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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Business Development in a War Zone – the 3 Rules

No BD meeting should start out like this

“The way to make money is to buy when blood is running in the streets”. So said John D. Rockefeller who was at the time the richest man the world had ever known.

That’s a war-zone he’s talking about.

But working in a war-zone (Iraq) I watched people come and go trying to turn a buck. And I learned these 3 rules.

 

 

 

1. Do not go to the war-zone. There is no money there for you.

2. Find out how much your government is spending on the war-ravaged country and on what.

3. Lobby your government to spend some of the money on your company.

 

Let’s take an example. Say your company prints school books and your government wants to give schoolbooks to the educational establishment of a war ravaged country. The money for the schoolbooks will be spent in the donor country, not in the war ravaged country. Same for shipping, insurance, storage and so on.

Apart from anything else, nobody in a war zone has the time, the energy, the money or the capability to do anything else but run for cover.

And. The government of a war-ravaged country sucks in money, it doesn’t give any out. If you turn up at their door the assumption is that you’re there to give them something for free.

 

No place for businessmen

 

Returning to John D. Rockefeller’s quote – it doesn’t say you have to be in the street where the blood is running to make the money.

 

 

 

 

However if you feel you really should go to the war-zone, here are a few tips.

Get serious about security. Do not accept offers of security from local entities. ‘Don’t worry, we’ll take care of you’ and ‘It’s not really dangerous here’ are two things you’ll hear – a lot.

Take a substantial amount of wet-wipes with you. The biggest ones you can find. If there’s no water you can still get clean and toilet facilities may be rudimentary.

Take a plug for the shower/ bath/ basin (if you’re lucky enough to find one with running water).

Take a pack of Brufen 800 and a jar of Vick. Vick is a powerful antiseptic and not just for colds.

Wear shoes you can run in.

Wear the cheapest watch you own.

Check your life insurance. It will probably exclude war-zones (and that’s telling you something).

Plan your trip to the smallest detail and do not vary from that plan, ever.

 

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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.

 

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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.

 

 

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?

 

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The Project HSE Risk You Haven’t Spotted Because It’s So Gigantic

This HSE Risk Cannot be Seen With A Magnifying Glass

HSE has gotten pretty good over the years. PPE, Tool-Box Talks, Awareness and so on. All great initiatives that have save many lives and prevented uncountable injuries. But there is a macro-risk that goes unnoticed. A risk that can be identified but usually in retrospect.

It’s a risk that can force people on site to take unnecessary risks, seek shortcuts and put people in danger. It’s hard to spot because it doesn’t show up on site, it’s a risk-mechanism that started (perhaps) even before design began,

If the managers on site stick strictly to their procedures they can avoid the danger but when pressure grows there can be a tendency to waive the rules.

So, what is this monster? How can this HSE risk manifest itself in the early phases of the project and yet no-one sought to stamp on it?

Well it’s because the people who created the monster and the people who have to deal with it never meet. They live in two different worlds. And the HSE Department is in neither.

The monster’s name? The Fixed End Date.

Doesn’t sound very scary or unmanageable, does it? But it is.

The Fixed End Date appears around the time the project is sanctioned and funded. The profitability of the venture depends on the date being met. All of the finance revolves around that event. Nobody from HSE is in the loop.

The project players say the date isn’t fixed. It’s variable with a confidence range (+20%/ – 10% is tossed around at that time) BUT when someone senior enough sets a date it hardens quicker than fast-drying cement.

The other factor is that the date may have been chosen to suit a non-project objective. Nothing to do with ROI but could be about a royal opening, prestige, a gong for the company owner. A host of reasons that fix the date in solid stone. And the project manager isn’t selected yet.

Let’s skip to the period in time when the end date looms large. All of the activities are either critical or loaded with negative float. Additional work that has been hidden forces it’s way onto the agenda. The secret life of the project bursts out into the open like an alien out of John Hurt’s chest.

Someone pushes the red button. The people on site take incoming. The monster rears it’s head.

The long lunches at sanction stage, the prevarication/ procrastination/ political infighting – all forgotten. The task now is to get the welders to weld faster. The drive is to flood the worksites with men, machinery and equipment. The bugle calls up a night-shift, a back-shift, a miracle. A window opens and Commonsense throws itself out.

The project enters a fugue state where there is a hunt for the guilty and punishment for the innocent because the Great Fixed Deadline Has Not Been Met!!!!! And nobody told ME.

Of course, a welder cannot weld faster and the only possible outcome from throwing people into the breech is a steep rise in the probability of an accident. All because a group of people in the possession of scant knowledge with only a vague plan set a Fixed End Date for the project a long long time ago.

The only thing the Project Manager can do is to run a copy of all the weekly, monthly and quarterly reports that showed the real and moving end-date as identified by the Critical Path Network from when he started on the project right up till time now.

If Project Managers don’t have that paperwork? Then hell mend then.

 

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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.

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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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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.

 

 

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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.

 

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