PVD Project Control Best Practices for Large Projects

Project Value Delivery
© Project Value Delivery, 2016
w w w . P r o j e c t V a l u e D e l i v e r y . c o m
Best Practices for
Large Complex
Projects Control
Jeremie Averous
Senior Managing Partner
V0 – March 2015

Contents
Large Complex Projects
Best Practices
• Introduction: Specifics of Large,
Complex Projects
• Project Team
• Project Control
• Cost
• Schedule
• Risk
• Project Systems
• Summary

w w w . P r o j e c t V a l u e D e l i v e r y . c o m 3
• Be Focused on the right
things – Convergence
Monitoring
• Be in Control while
remaining Agile
• Address Complexity
• Create Space for
Responding to the
Unexpected

Section
1
• Introduction: specifics of Large,
Complex Projects
• Project Team
• Project Control
• Cost
• Schedule
• Risk
• Project Systems
• Summary

What is Complexity?

Complex System = System with many
independent components and strong
interactions

Complicated vs Complex

Section
2
Complex Projects
• Project Team
• Project Control
• Cost
• Schedule
• Risk
• Project Systems
• Summary

Project Team Best Practices
• Strong Project governance
• Strong Project Manager authority / specialized
disciplines providing resources
• Project Leadership not just Management
• An effective, integrated team with full-time
contributors in a separate open-space
• Effective teambuilding and operating practices
• The Project Execution Plans are developed and
revisited as a group during workshops at project
start-up
• To the extent practical ensure alignment between
individual capabilities and interests and project goals

Why?
• Diminish complexity
– Improve contributors’ alignment
• Strength of Project Sponsorship & governance
• Familiarization, alignment workshops
• Incentive schemes
– Minimize the number of contributors and
interfaces
• Integrated work package / subcontractors
• Integrated teams

Integrated teams
• High Authority Level of Project Manager
• Most people are allocated full time to a project
• The project-team is collocated in an open-plan
space to facilitate communication
• They do what it takes for the project
– recognition of need to contribute outside formal role
description for overall success
• A Matrix organization is
implemented within the
project with delivery
responsibility

Project Governance
• Proper project governance is often lacking on large
projects
– Project sponsor should understand specifics of large
projects,
– Project sponsorship should be strong and present,
– Project execution strategy and decision-making key points
for management should be well defined (gates),
– Utilization of contingency reserves process should be clear,
– Will to invest to prevent future costs or manage risks.

…You need to
build an
effective
integrated
team to find
the solution in
complexity

A team where blaming starts
=
100% project failure

Section
3
Complex Projects
• Project Team
• Project Control
• Cost
• Schedule
• Risk
• Project Systems
• Summary

The Three Fundamental Questions
WHERE ARE WE?
(ARE WE ON COURSE?)
WHERE ARE WE GOING?
WHAT DO WE NEED TO DO TO BE
BACK ON COURSE?

Project Control Best Practices
• Project Control is implemented as a specific senior role
reporting to the PM – does not exist as such in smaller
projects
• Project Control to ensure consistency between cost,
schedule, risk and contracts at the adequate level of
detail
– Breakdown structures
– Forecasts / Earned Value Management
– Contingency, reserves, allowances
• Project Control sets up the relevant measurement and
reporting processes & systems
• Project Control is not just about compliance - it needs to
be the strategic advisor for the PMT

Large projects typical organization
Project
managerProject
Control
manager
Package
Manager 1
HSE, Q
Package
Manager 2
Package
Manager 3
Engineering
Manager
Procurement
manager
Construction
manager
Commissioning
Manager

What is Project Controls?
Project Control is about building
information sensors, and making
sense of the information.

Project Breakdown detail level
(Cost Model, Schedule)
Breakdown detail
Too little detail
will not allow
to grasp
the project drivers
Too much detail
drowns the team
and removes agility
Effectiveness
Optimal
Cost /
Schedule
Detail
Range

Too much detail!
= Not enough time for
analysis!

Section
4
Complex Projects
• Project Team
• Project Control
• Cost
• Schedule
• Risk
• Project Systems
• Summary

Project Cost Control Best Practices
• Fully distinct from Accounting
• Focus on commitments and Project-end forecast
• Actual Cost (VOWD) is evaluated independently of
invoicing
• Breakdown structures are owned by Project Control and
coordinated with Procurement and Construction
contracting strategies
• A full Project Cost Model is maintained (in source
currency, time-phased, by work package)
• Issues / events are reported immediately in the forecast
• Sensitivities are provided in addition to the (prudent)
forecast
• Data integrity is maintained, all variances remain
traceable

Common “maturity’ observations
when no strong Cost Management
• Costs for internal resources as actual costs instead
of standard rates
– Extreme complication of cost tracking
• Commitments are not tracked – only invoicing
– Invoicing without commitments
– Poor control on project bottom line because of
invoicing delays
• Poor consistency with project execution strategy
and forecast schedule
• No support to PM in scenario planning
• No sensitivities available

Section
5
Complex Projects
• Project Team
• Project Control
• Cost
• Schedule
• Risk
• Project Systems
• Summary

Project Schedule Best Practices
• Limit the detail of the Project Integrated Schedule – use a
proper scheduling hierarchy
• Use the Convergence Planning / monitoring method +
communicate focus to the team
• Float and Buffers are owned by the PM
• Avoid ‘virtual float’ generation by constraining delivery
on fixed dates
• Implement float monitoring / trending (evolution of float
from one update to the next)
• Avoid having different schedules for different
stakeholders
• Prefer to increase the schedule robustness and
resilience instead of minimizing the critical path.

