiculous phrases like ‘start date’, ‘scope of work’, ‘penalties’.

Requesting a Schedule

Well it’s at least worth a try. What else are you doing with your day?

Explaining What a Mobilisation Plan Is

Hire someone who speaks the local lingo and send him to the meeting while you try and find a good coffee shop.

Starting Work On Site

For this you need a comfy chair in an office with a good view of the road leading to your site. Stare up the road, go home at 6 o’clock, awake, go to work. Repeat.

Hauling the MD/ Owner/ PM in for a Bollocking

You need to explain the following to yourself in case they ever turn up. “The subcontractor doesn’t work for you. Their connection is with the client”.

While you’re waiting for them you can practice new skills. Plaiting fog, jelly-to-wall nailing…and so on. I usually curate my collection of rocking-horse bum-holes to keep me out of mischief.

Explaining to the Client Why the Work Hasn’t Started On Site Because the Subcontractor They Coerced You Into Using Hasn’t Turned Up

Explaining it will take as long as you took to read that sentence. The rest of the 1 hour meeting will be taken up by the Client loudly explaining in words of one syllable that the subcontractor works for you and it’s your job to manage them. You big macho person you.

Withholding Payment for Non-Performance of Work

Or, as it’s called in the Middle East, finding out the strength of the connection your subcontractor has with your client. Your mobile phone is about to ring any second now.

Being Gubbed

…and at that point the project is gubbed.

 

End.

The Holy Grail of Projects – A Meaningful Risk Register

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A Holy Grail May Be An Illusion

A Meaningful Risk Register – the Holy Grail. But more difficult to find

The main problem is, as can be expected, where to start?

Here’s an overview of how to go about it.

Avoid a ‘Risk Brainstorming Session’ like the plague. You’ll end up with a long list of risky events that happened to people on their last projects. The past is no predictor of the future when it comes to risk.

A look at a close-out review and lessons learned of a similar project is always worth while but few projects do them and even fewer file them where they can be found.

But anyway….

 

 

Gather Your Sources

Gather the 4 documents that contain the Genesis of All Risks

  1. The Contract
  2. The Project Plan (if you don’t have a real one then that’s your Number 1 Risk)
  3. The Cost Book
  4. The Project Location Map

Looking for Risk

The Contract

When a contract is awarded very few people, if anybody, will know what is actually in it. Legal will know the legal parts, Treasury the finance parts and so on. Who has read the document back to front and made notes on the differences between the contract as it was intended v actual contract that will be enforced on the project?

So – you’re looking for 2 things. The risks inherent in the intended contract and the changes made in the contract as negotiated and issued.

Specifically go through the Bid Q & A and check against the final contract – there are usually gaps or differences in interpretation.

Then check key phrases to look for…

  • Novation of Sub-Contracts
  • Early Milestone Dates. Specifically, ‘start work on site’ date.
  • First Deliverables Dates
  • Penalties
  • Client Generated Dates – Access to Site/ AFC Drawings/ Fee-issue Materials/ Project Start and Finish Dates
  • Insert your key phrase here – what contract clause gave you the greatest grief on your last/ current projects?

 

The Project Plan

At the start of projects there are 2 + ½ plans

  1. The one used in the bid. It will be optimistic because you want to win the contract. It will be aligned with the client’s milestone dates because you don’t want to put in a non-compliant bid AND you don’t have enough information for a proper plan AND you didn’t have enough resources to build a proper plan. This is probably the one you’re looking at. It’s toilet paper.
  2. The one you’re going to use to run the project. If you’re not planning to use a plan to run the project then you don’t need to read any further. Your project’s finished before it starts. This is also the plan mentioned in the contract where it says, ‘a full project plan will be issued by 28/35/42 (pick a number) days after award of contract’. It’s probably 14 or more days after contract signing right now and you don’t have any more information than what was available at bid stage.
  3. The ½ plan you think you have but you probably do not. The killer risk. The Mobilisation Plan. You don’t have a specific one, I know. Produce one now and hope it’s not a career buster.

Plan 3) is obviously a sub-set of plan 2) but make it a stand-alone plan. Because it is not a work plan (like – install a generator) it’s a business plan that will need the input from HQ, Resourcing, HR, Travel, Legal…and so on. Expert(s) on the location(s) of the project is essential. You need someone who really knows how it works out there. They’re quite easy to find, right after hen’s teeth and rocking-horse poo.

Whether the project is offshore/ inshore/ desert or tundra there is a unique set of circumstances around the mobilisation of personnel, equipment, offices, IT and a hundred other things you need to do a project.

Fact 1: If the project is in Iraq it takes 152 days to get a welder on site. And that’s after you have the in-country infrastructure in place. That number of days is not so different for Saudi or Offshore.

Stock up on Imodium and gather your people.

Now you’ve gathered all the risks, changes, half-truths, maybes and scraps of this and that, the only thing you can do is to update the plan as best you can using the latest dates (Time Now is a great phrase to throw around). Then run the network with no restraints. This is your plan.

Prepare for the Project Kick-Off Meeting with the client. Will you table the new plan? If not, this risk goes to the head of the queue.

 

The Cost Book

I love cost books. Especially the beginning where it says, ‘Once Upon a Time…’ although fairy stories usually have more substance.

Steps…

  • go through the spreadsheet and fix the errors There are always errors.
  • uncover hidden cells. Ask Google how to do it.
  • update the book against the Contract as Issued. (Mega Important Point)
  • update the book against the Plan you just revised. The Cost Book never ever matches up with the contract or the plan. After this exercise it might match for a week then the three documents will start to deviate again.
  • Identify how much you have for project contingency. Your financial wiggle-room.
  • Prepare to meet your boss to advise him on what you’ve found.
  • Phone the pharmacy and double the Imodium order.

Everything you found goes on the risk register – rank them in Cost Impact Order.

The biggest impact should be the fact the project end-date has moved substantially, but it could be anything.

 

The Project Location Map

This item may have puzzled some readers. Read on.

There is a sentence in your contract that says ‘the contractor will have visited the site and assured themselves that the work can be done’. Or similar.

When did the bid team have time to go to site or have access to it? It could be in the Gobi Desert or 50 Leagues Under the Sea or…

But that’s not the real problem – access to the site now is the issue. If it’s in Saudi you’re 42 days away from visiting the site (if you use a Businessman’s visa) or 70 days away (Work Visa) and they just get you to Khobar.

Time to revisit the Project Mobilisation Plan. Take a big syringe and inject a dose of realism into it.

The rubber, as they say, has met the road.

Now. If your company has never worked in the contract area or does not have someone experienced in the site area? You’ve found another Category 1 Risk.

For light relief Google the area. It will read…

‘UpYoursIstan has the hardest igneous rock known to man. The lower lying areas are subject to flooding for 11.5 months of the year. The judiciary have been executed following the last coup’.

Great pipeline country.

The Risk Register writes itself at this point.

 

Ends.