Escape from mediocrity

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  • I've worked with a lot of you. I know you want to be able to produce high quality work. However I also know from first hand experience how we can lose focus and motivation when we are asked to meet schedules that often include dates which have expired even before the engineering started. How, it is often hard to work with any sense of urgency on something that you know  will have to be repeated in a few weeks because the deliverable dates have no connection with logical engineering design.Its not about pointing out flaws in what we have done because what I am talking about is endemic to the EPC industry. Talk today is about,how can we be better than other EPC’s, what can we do to differentiate ourselves and step away from the herd.So why am I bringing this talk to you guys? The VP’s can’t do it all on their own. They need our help to make a change.Through this talk I want to provide a frame work of what to watch out for. So you can bring it to the attn of your lead. Its only through our collective action that there can be real change.
  • 86% of projects are over budget & delayed.On average projects are underestimated by nearly 30%.Projects are underestimated to a greater degree than they are over estimated.Underestimating has not decreased over past 70 years.
  • Damaged Reputation.Seen as Just like all the others.Won’t build customer loyalty.
  • Most imp of all you will stress your employees out!From stats Canada, Stress causesLess workWorse qualityMore sick daysEmployee lossMore safety incidentsDepending where you look stress costs us businesses anywhere from 50 -150 billion dollars every year.
  • Companies goal is top 5 in 5Two definitions,1 = Top 5 in project worth2 = Top 5 for Employee & Customer satisfaction, 2nd definition jives much more with that statementFocus on path that will really deliver this.
  • Believe the solution is to “Build a better product”The only way I think you can leave the competition behind is to do what the competition doesn’tBreak the mold by delivering what we promise & exceeding expectations
  • Focus on producing a high quality productWhat does that mean?Doesn’t always mean super in-depth calcsHigh Qual means exceeding clients expectations on budget & on timeHigh Quality means not just being “man-hours” Working with the client to add value to the Project.Reducing costsIncreasing efficiencyFollowing up after the project is built to find out what worked well and what didn’t.
  • 3 Steps to Building a better productGo through each picking out a few key points and targeting some of the cognitive biases that get in our wayFocusing on these steps isn’t new but implementing them effectively all together could be revolutionary
  • We all know how important planning is. So how come we keep screwing it up?Planning really is just as important as every one says it is.However its much more difficult than we think it is.Take a look at key points that impact effective planning.
  • Information from a recent project we have worked on.I expected to find that not enough time had been spent on planning.1 months sounds like a reasonable amount of time to plan.So it leads me to ask are we planning as effectively as we could be.
  • Before plan, have to have a visionMean by vision? Clear Idea of what we plan to deliver.No point in laying out detailed Gantt chart if your end goal is vague or uncertain or does not match your clients requirementsKnow all the facets of what is expected E.g.How detailed will the design beWill studies be includedIf Vision is not clear you don’t have a path to follow & you will waste time & money in the design
  • If you find yourself scheduling to a set immutable end date, you are not scheduling, you are packing!Scheduling should be intimately linked with a logical design order.When you are producing calculations to a schedule that does not take into account design order, calculations end up being reworked multiple times.Proj needs to be rescheduled due to changes / delays. Should effect the end date unless there was enough float to account for the changes.Otherwise the deadlines will bunch up, be harder to achieveWhen possible there should be float between major phases of the projectBreathing room because life rarely goes according to plan
  • Floor chat, asked a question.“Do you have any specific plans to improve realistic scheduling & planning in order to allow us to produce the quality you keep talking about”Not most tactful momentDidn’t get specifics however John made a good pointHe said “Sometimes we may be too optimistic because we want to please”Behavioural economics called “Optimism bias”Our tendency to be optimistic about our own abilities even when it is not warrantedExample ParentingPrevent with reference class forecasting. Comparing proj you are undertaking with similar ones to see how long they took compared to your predictions.
  • Reference class forecasting also gives some protection against Black SwansRead Outliers Malcolm Gladwell or Black Swan By Nassem Taleb.Both focus on how much of the world is impacted by rare unforeseen events which have a large impact.These are black swansExample of Black SwanLas Vegas Casino 4 biggest losses were not gambling related.Tiger attacked performerDisgruntled employee tried to dynamite the buildingEmploy not sending tax forms inOwners daughter kidnappedProb with planning for the future isn`t that the future is unknown Its that its really unknown.How do you plan for what by definition you can’t plan forReference forecasting
  • Communication underlies everything we do in business & our daily lives.If communication breaks down it can have a devastating effect on the project.Unlike planning We’re not bad at it.However there are always some areas we can improve upon.
  • Communication is essential in ensuring everyone is on the same page.In every project 4 key groups need to be aligned.Engineers Both Client & EPCProject management Client & EPCAs Engineers we don’t like to work with conflicting directions.
  • Key to building trust between your customers & employees.If you are not honest & transparent with your employees its hard to be an employer of choice & you wont retain talent.Customers, Means being honest about what you can deliver & not agreeing to deadlines you will never achieve.This sort of honesty will encourage loyalty from your clients & employees.
  • 2002 study of 258 projects “Found with overwhelming statistical significance that cost estimates used to decide whether such projects should be built are highly & systematically misleading. WhyBecause delayed over budget project is deemed better than having no project at all.Bad for us we may undertake a project with a faulty cost benefit analysis. And commit finite resources to what might not be the best use of them.Bad for the client because a project may be started despite not being economically viable.How do we win projects honestly in a dishonest environment.Target projects & clients we want to work with.Assemble a team with a deep understanding of the project we are aiming to get.Let the client know that we will deliver more value, under budget on time than our competitors.
  • Cognitive bias – human tendency to rely on the first piece of information.Use initial information to make subsequent judgements.Once the anchor is set future judgements are made by iterating away from the initial value.This can effectBargainingDeliverable datesAnchoring effect even occurs when the number is completely random.Study Participants spin wheel, given either 15 or 65Then asked how many African countries are members of the UNTheir answers clustered around the number they spun earlier.
  • Follows on from anchoring effectInterested in getting honest answers we must be careful how we phrase our questionsIf question is phrased with the expected answer in the question, you make get the answer you were looking for but it may not be realistic.E.g.Will you have this done by tomorrow morning?Now to get an honest answer the person you are asking has to contradict you.For a more honest answer ask When will you be able to complete this?
  • Discipline is about the work we agree to take on and the work we produce.Giving the client a consistent product.Ensuring that the work you agree to take on is covered in the original product scope.Not being distracted by small minor decisions to the point where you take time away from more important cost impacting items.
  • Say NoSometimes saying no even to the client may lead to better relations in the long run.Provide alternatives instead of just saying no.If there is no alternative make sure you are compensated fairly as to make their request feasible.
  • Uncontrolled changes or growth in a projects scope.We have all seen when studies are added to a project or when what was suppose to be validation level calcs suddenly become detailed level.Scope creep occurs when the amount of work increases but the resources available do not.Scope creep can be controlled by:Clear visionGood change controlCommunicationStrong project management
  • Raise hand if you can give me some important technical aspects of building a nuclear reactor.Raise hand if you can give me a few suggestions for building a bike shed.The time spent on any item will be inversely proportional to its complexity.Traditional example…Combated by having a chair of the meeting who is familiar with such cognitive biases & keeping control of how the committee spends its time.
  • Unfortunately this all won’t just happen.We could wait for an executive decree to change our practices.In reality we need to be part of the change.To match the VP’s top down revolution we need to start a bottom up one.Need to point out when we see mistakes being made in planning or execution.If necessary bring it to the attention of your leads et al.If we are serious we need to be proactive about change.Thank you.

