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Project Performance Management

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  • 1. Project Performance Management Present and Future Russ Novak Director of Consulting ARC Advisory Group rnovak@arcweb.com
  • 2. Agenda Why Rethink Project Performance Management Owner’s Perspective of Project Performance Issues Evolution of Project Performance Management 2 © ARC Advisory Group
  • 3. Rethinking Project Performance Management Project Performance Asset Performance Management (PPM) Management (APM) Retire & Plan Design Procure Build Operate Maintain Recycle Project Asset Handover Performance Performance Management Management (PPM) (APM) Modification Funded Requests Projects Asset & Project Portfolio New Management Facility (APPM) Requests 3 © ARC Advisory Group
  • 4. Why Rethink Asset Lifecycle Management?  Riskier Business Opportunities  More Mandatory Investments  Limited Capital, Tough Capital Markets  Bigger, More Complex Projects  Global Projects, Global Project Teams  Escalating Labor and Material Costs  Poor Asset Utilization, High O&M Costs  Aging Workforce, Lack of Skilled Workers  Legacy IT Systems Constrain Improvement  Easy IT solutions can help 4 © ARC Advisory Group
  • 5. Research Results: Owner Perceptions onProject Performance Management Issues How do you approach governance and process assurance? How does IT play a role in Governance? Document management? How do you accomplish What about JVs Handover? and governance? Do you use GRC software? Do you use Portals for project status reporting? How well do you integrate Project and Engineering Systems? What about asset-centric information management? 5 © ARC Advisory Group
  • 6. Governance and Process Assurance Need well defined & governed CapEx delivery processes Adoption by Top Tier Performers Internal or External Controls & Metrics Corporate/Enterprise versus Project/Engineering Workflow Perspectives • Enterprise Issues Trump the Engineering Workflow Analysis & Lead to Corporate IT Involvement • Continual Improvement 6 © ARC Advisory Group
  • 7. Project Performance Management:O/O Activities Require Effective IT Strategy Portfolio Approval Project Mgmt Permits Evaluate Process Design Construct Training Budgeting Scheduling Procure FEED Handover Finance Commission Mgmt Start Reporting Up Estimating Inspection Engineering Operating Facility 7 © ARC Advisory Group
  • 8. Project Performance Management:Reality, Constraints & Obstacles Different Worlds: O/Os don’t fully understand the information requirements of E&D, EPCs, or Project Mgmt. … and vice-versa IT Gaps: Asset-centric Approach vs. “Silos” Interdependency issue is underestimated “Workarounds” distort reliability of information Increase in Size/Complexity/Costs: =>Unacceptable Risks with IT legacy systems Failure to follow Best Practices/Governance omissions Lean/Aging workforce (information transfer & retention) Engineering Tools originally designed for E&D, not O/O Evolution in format of information: Drawings --> Databases Initial development of IT systems not focused on project execution Not fully integrated with Portfolio Performance 8 © ARC Advisory Group
  • 9. Project Performance Interdependencywith Portfolio Assumptions Portfolio Projects SPECIFIED Benefits, Risk, Resources Project Approval is based upon specific assumed levels of Benefits, Risk, and Resources. Project Performance Management for all projects must be synchronized, standardized, and update the Portfolio Performance Management base cases. 9 © ARC Advisory Group
  • 10. Evolution of Project PerformanceManagement Evolution of Project Performance Management is being driven in part by … Adoption of Portfolio Performance Management • Synchronizing corporate business objectives with selected projects • Prioritization/ranking/selection of competing projects • Competition for investment, people, resources, • Alignment with strategic initiatives (sustainability, etc) • Lifecycle of “project” becomes lifecycle of asset • Increased emphasis of Risk Analysis • Trend of executive access via dashboards, etc. • Stakeholder community expanded (marketing, financial, sustainability, compliance, L-R planning) 10 © ARC Advisory Group
  • 11. Project Performance Management:The Future - Optimal Case  O/Os fully understand the asset information needs of E&D, EPCs, and Project Management …and vice versa  Lean/Aging workforce issues resolved/compensated by emergence of knowledge worker and IT implementations  Engineering Tools evolve with inherent IT capabilities for both Project and Operations domains  Technology enables automation of IT strategy for PPM  IT and enterprise systems are totally in sync with the entire project space and portfolio management processes  All phases of project performance management is understood, accepted, and incorporated into normal business workflows  Seamless transfer of Project information to Operate and Maintain phases  Central governance and process assurance programs mature, but continue to improve 11 © ARC Advisory Group
  • 12. Takeaways ARC continues to expand its ALM research efforts in the Project Performance Management space. Project Performance Management is evolving and will exhibit tighter integration with Portfolio Performance Management. 12 © ARC Advisory Group
  • 13. Thank You. For more information, contact the author atrnovak@arcweb.com or visit our web pages at www.arcweb.com 13 © ARC Advisory Group

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