Failure continues to be the reality of projects
Project vs Program vs Function. What is a project? It is an endeavor with a start and end date. Examples include building a house, a plant, taking a trip to Andalusia and designing a new hire procedure. When the end date is missing, it is a program, such as developing a new drug or a team of aspiring Olympians. When both dates are missing, it is a function. Running the accounting department is a function.
The profitably performing asset (PPA) philosophy is applicable integrally to projects and programs. There is a secondary level of differentiation for projects: spend projects and investment projects types.
The spend project does not generate revenues when completed; the investment project does. The distinction is fundamental to the PPA philosophy. Spend projects are managed by the constraint trifecta shown in Figure 1.1. The overriding concern of the execution strategy is to minimize costs. Investment projects should be managed by the constraint diamond of Figure 1.2, and strive to maximize the asset’s long-term ROI performance. Both project types produce the same outcome: an asset. Both are justified from the assumption that this asset will be realized.
For this reason, the PPA philosophy applies equally to both. The most bang for the investment buck will accrue to large-scale projects with million or billion dollar budgets. Things like civil infrastructures, airports, ports, city development, pipelines, plants, power generation, mining, technology development, movies and the likes. This series of articles will in fact show that investment projects fail when they are managed by the constraint trifecta.
The justification for the PPA philosophy. One may very well ask why bother with yet another book on such a well-worn topic, given the plethora already on offer on the market. The reason is threefold:
- genuine project management is dramatically different than TPM orthodoxy;
- project owners cannot afford the failure rates; and
- project success lies beyond the procedural horizon embraced by traditional practice.
This series is not a recipe book on how to create a schedule or develop a change management process. The reader interested in the tools of the trade are encouraged to consult what’s on offer online or inside bricks. Instead, the series 1) explores the shortcomings of TPM practices; 2) re-defines projects, project management and their associated mechanics and mechanism; 3) alters the interpretation of project management away from tools and techniques, towards the relationship aspects of projects; and 4) equips the reader with a cohesive project delivery framework that will guarantee success, predictably and repetitively. The articles will explore the underlying reasons for the disturbing failure statistics and offers practical, coherent solutions tested in the trenches of project execution. The material will resonate with new and experienced project professional alike, who struggle with the ever-present threat of budget overruns, schedule slippages, construction misfires and plant deficiencies. Owners, operators, design firms and constructors will discover the common threads that unite them in their shared and individual commercial objectives.
Few organizations can afford to deploy their project capital as inefficiently as history reveals. Fewer still can afford the status quo in an era of low commodity prices, complex global execution strategies, and regulatory minefields. The series offers project owners and developers alike a road map to predictable and repeatable success, and a guarantee of future investment returns from their assets.
The status quo is often justified but rarely justifiable. There are no quick fixes or magic bullets to remedy the failure record. There is no way to tweak one’s project delivery organization painlessly, or change the prevailing status quo. The journey begins with four initial steps. Step 1: acknowledge the importance of the proven practices of traditional project management. The TPM processes and procedures are valid, solid and understood broadly. Step 2: acknowledge the imperfections of TPM and recognize that too many projects continue to fail in spite of their TPM implementation. Simply put, something must be amiss in TPM otherwise success would be the norm. Step 3: the status quo must be challenged. Tweaks will not suffice; if they did, natural selection would long ago have embedded them into the DNA of the principles. Step 4: introduce a new, two-part management paradigm.
New project management paradigm. Part one is to recast the definition of a project as the development of a profitably performing asset. Let us emphasize once more that the point of a project is to bring to life a physical asset that will make money for its owner. The asset is acquired to generate revenues and yield profits. In other words, the asset is the justification for the project, not vice versa. The asset exists to deliver sustained returns on investment (ROI) to shareholders, throughout its economic life. The project is therefore a means to an end – the profitably performing asset. It is the investment vehicle to conceive, develop, realize, activate and operate the asset. All project activities, objectives and decisions are resolved in favor of making the asset profitably performing.
Part two redefines project management as the controlled execution of a project. This wording departs dramatically from the usual TPM definition which goes something like this: a set of skillsets, processes, procedures and plans to execute a project in such a way that all stakeholders’ needs are satisfied. In this interpretation, project management is reduced to allocating and managing resources to achieve a set of objectives. The definition takes on a pronounced procedural character which takes the form, on a daily basis, of execution plans and strategies. They are in turn constituted into management schemes over schedule, cost, quality, human resources, communications, risk, procurement, construction management, systems and standards. The act of managing a project is thus encapsulated in the aphorism “if you fail to plan, you plan to fail”.
However, although planning is a necessary condition to execution success, it is not a sufficient one. For example, I have been involved, over the years, with a multi-billion dollar project (to name but one) whose execution strategy tallied 800 pages of plans, procedures, processes and templates. Despite this depth of details, the endeavor would eventually flounder. The fact of the matter is that a plan is akin to a music partition, one that is regarded as the end unto itself in the TPM tradition. But notes are only the starting point. The music that ensues is brought to life by executing this partition by an orchestra. The execution requires skilled players, aligned in synchronicity and led by one individual (and never, you will notice, a committee). The piece “La valse des patineurs” by Waldteufel can be played by a high school band and by a professional symphonic orchestra. The notes, the cadence, the phrasing, the instruments are the same, yet listen to the difference!
Further insights can be gleaned from chapter 1 of Investment-Centric Project Management, available at Amazon.com and jrossub.com