Transcript

  • 1. An Escape FromMediocrity
  • 2. 86% Overbudget
  • 3. Consequences of Delayed, Over Budget Projects
  • 4. Don’tStress Us Out!
  • 5. Top 5 in 5 To achieve excellence in execution, deliver a consistent product to our clients which complies with ourcontractual obligations, and seeks toexceed expectations while achieving planned financial results"
  • 6. Buildabetterproduct
  • 7. HighQuality
  • 8. Planning 1
  • 9. Time Spent Planning Reality 16 months Forecast 12 monthsPlanning1 month
  • 10. Vision
  • 11. ScheduleReschedule Float
  • 12. Optimism bias
  • 13. BlackSwan
  • 14. Communication 2
  • 15. Honesty &Transparency
  • 16. Strategic Misrepresentation
  • 17. Getting Answers(Not just the ones you want!)
  • 18. Discipline 3
  • 19. “A No‘ utteredfrom the deepest conviction is better than a Yes merelyuttered to please, or worse, to avoid trouble.”
  • 20. Project Plan 1/2 way ENDFEED of Refinery FEED of Refinery FEED of RefinerySimulation Simulation: Simulation: (4 more cases) (4 more cases)PFD’s PFD’s PFD’sH&MB H&MB H&MBFEED Lv Calcs Detailed Lv Calcs Detailed Lv CalcsP&ID’s P&ID’s P&ID’s Add distribution Add distribution Technology studyScope Creep Feedstock change
  • 21. Bikeshedding
  • 22. Literary referencesBent Flyvbjerg et al. (2002). Underestimating Costs in Public Works Projects, APA Journal, vol.68, No. 3, Pg. 279.Steen Linchtenberg et al. (2005). How to avoid overruns and delays successfully, Proposed ICEC Journal.Nassim Nicholas Taleb. (2007). Black Swan. Random House.Daniel Kahneman. (2011). Thinking Fast & Slow. Farrar, Straus & Giroux.Photo ReferencesBrown Cow http://ponyridingby.blogspot.ca/2011_11_01_archive.htmlTigers in water http://www.ck12.org/user%3AeWVvbWFubWlrZUBzYXlkZWwubmV0/book/Saydel-Biology-Flexbook/r13/section/22.0/Mammals-and-Animal-Behavior-%253A%253Aof%253A%253A-Saydel-Biology-Flexbook/Gandhi http://www.wallpaperswala.com/mahatma-gandhi/Dog with burger http://myfangalicious.files.wordpress.com/2011/12/img_87372.jpgOil refiner http://tropicaldaily.com/nicaragua/mega-oil-refinery-project-brings-both-hope-and-concern-to-nicaragua/Glass half full http://hd.wallpaperswide.com/thumbs/glass_of_water_half_full-t2.jpgButterfly http://www.turtok.com/wpcontent/uploads/2012/10/Glass_wing_or_clear_wing_butterfly_Wallpaper_h6675.jpgLying http://www.ionpsych.com/wp-content/uploads/2011/03/lying-main_full1.jpgShed http://www.junglecatmedia.com/wp-content/uploads/2012/04/shed0039.jpgCoughing http://img4-2.realsimple.timeinc.net/images/stock-images/man-coughing_300.jpg