Industries today are facing relentless competition for capital, making the selection and predictive performance of projects all the more critical. Even companies with a long and rich track record of delivering some of the most difficult major projects in our industry are struggling to deliver on promises. Artifacts from mergers, acquisitions, or divestitures may create additional obstacles to achieving “best in class” performance when companies fail to integrate their work processes following those changes to the company’s structure.
Project excellence is a must for companies that wish to stay competitive in the current market. However, there is often a tendency to overcomplicate project excellence programs; this mistake risks slow implementation and inconsistent application. How can you achieve project excellence? The best project delivery must simply fulfill three key roles: people, process, and governance.
1. People — Who We Are
This is perhaps the most important element of a project system — and it can easily be neglected in both down markets and growth markets. Successful companies realize that excellence begins with people, and focusing on these four areas will improve your project system (and all of them, when handled well, are completely self-funding):
• Firstly, and perhaps most importantly, you must carefully and efficiently assign the right people to the right positions. The right experiences build proficiency faster than anything.
• Provide good coaching. Support regional businesses and project teams by explaining how projects can be best delivered by the “The Company Way.”
• Create communities of practice that bring together engineers and project professionals in less formal network, where members can accelerate their own learning and understanding by sharing best practices, success stories, and problem solutions together.
• A more formal type of teaching product can be developed in conjunction with the company’s organizational development group — or even a university, much in the way that BP developed the Projects Academy at the Massachusetts Institute of Technology.
2. Process — The Way We Work
Most companies with a capital project portfolio have some type of work process which defines the state of completion that should be achieved before a project is allowed to advance to the next stage throughout the project lifecycle. In the illustration below, there are 9 elements which should be matured concurrently as a project advances from one stage to the next.
Even the best processes, though, can fail to produce good projects if they are not designed and used properly.
Four Common Process Pitfalls:
When a project’s common processes are disrespected or underutilized, they generally suffer from one or more of the following attributes.
Facilities Focused: Especially when a company’s primary focus has been on small, simple projects, the common process may be too “facilities-centric.” As a result, it can neglect important integrations across other components, which are common in more complex developments. In mining, oil & gas, and chemicals, for example, components like subsurface, feedstock source, transportation, and infrastructure are all equally important. For upstream oil and gas, there would be a tenth element for the drilling and completion of wells, and this may comprise the majority of the capital cost and risk on the project.
Not Scalable: Many project management processes are geared only toward major or mega projects, when in fact most companies with project portfolios probably have more project professionals working on small projects than large ones. The best systems are easily scalable and equally relevant for a $50MM generator replacement as for a $10B deepwater development. A strong project system sets expectations based on a project’s size and complexity — smaller projects are expected to satisfy fewer, simpler expectations.
Overly Prescriptive: An overly prescriptive or detailed project common process can actually erode performance and personal accountability by becoming a “tick the box” exercise. The more prescriptive the process is, the more tendency there will be to cut corners and use the excuse “I followed the process” as a substitute for high-quality work and expert judgment.
Hard to Use: A common process that requires a bookshelf full of three-ring binders to implement is unlikely to be embraced by practitioners. The best systems today are web-based and easy to navigate by everyone on the project team.
What’s More Important — People or Process?
This isn’t really a choice. Both quality people and quality processes are required to deliver successful projects. Ed Merrow, founder of Independent Project Analysis, has noted that companies who are over-fixated on “following the process” have typically added requirements and compliance assurance to compensate for weak teams. The real solution for weak project teams is better people — hence the imperative to focus on development and deployment, as discussed above. Applying the same solution — stifling process and assurance for all projects in a “one size fits all” fashion — creates resentment and passive non-compliance within the strong teams, and does nothing to improve the weak teams.
3. Governance — How We Make the Big Decisions
Unless a company has a small portfolio, and the senior executive team has a clear window into each potential project opportunity, the project selection process with a poor governance structure can be dominated by the loudest voice. When competing for scarce capital, business unit leaders may inadvertently minimize project risks, mischaracterize the readiness to proceed which has been achieved, and even misrepresent the strategic fit.
Leading Projects advocates four key components for better governance:
• A hybrid organizational model in which both the business unit and the projects function share responsibility for project selection and delivery. When responsibility is either extremely centralized or extremely decentralized, it’s hard to ensure that decisions are objective and free from bias.
• A structured approach to decision quality, which ensures that the “problem we’re solving” is properly identified, the right options are considered, a robust evaluation model is used, and the right stakeholders are involved. Leading Projects has a proven formula for this which can be adapted to virtually any decision.
• A decision review board with balanced representation from the business, projects organization, and other key functions. The review board should be small, but sufficiently representative, such that decisions won’t get “reversed on appeal.”
• Independent assurance — on important decisions, a best practice is to engage an independent, external third party to provide an expert assessment of the risks, uncertainties, and the decision quality. This provides the decision review board with a layer of verification and challenge that is free from organizational biases.
A good project delivery system doesn’t have to be complicated — just balanced with three equally strong pillars: people, process, and governance.