CMAA has met the standards and requirements of the Registered Continuing Education Program. Credit earned on completion of this program will be

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1 CMAA has met the standards and requirements of the Registered Continuing Education Program. Credit earned on completion of this program will be reported to RCEP at RCEP.net. A certificate of completion will be issued to each participant. As such, it does not include content that may be deemed or construed to be an approval or endorsement by the RCEP.

2 MANAGEMENT OF LARGE COMPLEX PROJECTS Presented to CMAA September 2016 Bob Prieto Chairman & CEO Strategic Program Management LLC 2

3 Management of Large Complex Projects Learn how management endeavors to introduce regularity in a world that will never allow that to happen. Consider how large projects are dynamic, often chaotic, systems in a changing world of constraints and opportunities Recognize that Fayol s plan (organize, direct, coordinate, and control) is now expanded to include confirming, monitoring, engaging, influencing, and evolving Learn how project management must create context, capacities, and capabilities

4 THINK ABOUT YOUR MOST RECENT PROJECT At the outset of the project how would you score owner readiness? Owner s Readiness Index Simplified Assessment Instrument Readiness Area Maximum Score Pre-score Post-Score Owner readiness with respect to an individual program and associated decision frameworks and processes 40 Program objectives and criteria 30 Program planning and execution approach 20 Commitment to sustained readiness by owner s executive and implementation team 10 Total 100 4

5 REALITY OF LARGE PROJECTS 5

6 POP QUIZ: WHERE IS THE GREATEST RISK IN THIS PROGRAM? 6

7 2/3 LARGE PROJECTS FAIL 7

8 THEORY 8

9 HYPOTHESIS: LARGE, COMPLEX PROJECTS ARE DIFFERENT Theory of PM does not draw fully on management theory Large, complex projects not well served

10 PHYSICS: NEW THEORY REQUIRED TO ADDRESS SCALE F=ma

11 MANAGEMENT ROOTS OF PROJECT MANAGEMENT Scientific Management - Taylor, Gantt Administrative Theories Fayol PMBOK, the Project Management Body of Knowledge, was intended to provide a management framework for most projects, most of the time. We may have lost visibility of this important qualification, especially as projects have grown in scale, duration and complexity. 11

12 MANAGEMENT THEORY HAS CHANGED Management theory has moved through four broad schools of thought: Industrial encompassing Smith s division of labor as an approach to execution of work and scientific and administrative approaches to the management of execution Human encompassing consideration of human aspects as part of organizational behavior Biological representing much of systems theory and encompassing static and dynamic systems which exhibit more deterministic characteristics including chaotic systems Evolutionary representing nondeterministic complex systems 12

13 PM THEORY MUST ALSO CHANGE (1/2) Management endeavors to introduce regularity in a world that will never allow that to happen. Large projects are dynamic, often chaotic, systems in a changing world of constraints and opportunities

14 PM THEORY MUST ALSO CHANGE (2/2) Fayol s plan, organize, direct, coordinate, and control are now expanded to include confirming, monitoring, engaging, influencing, and evolving Project management must create context, capacities, and capabilities

15 PM THEORY RECOGNIZES NEED TO CHANGE Industrial Traditional Approach Prince2 Process Based Management Human Agile Biological Lean CCPM Evolutionary Extreme Project Management 15

16 CORE CONCEPTS Strengthen Foundations Provide clarity and rationale for desired outcomes Shine a bright light on planning bias Manage Flows not just tasks Know your assumptions and their current condition Value time Simplify Focus on emergent patterns Manage risk Engage the environment Recognize the unbounded nature of large projects Be transparent 16

17 IN A NUTSHELL - TRANSFORMATIONAL PROCESS VIEW NOT ENOUGH Semi-Permeable Boundary Focus on Flows Stronger Foundations

18 STRENGTHENED FOUNDATIONS 18

19 PROJECT FOUNDATIONS ARE NOT WELL FOUNDED Some framework processes are either absent, break down at scale or are not adequately addressed Foundations must be strengthened in at least four ways: Owner readiness & SBOs Project baselines Risk models Risk focus 19

20 HEIGHTENED AND STRUCTURED FOCUS ON OWNER READINESS NOT JUST PROJECT READINESS IS REQUIRED Three aspects must be addressed Strategic Business Outcomes/Objectives (SBOs) must be clearly articulated, agreed to and continuously communicated Owner s framework processes for decision making and approvals must be strengthened and streamlined Project SBOs must be committed to by all owner elements including legal, procurement, contracts and accounts payable Project readiness must be further strengthened along the lines of traditional readiness elements but also be expanded to ensure SBO alignment and the utilization of Big Analytics starting at the planning stage 20

21 VALUE OF TIME STORY #16 Delay can drive project costs up by 2.25% per month, excluding retrograde productivity 21

22 PROJECT BASELINES MUST INCLUDE AN EXPANDED BASIS OF DESIGN (BOD X ) Encompasses not only the traditional basis of design associated with meeting the owner s project requirements but also: A Construction Basis of Design (CBOD) that reflects desired means and methods (prior to the start of design; more than just a constructability review) such that a project is designed to build. Safety is taken to a new level through hazard elimination rather than mitigation during construction. Incorporation of a CBOD changes design packages requiring more granularity in design package definition An Operations & Maintenance Basis of Design (O&MBOD) that brings life cycle consideration to the very front end of the project, influencing design choices from the outset rather than seeking to improve the O&M characteristics of a developed design at a later stage. 22

23 #20 -TOOLMAKING LEFT COAST LIFTER - SFOBB 23

24 TAPPAN ZEE CBOD CASE HISTORY 24

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26 CONSTRUCTION BASIS OF DESIGN CONSIDERATIONS Labor Minimize marine work and work over water Equipment Select equipment that reduce dredging requirements Materials Lightweight structure to reduce foundation loads on friction piles Means and methods Take advantage of larger lifts possible with Left Coast Lifter Management processes and practices Drive engineering with construction focus on total cost and schedule 26

27 IMPACT OF CONSTRUCTION DRIVEN EXECUTION LCL enabled double and triple lifts Reduced work over water Reduced work over active railroad line Higher productivity at grade Improved labor logistics to work face Reduced marine equipment requirements Shorter schedule (5 months) 27

28 IMPACT OF CONSTRUCTION DRIVEN EXECUTION LCL simplified demolition Whole section removal vs. multiple cuts over water Reduced demolition time Minimized disruption to passenger rail Marine equipment selected to reduce dredging requirements Reduced dredge materials (1,000,000 yards) Reduced dredging time Reduced disposal cost Reduced environmental protection costs 28

29 IMPACT OF CONSTRUCTION DRIVEN EXECUTION Focus on lightweight structure influenced design Steel selected over concrete to reduce weight Webbing designed to spread beams further apart (less beams) and to allow for standard (noncustom) beam dimensions Lighter superstructure produced substantial savings in piles, especially in friction pile zone Reduced tower height and composite deck lowered main span foundation loads 29

30 IMPACT OF CONSTRUCTION DRIVEN EXECUTION Construction focus drove: Schedule Reduced general condition costs Quantities Reduced weight and dredging Productivity More work at grade Safety Less marine lifts; work over water 30

31 VALUE OF CONSTRUCTION DRIVEN EXECUTION (MILLIONS NOMINAL) Reduced dredging and disposal $140 Lightweight design (steel) $150 Labor productivity $ 35 Demolition $ 30 General Conditions $ 45 TOTAL $400 31

32 RECOGNIZING THE INADEQUACY OF CURRENT RISK MODELS Foundations must further strengthen project baselines especially for large, complex projects where 2 out of 3 fail by recognizing the inadequacy of current risk models that ignore the observed fat tails and optimism bias in project performance Risk models must avoid screening out risks prematurely and provide for Monte Carlo risk modeling with fat tail distributions such as a Cauchy distribution Optimism bias must be addressed through the increased use of reference class forecasting for cost and schedule Assumption capture and tracking to address assumption migration in long duration projects 32

33 WHERE IS THE GREATEST RISK IN THIS PROGRAM? 33

34 RISK FOCUS MUST BE EXPANDED Risk focus must be expanded to address: White space risks that exist in complexity Stakeholder risks which act on today s more unbounded project Changed risk profile associated with required tighter supply chain integration Changed risk profile associated with data and tool sharing such as seen in shared BIM models 34

35 STRENGTHENED RISK FOUNDATIONS Owner s readiness Optimism bias addressed Realistic risk registers, models, and modeling White space, fat tail distributions, assumption migration, and constraint coupling Recognize, address, and measure complexity Probability of the Improbable Normal Cauchy 5 sigma event 1 in 3.5 million 1 in sigma event 1 in 2.0 x in 94

36 FLOWS 36

37 RISKS IN IGNORING ARROWS (1/3) Project delivery heavily focuses on decomposing a project into a series of interrelated tasks and then managing the activities within each task. Tasks are reflected on schedules and network diagrams with little arrows showing directional flows. Arrows are not dimensionless and inadequate attention to flows is a significant source of project disruption and degraded performance. 37

38 RISKS IN IGNORING ARROWS (2/3) Project management must strengthen its focus on flow management by: Increased attention to interface identification and management including identification of underlying constraints which may couple otherwise disparate tasks on a project Recognition that previously established interface requirements may change as underlying assumptions and conditions migrate over time Greater use of last planner techniques and improved workface planning from a knowledge enabled worker force 38

39 RISKS IN IGNORING ARROWS (3/3) Project management must strengthen its focus on flow management by: Utilization of knowledge assemblies that bring together all the informational resources required by a particular task together with the associated computational and analytical tools and methods Recognizing the growing importance of flow management as supply chains are more tightly integrated. This is in addition to the flow complexity associated with distributed execution and challenging project logistics both in remote and urban areas. 39

40 FLOWS (1/4) Transformative Flows Inside a Task Influenced by systems level transformative flows from task to task which may act to change task timing and sequencing as well as modify system flow outputs required from the task operation

41 FLOWS (2/4) Transformative Flows Between Tasks System level Transformative flows influenced by the overall system state. Transformative flows between tasks modified by: task level performance impacts of influencing flows directly on the planned transformative flow impacts of influencing flows on other transformative flows which are directly or indirectly coupled (through constraints) impacts from induced flows

42 FLOWS (3/4) Influencing Flows Flows across semi-permeable project boundaries that arise from external stakeholders or changed project environment.

43 FLOWS (4/4) Induced Flows Created by the interaction of one or more influencing flows on various system elements (task; transformative flows) or the interaction of transformative flows with each other as a result of the effects of Influencing flows.

44 Large complex projects require a strong outcomes focus, not just an outputs focus, as suggested by more traditional management practice.

45 LARGE COMPLEX PROJECTS DO NOT FOLLOW CLASSICAL TRANSFORMATION

46 THOUGHTS ON FLOWS Large complex projects do not follow classical transformation models Temporal coupling now represents a new risk point given the various influencing flows that a large complex project faces. Precedences must be minimized, or at the very least limited, and clearly understood. Tasks must be increasingly decoupled. The non-linear dynamics of the complex processes and relationships which define this class of projects means that the links between cause and effect may be almost impossible to detect. While not predictable, perturbations in flows become signatures of the direction of likely system emergence.

47 STRENGTHEN FOCUS ON FLOW MANAGEMENT (1/2) Project management must strengthen its focus on flow management by: Increased attention to interface identification and management including identification of underlying constraints which may couple otherwise disparate tasks on a project Recognition that previously established interface requirements may change as underlying assumptions and conditions migrate over time Greater use of last planner techniques and improved workface planning from a knowledge enabled worker force 47

48 STRENGTHEN FOCUS ON FLOW MANAGEMENT (2/2) Project management must strengthen its focus on flow management by: Utilization of knowledge assemblies that bring together all the informational resources required by a particular task together with the associated computational and analytical tools and methods Recognizing the growing importance of flow management as supply chains are more tightly integrated. This is in addition to the flow complexity associated with distributed execution and challenging project logistics both in remote and urban areas. 48

49 UNBOUNDED PROJECT 49

50 UNBOUNDED PROJECT & INFLUENCING FLOWS Today s largely unbounded project is subject to the debilitating impacts of stakeholder derived influencing flows that sweep across a project s semi-permeable boundary, impacting not only the project s tasks but perhaps more importantly its various transformational flows. Addressing this challenge requires: Development of a new paradigm for project control Shifting our stakeholder perspective from one of management to one of engagement. 50

51 NEW PARADIGM FOR PROJECT CONTROL Development of a new paradigm for project control Includes equal attention to potentially impacting flows arising from changes outside the project proper. New paradigm will require increased use of big analytics not only on project performance data but also on a myriad of external data sources. Project controls must also be outward looking 51

52 SHIFTING OUR STAKEHOLDER PERSPECTIVE Shifting our stakeholder perspective from one of management to one of engagement. This begins by: Posting outward looking sentries (new project control efforts) Looking over the horizon with scouts to ascertain changes that may lead to potentially impactful influencing flows (big analytics) Engaging the broader stakeholder mesh that surrounds the project with ambassadors who seek to influence stakeholders and control time, the rate at which a change unfolds. 52

53 STAKEHOLDERS Boundary conditions are nondeterministic Semi-permeable Engage not manage The map is not the territory Alfred Korzybski; General semantics Sentinel Scout Ambassador Alert, seek out, shape influencing flows

54 RECAP ON MANAGEMENT OF LARGE COMPLEX PROJECTS 54

55 THOUGHTS Large complex projects learn and adapt to the realities that they encounter Multi-finality is a reality Importance of knowledge as a currency for project success Controls focus is inadequate Historical vs. Predictive Inward vs. Outward Performance vs. Change

56 Extended Focus of the Theory of Large Complex Projects Classical Focus Project readiness Output focus Owner readiness Extended Focus Emergent outcomes (Multi-finality) Tasks and transformative flows Flows including emergent influencing and induced flows Stakeholder management Stakeholder engagement (partners in success)

57 Management of Large Complex Projects Require Changed Leadership Behaviors Traditional Leadership Behaviors New Leadership Behaviors Individual leadership vs. Group leadership Control and order vs. Motivation and movement Scientific management vs. Transformative leadership Outputs focus vs. Shared outcomes focus Assignment and directive vs. Agreement and acceptance of goals Hierarchical and siloed vs. Flat communication and information structures Acceptance of normative vs. Questioning (assumption, process, outputs) Adversarial or transactional approach vs. Collaboration and information sharing with stakeholders Management of tasks vs. Management of flows Centralized decision making vs. Engaged and decentralized decision making

58 THINK ABOUT YOUR MOST RECENT PROJECT AGAIN At the outset of the project how would you NOW score owner readiness? Owner s Readiness Index Simplified Assessment Instrument Readiness Area Maximum Score Pre-score Post-Score Owner readiness with respect to an individual program and associated decision frameworks and processes 40 Program objectives and criteria 30 Program planning and execution approach 20 Commitment to sustained readiness by owner s executive and implementation team 10 Total

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60 Questions? Bob Prieto

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