HOW TO PRODUCE RELIABLE TIMETABLES FOR A MEGAPROJECT? Veikko Välilä Senior Advisor, Legal Lounge Ltd

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1 HOW TO PRODUCE RELIABLE TIMETABLES FOR A MEGAPROJECT? Veikko Välilä Senior Advisor, Legal Lounge Ltd The 12th International Project Management Conference 12 & 13 February 2017 Tehran, Islamic Republic of Iran

2 A case study: West Metro

3 An extension to the existing metro Total cost > 2,000,000,000 (phase 1 + 2)

4 Construction works still going on!

5 But actually it s a beautiful thing!

6 What went wrong with Phase 1? The project timetable failed considerably There have been several unexpected delays as regards the completion date Phase 1: From August 2016 to August 2017 There were sizeable budget overruns Phase 1: From 452 million to 1,100 million The progress reports did not reveal the actual situation The project sponsors (= City of Helsinki, City of Espoo) did not have reliable information of the project status and they could not make sensible decisions on how to continue leading the project

7 What was done as the crisis hit? The project sponsors (= City of Helsinki, City of Espoo) realized that there was something wrong and they decided to react Third party consultants were called in because internal teams were not able to stabilize the project The project sponsors decided to do what ever was needed in order to rectify the situation Emphasis as put on: Improving project competences and the organizational structure Better reporting Better use of risk analysis (both time and cost)

8 The first steps The situation was mapped by the consultants Documents: progress reports, sub-suppliers reports, time schedules Interviews: project director, other members of the management team, key suppliers and subcontractors Trying to find the root causes behind the problems Does reporting support project execution? Are the right facts reported? Are the reports from subcontractors taken into account? How are the time schedules produced? Are project milestones and acceptance criteria properly specified? Actual resources, competencies of the management team? Change management procedures? Risk management work?

9 What were the findings? The project had been divided into too small contracts which made it very difficult to manage Time schedules were not realistic As a rule design and construction resources were called in too early, leading to expensive waiting periods Construction works were started even before the design details were available Owner s own management team was too small and management duties were not delegated properly Decision making was slow and co-operation with suppliers and subcontractors was insufficient

10 Risk analysis needed a complete overhaul The risk management work was not executed properly The risk list existed but was not updated properly Risk information was not used for cost or time estimates Risk management related work had to be re-established Several risk analysis workshops were arranged The existing risk list was updated, overlapping risks were removed, new risks were added The risks were analysed (both time and cost elements) End result: An updated risk management plan including risk treatment measures each with a nominated person in charge

11 Stage 1: Qualitative Assessment Brainstorming Introduction What are the Aims, Objectives, Conditions? What is Unique/Unusual? Scene Setting Project World What are the Key Issues and Influences associated with this Project? Stage 2: Quantitative Assessment Lichtenberg method Structuring/Analyzing Scenario Analysis Better? Base Case Worse? What are our Assumptions & Expectations about the Future? How might these vary? Time Schedules Budgets Profitability Cost-Benefit Effort Cost Mean Values Key Risks and Uncertainties Probability Distributions Bar Charts and finally Stage 3: Action Decisions, Follow-up and Action Plans: Who? What? When? Base Case result + Overall Influences

12 A risk sensitive time schedule was established An analysis group was formed and facilitated by the consultant A logical structure was defined for the whole project (network of critical paths) with the help of existing work breakdown structures Detailing was limited to the few essential items only which really matter and went only as far as the accuracy of the calculation still improved (=top-down procedure or helicopter view ) The time related risks and general sources of uncertainty were added to the critical path network Standard excel spread sheets were used as then there were no limitations as regards the structure of critical path networks Triple estimates (minimum, maximum, most probable) were produced for each task, each risk and each overall correction Excel spreadsheets were established and calculations were made using variance analysis with standard deviations (=Lichtenberg method)

13 15 Critical paths of a mega project

14 Completion % 90% 80% Probable completion date 70% 60% 50% 40% 30% 20% 10% 0% 1/1/17 1/1/18 1/1/19 Time axis

15 Intensive care was started Several reports were produced by the consultants and introduced to the project sponsors The management team was strengthened and reorganised, a new project director was employed The opinions of the subcontractors and major suppliers were heard, proper design freezes were introduced The consultants kept tight control on the activities of the management team The most important risks were communicated openly

16 What was achieved? A renewed project plan with clear milestones A reliable time schedule, new deadlines which can be relied upon, with reliable minimum and maximum estimates on the final completion date A reliable cost estimate including information on probable minimum and maximum final cost level A more robust risk analysis, both from time and cost point of view A more economic use of financial and human resources A renewed project team, a new project director A more engaged and up-to-date project sponsors

17 Lessons Learned The responsibilities of the project sponsors and the project director can not be passed on to somebody else The consultant must not bypass the project director It is important to show the way forward instead of seeking the guilty Objective knowledge and truthful information is key to success. Take care of the root causes, not the symptoms Risk analysis work would be better started from scratch. The existing risk information is often of bad quality Take a helicopter view, see the full picture