What You Should Know About Megaprojects and Why: an Overview, in the April/ May 2014 Project Management Journal

What You Should Know About Megaprojects and Why: an Overview, in the April/ May 2014 Project Management Journal

I just finished reading the lead article, What You Should Know About Megaprojects and Why: an Overview, in the April/ May 2014 Project Management Journal. This was an invited article from PMI written by Bent Flyvbjerg from Oxford University.

Flyvbjerg presented the current state of megaprojects providing an overview of the current market and trends, a general conclusion that there are a huge number of problems with megaprojects, the source of these problems in a couple recommendations. A historical analysis of the development of your project was very interesting and included a number of statements that needed backup. For example, he said: “when projects of such as go wrong entire company’s national economies suffer.” This may be a logical conclusion but in a research oriented journal I would say he would need to present data to back up his point. He also included the stimulus package that was passed by Congress in response to the banking crisis as a project and the major acquisitions program portfolio of the United States Department of Defense. By including these programs within his discussion of projects he has blurred his arguments.

Flyvbjerg been listed a number of megaprojects that went wrong; over cost, late, not meeting the specifications and leading to a negative ROI. The list of projects that that one or more these criteria for an underperforming project was impressive. One of the most valuable parts of the article for me was a list of challenges that are inherent in megaprojects and are not typically dealt with in planning and executing megaprojects. In paraphrasing these challenges list included:

1.      megaprojects are risky

2.      planners and managers don’t have the appropriate skills

3.      stakeholders have conflicting interests

4.      technology is typically new and untested

5.      overcommitment to project without justifiable data

6.      optimism bias

7.      significant changes over time

8.      ignoring events that could cause risk for the project

9.      inadequate contingency

10.  misinformation about cost, schedule, benefits, and risk

Although I believe this list has a lot of validity, it would’ve been helpful to have some data that supported the belief. In a later section we also indicated that “front in planning this scant and bad projects are not stopped”. These types of conclusions cry out for citations.

Flyvbjerg quoted from the Standish Group research about the number of failed projects and I believe this detracted from his argument because of the flaws in this research that has been pointed out.

One of the more interesting parts of the paper was the discussion of the Hirschman’s Hiding Hand. In short, this is the intentional underestimate of a project in order to get approval. Flyvbjerg presented several situations where the original estimate of the project was intentionally at the level to be approved with knowledge that the estimate was significantly lower than the anticipated actual cost. In the construction industry recalled this “lowballing” an estimate. Companies would bid on projects at or below cost with the knowledge that there would be sufficient changes that could be created that will enable the company to make a profit. The art was estimating how you could go and how many changes could you create to have a successful project. I watch the original estimates for the new nuclear power plant proposal that went to the utilities commission in South Carolina. With my limited experience in this industry I estimated the cost to be at least double what was submitted to the utility commission. After initial approval, every update provided to the utility commission included at least a 10 to 15% increase in the estimate. I find it difficult to believe that the people making the estimate and probably the people accepting the estimate and making approval did not know that the true cost will probably be double.

Flyvbjerg suggested that there are number of drivers that lead to these intentional underestimates. He also recommended that companies and governments establish significant consequences for anyone or any organization that intentionally provides misinformation in these processes. He also gave several examples where countries are taking a step including the United Kingdom, Switzerland and Australia. It also appears that many private organizations are relying more on consultants to evaluate project bids more closely. Flyvbjerg suggest that we cannot solve problems that we do not talk about and cited Pres. Obama’s identification of costly overruns, fraud and abuse, and endless excuses as key policy problems, is one indication of a lease beginning to talk about these issues.

As I’ve addressed in other post, I believe this is indicative of where we are in the project management profession in the issues addressed in this article are not exclusively related to megaprojects. One of my focuses the best several years has been to better understand our projects. I believe the tools and techniques for developing a good understanding of the project are not well developed and without a good understanding of the project it is difficult to develop an appropriate execution approach. See my other post on project profiling.