Best Practice Schedule Vision
Integrated Project Schedule
1,500 – 2,500 activities
Convergence
Plan
~ 100-200
deliverables
MOREDETAILS
MOREFOCUS
Document
List &
detailed
engineering
schedule
SCM
Detailed
Plan
Construction
Sub-
contractor’s
schedules
Commi-
ssioning
Plan /
schedule
Installation
Plan
Simplified Project Schedule
200-400
Activities
(Schedule Risk Analysis)

Convergence processFor Complex Projects, the focus needs to be on
convergence

Convergence process
Simple Project Complex Project

Convergence process
Project Performance Driver
(or, what kills a project)
Simple project Large project
Efficiency Convergence
Potential upside/
downside±10%
+20%
- 30, -50, -100%

Most
Projects fail
because of a
small piece
missing…

Convergence
Plan Example

Section
6
Complex Projects
• Project Team
• Project Control
• Cost
• Schedule
• Risk
• Project Systems
• Summary

Project Risk Best Practices
• Opportunity and Risks, and ratings to be discussed as a team
• Focused action-taking. Prioritize ruthlessly and focus effort
• The earlier, the better for action-taking
• Use all opportunities of contractual relationships to transfer risk
• Do not confuse allowances, contingency, management
reserves
• Schedule risk analysis focus on improving schedule resilience
• Monte Carlo methods are conventional and their limits must
be understood (e.g. low probability risk, independence
assumptions)
• Most of the project risk is related to schedule slippage & lack
of convergence, and consequential impacts
• Prevention of major accidents is essential – industrial risk
management
• In case of major event, create a separate task-force to
minimize consequential impact on project execution

Advanced Risk Management
approaches
• Industrial Risk Management
– Specific methods to prevent major catastrophic
events (low probability, high consequences)
• Portfolio risk management
– Manage dependencies between projects
(resources etc) and consequential effects
• Minimize complexity
• Ensure there is a way to escape the project if it goes
bad – contractual T&C
– Limit of liability, termination clause etc
• Proper contingency calculation and Senior
Management ownership

Section
7
Complex Projects
• Project Team
• Project Control
• Cost
• Schedule
• Risk
• Project Systems
• Summary

Systems
• Large project = lots of data to control
– Manual systems are overwhelmed, high error rate
• Need to:
– manage inter-office remote work, remote sites
– guarantee data correctness and accurate
reporting
• What minimum systems?
– Document control & Correspondence control
– Cost control (different from accounting)
– Commitments & approvals
• SCM
• Logistics
• Travel, HR
• Timesheets
– Scheduling & convergence planning

Project Systems Best Practices
• Minimize risks of mistakes by having systems that synchronize or
are shared/ accessible between different sites & worksite (new
trend = in addition, go mobile) and across the full process cycles
(e.g. site commitments)
• Single integrated systems (~ERP) often less effective in terms of
control and efficiency than a suite of specialized systems with
checks at the interface; and in addition longer and more
expensive to set-up
• All action-tracking systems to be coordinated to allow real
prioritization across the board
• Reporting to be as automated as possible to leave space for
actual analysis work (new trend = real time dashboards)
• Leverage systems to create performance indicators and reports
• Ensure shared breakdown structures and consistent references
across the entire contracting levels

Conclusion

Moving into Larger, more Complex
Projects
• Management by “efficient”
hierarchical departments
• Purely rational approaches
• Following an immutable baseline
plan
(a.k.a the Stalinist approach)
…DON’T WORK!

So, is your organization is ready for
large projects?
Key indicators:
• Strength of project managers vs department heads
• Project leadership capabilities and effective teams
• Office lay-out – really integrated teams
• Cost mindset vs investment mindset at
management level
• Strength of project governance process
• Strength of IT systems for project data management

• Be Focused on the right
things – Convergence
Monitoring
• Be in Control while
remaining Agile
• Address Complexity
• Create Space for
Responding to the
Unexpected
LEAD!

This presentation summarizes key best practices for
Large Complex Projects.
More information is available on our White Papers and
other documents on www.ProjectValueDelivery.com
…as well as in our handbooks!

W e E m p o w e r O r g a n i z a t i o n s
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Project Control and Reporting
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Remote sites integration
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