GNWT PMC 2017

Embracing Project Uncertainty

Dr. George Jergeas P.Eng.

Professor and Director of Project Management, University of Calgary

November 22, 2017

Benevolent Dictatorship for Major Capital Projects

A guide for Executives who want to enhance their major project delivery experience LEARN academy™ Jim Lozon jplozon@shaw.ca (403) 466-1449

Amazon.ca Slide 2

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Muskrat Falls Project

Major Infrastructure Projects

■ We do not deliver on time and on budget. ■No single actor in control of the vision and

implementation. ■Private and public entities and stakeholders.

●Difficult compromise is needed.

●New players join and demand big changes.

●Changes can affect costs, schedule, and scope.

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Too Many Moving Parts

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Major Infrastructure Projects

■ The public tends to be fixated on the original promises.

■ The scope keeps evolving but the public is

expecting cost won’t increase. ■ Not easy to explain the new budget isn’t an

overrun driven by incompetence.

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Major Infrastructure Projects

■ Judged on the gap between initial targets and actual performance.

■50 to 100% cost overruns

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Blame Culture

Source: http://en.wikipedia.org/wiki/Bovidae#mediaviewer/File:Hausziege_04.jpg

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Benevolent Dictatorship

A Leader exercises absolute authority over the delivery of a project

but does so for the benefit of all members of

the project in full compliance with

legal, ethical and moral requirements and values

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Benevolent Dictatorship Approach

1. Understand the project delivery process 2. Embrace uncertainty 3. Establish governance and conduct oversight 4. Improve front-end planning and design 5. Appreciate your contractual and negligence

Obligations 6. Recognize your claims and disputes obligations 7. Build collaborative relationships

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1. Understand the Project Delivery Process

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1. Understand the Project Delivery Process

■Must not bypass any decision gate

■Analyze the risks and opportunities at each decision gate

■Final approved budget must be after detailed engineering design is complete

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2. Embrace Uncertainty

■No project goes exactly as planned

■Become comfortable with uncertainty ■Accept deviations during execution ●Plan for it

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Consider the Three Types of Risks

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Three Buckets

■Project Contingency

■Scope Contingency

■Management Contingency

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Cost Contingency Drawdown Curves

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10

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30

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50

60

70

80

90

100

0 10 20 30 40 50 60 70 80 90 100

Cos

t % o

f Con

tinge

ncy

Time % of Project Schedule

Drawdown Plan

Actual Amount Allotted to Date Time Now

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Risk Allocation

“… the contractor shall not have any claim for compensation for damages against the owner for any stoppage or delay from any cause whatsoever.”

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Risk Allocation Guidelines

■Accept the risks that are rightfully yours

■Allocate a risk to the best party capable of controlling it and dealing with it

■ If a risk is imposed, contractors add high contingencies

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3. Establish Governance and Conduct Oversight

Dictator 1

Dictator 2

Leader

4. Improve Front-End Planning and Design

■Enhance design/engineering quality: ●Consider constructability during design ●Standardize designs and vendors on

repetitive installations ●Maximize modularization and pre-build in

shops to reduce fieldwork ●Reduce the practice of fast tracking ●Apply the 80-100 rule

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80-100 rule

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Quantity of Change vs. Impact (based on manhours)

-5%

0%

5%

10%

15%

20%

25%

0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50%

Change Hours as % of Base Project Hours

Impa

ct a

s %

of

Tota

l Act

ual

Hou

rs

Productivity Improvement

CII

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5. Appreciate your Contractual and Negligence Obligations ■ Make the construction site available ■ Timely delivery of owner supplied materials ■ Ensure quality design ■ Provide timely approvals and decisions ■ Do not specify “method of construction” ■ Deliver owner supplied facilities ■ Timely issuance of change orders and payments ■ Disclose all information ■ Apply due diligence

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Due Diligence ■Policies and procedures ■Training ■Monitoring ■Reporting ■ Investigation ■Enforcement ■Benchmarking ■Record-keeping – “show your work”

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6. Recognize your Claims and Disputes Obligations ■ Clear lines of authority and responsibility ■ Implement collaborative relationships ■ Review scheduling and time requirements ■ Assign representatives of all parties to reside on site ■ Respond to contractor communications ■ Pay invoices in a timely manner ■ Monitor project progress ■ Implement a rigorous change management process ■ Minimize design changes during construction ■ Address claims as they arise