One of the things I’ve discussed in earlier posts has been the breaking up of large projects into smaller components. Most organizations have a project size and complexity comfort zone and when the project gets too far out of that zone is important to break the project down into smaller projects that can be managed independently and coordinated from a program point of view. This approach should have had some mention in Flyvbjerg’s article.

The article is worth reading and does provide a good overview of some of the issues surrounding megaprojects as well as some of our project execution as a whole. It is important to put on the table that much of this underestimating of project costs is intentional and that’s difficult for the project manager to address and project execution.

Russ

Stress and Project Management

Stress and Project Management

Stress is a natural biological response to perceived danger or threat. Our biological response is typically fight or flight. This makes sense because to understand that you are threatened and to take steps to reduce this threat is basic to survival.

What does this mean to your execution of a project? One of the things that we know is that increase stress reduces creativity. When we feel threatened, blood flows from the creative parts of our brain to the parts of our brain that focus on our physical survival. The adrenaline increases, blood flows from our stomach in our brain to our muscles. This is one of the reasons that we need to go for a run or ride our bikes after a stressful day. This exercise tends to neutralize the effects of the adrenaline and stress of the day. So stress has the impact of reducing our ability to respond creatively to problem.

As a project manager seeks to understand his project during the initiation phase, one of the things to explore is the stress level on the project. So how do we evaluate the stress level of a project? One of the ways to look at project stress is to understand the comfort zone. The comfort zone represents the area where we have the knowledge, skills and abilities to meet the requirements.

For example, if the project schedule indicates the project needs to be complete within two years and the preliminary estimate to complete the project is two and half years, then we created stress. If the project team truly perceives that they have insufficient time to complete all the necessary activities, then there will be a degree of stress. The level of stress will depend on the perceived consequences of not meeting the schedule and the perceived ability to develop an approach to either change the schedule requirements or accelerate the pace of the project to meet the requirements.

In a similar example, the project team does not believe they can perform the project within the allocated cost, then the team stress will increase. This can have a cumulative effect. The combined effect of an unrealistic schedule and budget will be greater than either one by itself. There are number of different aspects of your project making stress. There can be organizational issues, cultural issues, technological issues, clarity scope among their number of different issues that can impact the stress level in the project.

We have a number of methods for reducing stress in a project management tool box. For example, as we explore options for reducing the time it takes to complete the project we can the crashing the project schedule, executed activities in parallel other than sequence and decelerating procurement activities as if you the tools available. This is also true for many of the areas that carry stress on the project.

This project manager’s protest is to first understand the stress on your project and then develop an appropriate execution approach that will address the stress and maximize project performance. Sounds simple? Probably not, but this is what makes our job so interesting.

Russ

PMI Meeteing, Networking and Trust

PMI Meeting in Ashville

I attended the PMI chapter meeting in Asheville last night for a presentation by Teddy Burress. Teddy made a presentation on networking and focused on how to build a social network. The basic premise was networking was built on the foundation of relationships. Relationships begin with people you know and expand outward as the people you know help you find others with common interest and common concerns. The basis of this relationship focused on not how you can use the relationship to further your goals but how can use relationships to support people in achieving their goals. This foundational belief will lead to times when people see the opportunity to help you.

This presentation was not overtly related to project management but themes are consistent in building relationships with your clients, your team members and your project stakeholders. Relationships are also built on trust. Not in the sense of unconditional trust that you may share with people that you have a more intimate relationship but trust in the sense that you have shared goals and shared understanding and beliefs on how to achieve these goals.

Establishing trust with your client as well as your team and stakeholders is one of the critical skills they project manager. Without this trust communication suffers. Without this trust commitment to a common goal suffers. Without this trust is difficult to have fun on your project.

Trust comes from respect. It comes from shared values and it comes from a belief in a shared future. You developed this trust respecting your client, your team and your stakeholders. You developed this trust by sharing your values and living your values daily. And you develop a belief in a shared future through developing a common vision of success.

One of the critical aspects of the teambuilding meetings that occurred during project initiation is the development of trust. Depending on the project profile, the processes and the investment in developing this team will influence your ability as project manager to develop an appropriate project execution approach and address the various issues that arise during the life cycles of the project.

Russ