Continuously improve your chances for project success

Transcription

1 PROJECT ADVISORY Continuously improve your chances for project success Whitepaper 3 Thought Leadership Series 12 kpmg.com/nz About this whitepaper KPMG s thought leadership series is aimed at individuals and entities who are involved with major construction projects. Effective management of major projects relies on three key concepts: i) early planning and organisation ii) stakeholder communication and project controls integration, and iii) continuous improvement. In this third instalment of a three-part series, we outline the third key component in managing a major project, continuous improvement. Introduction The bigger the project, the more difficult it is to manage. In Parts 1 and 2 of this three-part series, we cited a Kaipara District Council ( KDC ) Mangawhai community wastewater project that experienced an unquantifiable cost overrun. This was due to poor governance, lack of effective and efficient management and records and ineffective management oversight. 1 The lesson from the KDC project is that project management on major projects must be equal to the task. There are three keys to effective management of major construction projects: early planning and organising; stakeholder communication and project controls integration; and continuous improvement.

2 /02 Part 3 Continuously improve your chances for project success Project management processes and practices are continuously improving as the scope and cost of major projects increases. For example, a hand-drawn activity construction project management (CPM) schedule that was satisfactory 20 years ago can t compare to the 100,000+ activity schedules typical of today. Similarly, it was not until the mid-1990s that earned value management (EVM) was widely recognised as a useful performance measurement tool for private engineering and construction projects. There are a number of papers and trade articles describing techniques for driving continuous improvement. 2 A common theme is for the project team to make small process improvements as the need arises and not wait for a major overhaul of the entire project management system. This can be done, for example, by making small changes and revisions to on-screen templates, logs, project reports, and other documents used on the major project. All such changes that simplify and facilitate communication are potential candidates for improvement. Additionally, continuous improvement is about the attitude and culture of your project team. If internal communication and interaction are overly formal, it will be difficult even to perform within the envelope of project-specific policies and procedures. A collaborative culture where information is exchanged informally and through multiple channels is preferable for inspiring continuous improvement. The project team must also practice tolerance for human error, but rigorously evaluate processes in order to eliminate wasted steps. Process efficiency should be directed towards improving quality, lowering the cost of performance, and eliminating delays. 1. Perform self-assessments One way to encourage continuous improvement is for the project team to schedule a series of project control self-assessments. Typically, one or two self-assessment activities are completed each quarter. The project self-assessments should focus on validating compliance with existing corporate-level and project-level policies and procedures. Where there are negative findings, the review team provides recommendations for improving compliance and assigns a responsible individual to plan and improve results. All actionable findings have milestones and/or deadlines attached. Some types of project controls self-assessments include: Project readiness assessment; Project controls compliance; Regulatory compliance assessment; Contractor/vendor cost audit; Internal cost audits; Risk management assessment; Cost performance and EVM assessment; Schedule performance assessment; Quality control and inspection audit; and Change orders and claims assessment. Project closeout audit The goal is to reduce negative findings to zero on subsequent assessments dealing with the same subject matter. Project controls self-assessments should continue throughout the major project life cycle until handover and project closeout. 2. Conduct performance appraisals Individual performance appraisals of project team members will sharpen skills, identify areas for additional training, and encourage continuous improvement. The key to effective performance appraisals is to link actual performance to expected performance based on specific job descriptions (see comments in Part 1 on project team roles and responsibilities). The use of scorecards published in advance and a five-point grading scale is recommended. Scorecards should be tailored to individual job descriptions. Functional managers should review the performance of their direct reports, and senior managers should review the performance of their functional managers. The project director will review the performance of his or her senior managers. Don t forget 360-degree performance appraisals where managers and staff anonymously report on a set series of questions about their peers and managers. The feedback can be surprising (and humbling), but must be received and incorporated in the spirit of continuous improvement. References: 1 Controller and Auditor General, Inquiry into the Mangawhai community wastewater scheme, Independent Assurance Report, November See, for example: Keh, Bernie. Establishing a Continuous Improvement Culture to Improve Project Results. BOT International Management Brief, BOT International (undated), which can be found at:

3 /03 3. Implement new processes From time to time, there will be a need to implement new processes for managing your major project. Some processes will be dictated by regulatory requirements, some by Government and some to improve or enhance existing project controls. To effectively implement new processes, the project leadership must get on board and oversee the transition from the top down. The benefits to the project and the construction owner should be clearly communicated along with the business rationale for implementing the change. The project team should be provided with appropriate advanced training and a period of time to transition into new processes. Specific cut-over dates and expectations for using the new processes should be communicated to the project team by the project director. As new processes are implemented, leadership should encourage comments and user feedback. Negative feedback may require additional training of personnel or modification of the new processes to correct errors. 4. Integrate operational readiness personnel into the project team One of the most basic failures of major projects is not having an operational team trained and in place to take over the project upon completion. Too often, facilities are commissioned and ready for occupancy or production, but operational governance, roles and responsibilities, key management personnel, and shift workers have not been selected. One way to avoid this pitfall is to integrate your operational readiness personnel into the project team. Shortly after the investment committee s approval of the project, a core group of operational readiness managers should be contacted and invited to join the project team. Operational readiness managers will obtain a firm understanding of the scope and size of the project, systems and facilities, equipment types, maintenance cycles, and staffing and supervision requirements. As the project s engineering design progresses, operational readiness managers will be instrumental in reviewing the engineering, procurement, and construction (EPC) contractors drawings and specifications and in helping the project team to source and select equipment vendors. Working alongside the EPC contractor and project team, your operational readiness personnel will review and provide input into the development of the commissioning and start-up plan for the project. This is a key activity, as the commissioning and start-up plan needs to be integrated into the overall project baseline schedule at a high level of detail. A major project cannot afford to wait until construction is 50 percent complete to add hundreds of commissioning and start-up activities into the CPM, because the schedule may be too compressed to accommodate commissioning and start-up activities without accelerating the work and incurring significant cost growth. If systems and equipment training is included in the EPC contractor s scope of work, the operational readiness personnel will serve as the construction owner s primary point of contact for training content, formats, and schedules. This relieves the project team from the need to coordinate between the EPC and the operational readiness team and places responsibility for developing the necessary training programs with the proper owner organisation. If the construction owner is primarily responsible for training, then the operational readiness team will need to initiate contacts within the project team to identify resources that will assist in developing operational training programmes. 5. Familiarise operational resources with project technology Depending on the length of the training programme, operational supervisors and staff will be hired typically within four to eight months of facility start-up and will need to become familiar with project technology, facility layouts, operational procedures, maintenance schedules, etc. This requires that operational readiness teams have access to detailed design information, process descriptions, piping diagrams, and mechanical and electrical specifications, drawings, and Computer- Aided Design (CAD) models. Operational readiness managers will develop shift schedules, identify staffing requirements, prepare and validate operating cost models, and receive materials for first fills and operational spares. In addition, operational supervisors and staff should serve as observers during the major project s final inspection, commissioning, and start-up procedures to facilitate the handover of the project from the project team to operations. By shadowing and observing commissioning procedures, operational supervisors and staff will boost their confidence and gain a more thorough understanding about how to operate the facilities after turnover. Your project management procedures should have a formal process for facility handover by the project team and acceptance by operations as evidenced on a handover document signed by both the project director and the facility manager.

4 /04 6. Share lessons learned One of the benefits of cultivating a collaborative project management environment is the wealth of knowledge and experience that can be shared across all disciplines and experience levels. This is all the more beneficial for companies that manage similar types of projects year after year. For this reason, project teams should capture and communicate lessons learned on every project. Lessons learned should be captured by the project team in monthly or quarterly increments and stored in a database accessible to all team members. On a regular basis (two or more times per year), the project director or their designee should review the lessons learned data and decide if there are any helpful ideas from a corporate planning and project execution perspective. These particular lessons learned should be submitted to and captured by the corporate level project management office (PMO) for use in planning future projects. An incentive programme for submitting useful observations about project management practices and controls can encourage project team members to contribute data. Project learning should be identified by major project management category and control (see the discussion in the project organisation section in Part 1). This allows for the accumulation of project learning by topic area and is more useful to those on the planning and project management teams whose roles are limited to a particular area or process control. Where project learning on one particular project is considered significant for implementation on other current or future projects, the learning should be incorporated into project management policies and procedures. Even various checklists and forms developed by a particular project team that demonstrate an efficient and effective way of controlling a project are useful and should be passed along to other project teams. Institutionalisation of good ideas through updates to the policies and procedures captures that knowledge for the use of others. At the conclusion of the project during the closeout phase, project team members should reserve at least a half day to meet and discuss project performance and team learning. The discussions should not focus on individual successes or failures, but on the team as a whole and on processes that went right or wrong. A team member should be assigned to prepare meeting minutes of the discussions and the note should be preserved in the archived records for the project. Copies of the meeting minutes should also be forwarded to the PMO for retrieval and use by other project teams. CONCLUSION You can t manage a major project simply by drawing on industry experience, being familiar with project management principles, and applying technology. A successful major project is the result, in part, of continuously improving the ability of the project to meet business goals. That s the third key to success, and it encompasses self-assessments, performance appraisals, new processes, operational readiness and technology resources, and lessons learned. As we discussed in Part 1, the first key to success is early planning and organising, which encompasses team assignment, delivery strategy, estimating, risk management, buy-in from leadership, policies and procedures, role assignment, and conducting meetings. In Part 2, we discussed the second key to success effective stakeholder communication and project controls integration which encompasses communication planning, systems and controls, work structure, scheduling, scope changes, risk, reporting, and sticking to the plan. Managing major projects may seem difficult and elusive. However, by following these three major project keys to success, it s more than possible.