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Dispute Prevention vs. Resolution

DISPUTE

CO

NTR

OL

BY

TH

E P

AR

TIE

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COST TO THE PARTIES

LITIGATION

NEGOTIATION

MEDIATION

THIRD PARTY NEUTRAL EVALUATION

ARBITRATION

Resolution

Pre

vent

ion

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7. Build Collaborative Relationships

Build a cohesive, co-operative relationship with common goals and established procedures for open and honest communication and issue resolution in a timely manner based on: ●Trust ●Respect

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7. Build Collaborative Relationships

1. Common Vision 2. Health Check 3. Issue Resolution Mechanism 4. Ground Rules 5. Roles and Responsibilities

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We, the YYC Runway Development Program – City of Calgary Airport Trail Tunnel teams will

meet the following milestone dates: ● Zone 1 under runway – Aug 31, 2012 ● Zone 2/3 under Taxiways – October 31, 2012 ● Structure completion – October 31, 2012 ● Zone 4/5 under perimeter roads – June 30,

2013 ●Runway in service – May 2014

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Health Check 1. difficult, guarded 1 2 3 4 N/A2. restricted 1 2 3 4 N/A3. late 1 2 3 4 N/A4. ineffective 1 2 3 4 N/A

5. Poor, Detached 1 2 3 4 N/A6. ignored 1 2 3 4 N/A7. personal, negative 1 2 3 4 N/A8. ineffectively 1 2 3 4 N/A9. Senior Management 1 2 3 4 N/A

10. Low 1 2 3 4 N/A

11. ignored 1 2 3 4 N/A12. not acceptable 1 2 3 4 N/A13. ignored 1 2 3 4 N/A14. low 1 2 3 4 N/A15. poor 1 2 3 4 N/A16. not acceptable 1 2 3 4 N/A

17. Public Complaints are… frequent 1 2 3 4 N/A18. Client Involvement is… late, unclear, vague 1 2 3 4 N/A

19. Completion of milestones are rewarded / recognized ineffective 1 2 3 4 N/A20. Overall Satisfaction is… dissatisfied 1 2 3 4 N/A

COMMUNICATIONTeam Communications are… open, up-frontInformation flow is… free, openTimeliness of information is… on-timeCommunications / Meetings are… effective

WORKING RELATIONSHIPSCooperation between Project Groups is… good, unreservedIssues and concerns are… dealt with quicklyResponses to issues become… project specificDisputes are addressed… EfficientlyProblems/issues are resolved by… lowest levelLevel of Trust is… High

PROJECT REQUIREMENTSSafety is being… consideredQuality of work is… acceptableEnvironmental requirements are… consideredIs the Project receiving Value for money highSchedule Management is… EffectiveCost Management is… acceptable

effectivesatisfied

STAKEHOLDER & EXTERNAL ISSUESinfrequenttimely/relative

TEAM SATISFACTION

Please list examples for the points above that you rated 1 or 2 __________________________________________ ____________________________________________________________________________________________ ____________________________________________________________________________________________ ____________________________________________________________________________________________ 33

Issue Resolution Mechanism

A: Issue requires immediate or quick resolution.

B: Issue can be resolved within 5 days with minimal impact

C: Issue can be resolved in greater than 5 days with minimal impact

Group: A Immediate

B 5 days

C 5+ days

Site Level Site Level

12 HR 1 day 5 days

PM Level PM level 24 HR 2 days 5 days Director Director 24 HR 2 days 5-10

days General Manager CEO

24 HR

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Ground Rules An example of Ground Rules:

● If response is urgent, say when - if timeline is not possible, say so and establish a reasonable timeline.

● Key decisions – document and share them within 3 days (aids communication and defines future change).

● Meetings – every 3 weeks: agenda provided in advance (2 days); meeting minutes sent out within 1 week by Engineer.

● Open communication – include the PM in project correspondence.

● Respect decisions once made – leave disagreements at the door; trust and personal respect.

● Everyone shares responsibility and celebrates success. ● Don’t let issues fester – speak up.

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Roles and Responsibilities

Read The Full Contract (RTFC)

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How to Become a Benevolent Dictator?

■Show personal humility ■Act as a Servant Leader ●He who will be Leader is to be Servant

●The right balance: ●The Head - The Vision ●The Hands - Skills ●The Feet - Walk the talk ●The Heart - The Value system

Simplicity

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