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.

 

Ends

Project Disaster? Just Add Politics

H2S-project-politics-are-the-death-of-projects
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.

 

Ends

How To Goose Your Financier

Says a guy to me in the pub. ‘I’m on a fast track project, mate. Mental. A million miles an hour. Great fun.’

Funny enough, a Fast Track Project is the exact opposite of that. A Fast Track Project is dull, slow, sane and no fun at all. The kind of project a financier loves to fund.

Very few people are on the Fast Track. What they’re on is a project in a hurry. A project with an unachievable end-date. A project that has no chance of success. A project that is going to spend waaay over it’s budget. It can be fun for the participants but not for the money men. The financiers? They’re goosed.

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What’s the Differences Between Fast Track and ‘In a Hurry’?

1. A Fast Track Project has a reason for it’s truncated schedule. And the reason is not ‘we’re late already’.

2. A Fast Track Project is defined by its use of scientific and measurable processes to truncate the schedule. (examples: modularisation, dimensional control, new technology)

3. A Fast Track Project has the processes embedded at the Concept stage

4. Each process used to truncate the schedule is visible and demonstrates the reduction in schedule

5. Each process used has a Duration v Cost analysis. Fast Track Projects are not Low Cost Projects. Fast Tracking costs money.

6. The Fast Track Methodology has the full and unalloyed backing of the project sponsors. Fast Track Projects often fall over when the main contract is awarded and that contractor ‘knows better’.

Example: Modularisation. For projects where the location demands a fast construction duration (offshore, war zone, inhospitable climate) then modularisation is a winner. But it has its own added cost due to extra design and steelwork for the module, transportation and lifting costs. Its big advantage is that it can be constructed in parallel to the main ground works on site. Work can start before people are mobilised to site. The other advantage is that the process work done in a yard is cheaper and safer and of better quality.

The time saved is the overlap of yard and site construction starts + less work on site. A modularised site is Hook-Up, a non-modularised site is Construction. There should be a significant reduction in Safety Incidents on a Hook-Up site.

The saving in duration must be firmly established and the Project Team have to deliver that saving. The Project Team also have to show how the extra money awarded for fast tracking was spent. It’s not a contingency pot.

The cost of Fast-Tracking must be calculated and built into the budget.

The relationship between the two is very simple.

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The relationship is simple but the underlying mathematics are not.

Where the lines cross over is not the optimum point between time and cost. The optimal point is where the overall project duration is reduced enough to meet the end date. Check that the project sponsors are willing to pay the price.

It’s best to establish what your desired duration is then check the additional cost. Do it one-at-a-time or you’ll be tangled up for ages.

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.

 

 

 

 

 

 

The Project Yellow Brick Road

Dorothy followed it and arrived at a successful conclusion, projects need to as well.

The Sure Path to Success

The Wizard of Oz isn’t at the end of it but a successful conclusion to your project is.

There is only one way to manage a project. Other ways have been tried and consigned to the dustbin of project history.

The problem is not that Project Teams do not use the ‘way’. The problem is that they take shortcuts – usually because the project is ‘late’, as defined by someone not on the project.

Some of the short-cuts look compelling. No-Brainers. Easy-peasy. But that short-cut is actually a cul-de-sac with no space for a three-point turn. You’re trapped in there.

I’ve compiled a short list of Short-Cuts. And yes, I’ve been in the middle of all of them.

Project Sanction. ‘We don’t have new well test results but the ones from 1801 are OK. I mean? It’s only gas, right?’

Engineering. ‘Let’s save money and skip the Front End Loading stage. We know what we want anyway, why spend time and money finding out what we already know?’

Procurement. ‘We’ll order the long lead items before the design is complete. Save a ton of time.’

Construction. ‘We’ll start work before the Approved For Construction drawings are available. We can meet the ‘Start On Site date that way.’

If a project starts out at sanction stage with the above mind set then all of the examples will come into play.

That is the most expensive and the longest way to execute a project. But many companies imagine it’s the cheapest and shortest way.

There are an infinite number of short cuts. None of them work.

What Does Work?

Project Management Book of Knowledge

PM Book of Knowledge
The Only Way

It’s not easy but then nothing worthwhile ever was.

Ends

Digging A Grave for Your Company

graveyard burial companySome company activities may look innocuous and many seem like a good idea. But there is one thing you can do to kill your company and bury it in a very deep hole. One action that is as good as buying a burial plot and signing the deeds.

 

 

When a Client establishes a Project it will have been approved against a Budget. A budget for Engineering, Procurement, Construction or a Total Budget for a Main Contractor.

Knowledge of that budget for anyone other than a select group of Client personnel is a very dangerous thing indeed.

But to many Contractors it might seem like something they could put to good use.

You may be able to obtain such a budget through various means but a better idea would be to buy an elephant gun and shoot your bid in the back of the neck with it.

Because

Clients. They prepare a budget with the information they have available using their best cost practices. The relationship of that budget to reality may be tenuous.

The relationship of that budget to how much it will cost a Contractor to execute the job could not even be described as tenuous. It’s a guesstimate.

Because? They’re not the Contractor. They have no insight into how much it will cost a Contractor to do the work. No idea of how comfortable or desperate a Contractor is to get the work.

Plus. The project may have been priced to ensure a thumbs-up by the Client’s review committee.

Main Contractors. Knowledge of a Client’s Budget will deep-six their company in a variety of ways.

They can shave $10 off the budget price and ensure their bid is ‘under budget’. Or they can take all of the money out of their bank account and distribute it on the street to passers-by to achieve the same end result.

Because 1. The budget minus $10 bears no relation to what it will actually cost that particular company to do the job + overheads + profit + taxes +++

Because 2. What is the budget you’re looking at? Does it contain contingency? Was it produced at FEL 1 stage or FEL 3? The content and context of a budget is as important as the price. It is unlikely that you know the details.

Because 3. The provenance of the information is uncertain. Who exactly stole that information? I could have used a different description there but theft is the right terminology. Did a clerk find it on the wrong photocopier? Who knows?

Because 4. If the Client finds out? You’re off their bid-list, maybe forever.

Because 5. If the law finds out you could end up in a situation where all your statements end with the words ‘your honour’.

 

The Solution?

Bid the contract the best you can.

Know your costs, your overheads, your risk.

Understand the scope of work.

Price in location, the job market, the contract details.

Ignore what your competitors are doing.

 

Or buy a shovel.

 

 

Ends

The Project Stockholm Syndrome

image of an armed man holding hostagesimage of an armed man threatening hostages

 

 

 

 

The Stockholm Syndrome was spotted after a robbery in Sweden in the 1970 where bank employees were held hostage. It’s a syndrome where hostages bond with their captors. The hostages develop strong emotional ties with the people who intimidate them.

Sound familiar? Well, it’s happening on your construction sites right now. No, no – stop arguing – right now, check it out.

In a work and contractual situation your people are not hostages and your clients are not captors, but your people on site and the client’s people on site form emotional bonds. I first noticed this when I started working offshore. The client, contractors and sub-contractors formed a bond that excluded anyone who did not work on the platform. People up and down the organization who worked onshore (The Beach) were ‘Them’. The people who stopped us offshore tigers from getting on with it.

So, does it matter?

Well in one area of a contractual relationship it matters a great deal and that’s where it comes to changes in the scope of work or in the way the work is done.

Your people on site are doing extra work or working in a non-contractual way and not only are you not going to get paid for it, you’re not going to find out about it.

Here’s some thoughts.

Contractual Changes Not Associated With the Scope of Work

If your guys (this is my unisex description of anybody on a site) work a 10-hour day as proscribed in the contract, and they have an established number of breaks and non-productive activities (gather tools, walk to work, eat lunch, clean site) then the productive time is (say) 6.5 hours a day. That’s what should be in your schedule.

It’s common on site to think that a 30-hour job will be done by one man in 3 days but it’s 5.3 days for 1 man (because the guy only spends 6.5 hours a day digging).

If the client issues the work permits 30 minutes late and collects them 15 minutes early then your productive day is reduced to 5.75 hours per day. But your schedule is still running on a 6.5-hour productive day. That’s approximately an 11.5% reduction in the day.

This means that your remaining duration will be 11.5% longer that your plan shows.

Lesson 1. A change in work practice is a change and should be managed by the Change Control Procedure and after approvals should be translated into Schedule, Cost and Risk. In the above example the job is going to take 11.5% longer, it’s going to cost more and the risk to the Project Completion Date is high.

But that’s not the full problem – the Project Management Team may not know about it because your people and the client’s people are either a) not aware of what’s in the contract or b) not aware of the ‘productive day’ or c) they’re doing a Stockholm. All three may be going on at once.

Contractual Changes to the Scope of Work.

Let’s start with: what’s the difference between extra scope and ‘a favour’?  If you’ve ever worked on site you’ll know what a favour is. A small piece of work that would be administratively difficult to get done (let’s say paint a weld on an adjacent line while the scaffolding is up). Favours oil the wheels of co-operation. No big thing.

But extra scope is anything that’s not specified in the contract. And extra scope should be checked by the client’s engineers – because what seems like an insignificant change to the untrained eye can lead to a disaster. Lesson 2. Turning a blind eye isn’t just doing work for ‘free’ it’s enabling illegal modifications to be done.

The Stockholm Syndrome Can Be Very Dangerous.

You’re working away on site and you go to fit a 6-inch valve. But it’s not there, the client has given you an 8-inch valve. The situation should have been spotted a long time ago but the QA and Materials guys in both organisations didn’t want to upset anyone. They’re ‘Stockholm’d’ up to the eyeballs and back.

Normally an event like this would cause a kerfuffle, but not on a Stockholm Syndrome site. Here two extra 8-inch flanges appear along with 2 x 8-inch to 6-inch reducers. The work is done (the night-shift is the usual place to do it) and everybody is happy. No feathers ruffled, all is wonderful.

The puzzling thing is – they can’t get the proper valve but they can get more flanges and reducers?

The next guys into the breach are the QA guys. The extra welds and bigger valve aren’t on the P&IDs or the Isometric drawing. They flag up a non-compliance immediately and cry havoc – not!

No, they show the change on the red-line drawings to have it as-built later.

Lesson 3. All down the line an illegal and potentially disastrous change has been made. No engineering input, no change register note, no nothing. And nobody at HQ knows about it. Guess whose neck will be on the chopping block if something happens?

(Insert your answer to this here)

What can be done? Lots of things but reviews by an independent department who is not in the Stockholm Loop would go a long way to fix it. Corporate QC Department? Project Director overview?

Here’s my favoured ways to spot it.

1) Every project has changes. That’s a fact. On a well organised project changes might be expected to generate 1 x major and 10 x other change requests a month. On a project that is chaotic it could be 10 x major and 100 x minor a month. Start from there, expect changes.

I don’t have any figures for this but an experienced client and/or contractor could produce historical figures that would give the Project Management Team an idea of what volume be expected. Example: a $XXX valued project could expect claims to the value of $YY. Statistics showing the historical value of changes v original contract values would be helpful.

2) The number of change requests from site don’t match up with the volume of Engineering changes going through

3) If no changes emanate from site? Get your boots on and get down there. Something is going wrong.

 

Ends

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

Ends

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.