5 /05 About KPMG KPMG s services are objective, professional approaches to managing the many risks associated with major change: risks that involve complexity, technology, governance, selection and management of vendors and partners, implementation of solutions and acceptance of change throughout the organisation. KPMG applies leading concepts and practices, supported by: Experienced practitioners Recognised best practices Effective tools and templates International standards Built-in knowledge transfer Services can assist organisations to generate significant cost savings by minimising poor selection decisions, costly overruns, misalignment with business needs, poor quality deliverables and failed projects. Our project advisory services include INDEPENDENT QUALITY ASSURANCE (IQA) Is your project or programme on track? Are the key risks and issues being effectively managed and addressed? Independent Quality Assurance is KPMG s approach to providing objective, practical and open feedback to senior executives, independently assessing project status, risks and issues. Advice is provided by experienced staff who are not part of the delivery team. PORTFOLIO, PROGRAMME AND PROJECT MANAGEMENT (P3M) PRACTICES P3M provides services for the purpose of designing or evaluating portfolio, programme, or project management practices. The objective is to assist in implementing or improving P3M practices to reduce project costs, increase project success and create an organisational P3M support environment which is valued by internal and external stakeholders alike. LARGE PROJECT AND PROGRAMME MANAGEMENT ASSISTANCE This cornerstone service of KPMG s Advisory practice is designed to address the full lifecycle of a project or programme, providing an integrated approach to managing large initiatives the result: significant efficiencies and enhanced outcomes. The methodology incorporates concepts from well-known risk, benefits, project and quality management disciplines to help companies achieve the results they expect during every phase of a large project or programme. PROJECT RISK ASSESSMENT AND MONITORING These services provide a highly focused, activity-based approach to project risk management. They provide management with an objective and independent assessment of the risks associated with a business initiative, programme or project, and evaluate the effectiveness of planned or implemented controls to mitigate the risks. BENEFITS MANAGEMENT AND REALISATION ADVISORY KPMG professionals help you identify the measurable business changes that you will to see at the successful completion of your project and to tie these into an effective Benefits Management and Realisation strategy which can be referenced in your Business Case. Even for projects where outcomes are enabling or intangible, our Project Advisory team will be able to assist with the identification of proxy indicators and benefit relationships to support the approval of your Business Case and its successful delivery. PORTFOLIO MANAGEMENT Effective portfolio management helps large organisations make sound decisions by prioritising the deployment of scarce resources to change initiatives and maximising their value to help achieve the organisation s strategy. Organisations operate in increasingly dynamic environments, which often make it a struggle to satisfy fluid business requirements. KPMG s Portfolio Management (PfM) Advisory and Assistance services help organisations to develop appropriate processes and capabilities to achieve this aim. We provide practical guidance for conducting capability development, maturity assessments and performance reviews. Our methodology provides a flexible, comprehensive approach that can help our clients achieve their goals. PROGRAMME MANAGEMENT OFFICE ASSISTANCE Programme Management Office Assistance is intended to help our clients develop the processes to support a Programme Management Office. We assist with the development of a client s programme office processes and facilitate communication across client leadership to help make sure that enterprise programme initiatives are aligned with the organisation s business strategies. The focus of the PMO is to increase project visibility across client leadership in order to help achieve strategic programme performance. PROJECT ADVISORY Our practitioners know that successful projects are the result of clear vision, careful planning, and meticulous execution. Bottom line: services drive speed and effectiveness of change within your organisation by reducing costs and increasing success.

6 Leadership Series Please look for important topics covered by our Leadership Series in the coming months: Integrated project delivery Building a foundation for a project health check Effective reporting for construction projects: increasing the likelihood of project success Handling labour risk in construction Contact us Gina Barlow Director T: (04) E: gbarlow@kpmg.co.nz Chris Dew Partner T: (09) E: cdew@kpmg.co.nz Perry Woolley Director T: (09) E: pwoolley@kpmg.co.nz Harriet Dempsey Associate Director T: (04) E: harrietdempsey@kpmg.co.nz kpmg.com/nz 2014 KPMG, a New Zealand partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative ( KPMG International ), a Swiss entity. All rights reserved. Printed in New Zealand. The KPMG name, logo and cutting through complexity are registered trademarks or trademarks of KPMG International. The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation