Contracting for Effective Collaborations in Complex Projects-what the findings of the ICPM Taskforce Report mean for contracting in complex programs NASA PM CHALLENGE 2012 February 2012 Bretton Ackroyd COO ICCPM Email: email@example.com Phone: +61 406 420 642
Introduction• Speaker – Bretton Ackroyd COO ICCPM• ICCPM – who we are• ICPM Taskforce Report – Overview• ICPM KD2 and ongoing Research Agenda
Complicated vs. Complex A Working Definition Complicated – when you know what you have to doComplex – when you don’t
Overview• Introduction• The Problem• ICPM Taskforce Report findings• Key traits for delivering Complex Projects• Giving effect to the Report findings – Proposed Practical Contract and Organisational measures
Summary• To deliver the full benefits of complex projects and programs requires the capacity to engage in effective complex collaborations• Traditional forms of engagement and risk averse organisational cultures can often hinder or even prevent effective collaborations.• Research has identified some traits necessary for the development and realisation of Complex Projects.• To achieve best results organisations need to reflect, promote and support these “traits” through their practices policies and engagement agreements.
Modern Complex Projects Involve Complex Web of Commercial Connections
The Problem:Traditional contractual/ engagement approaches • Adversarial / Blame focused • Inappropriate risk allocation Contracts & Process • Lack of systemic view • Lack of effective change and conflict managementInfluence of Subject Matter Experts/ Dominant interestgroups in Contract Formation. Short term focus • Short term focus of most SME’s and interest groups at contract formation • Incentivises game playingDominance of Reactive Organisational Culture. • Adversarial, • Risk focused, Culture • Distrustful of others/change – not made here syndrome • Process driven/process controlled
Problems: Traditional contractual / engagement approaches Process Driven Adversarial Lack of Systemic view No future vision over regulated Blame focused Risk management?
ICPM Taskforce ReportFindings:• Competition needs to be selectively applied and targeted to provide effective outcomes and best benefit realisation.• Processes that facilitate early supplier/industry involvement essential for complex projects.• Contracts need to acknowledge and support the iterative & collaborative nature of effective risk management.• Contracts need to promote and support the growth of both strategic and tactical level collaboration.• Need to develop commercial advisors and related key subject matter experts that have the capacity to take a systemic view to contract formation and realising long term benefits benefits.
Contractual and Organisational Traits Required to Maximise Benefits from Complex Projects?• Flexible outcome focused Organisation; Creation of entity with processes, people and leaders flexible enough to address complexity and evolve throughout life of the program• Portfolio of Interrelated Projects; Systemic approach look at the whole as well as the parts; addressing the entire supply chain and beyond.• Long Term Benefits Driven Contracting Strategies; nuanced, targeted and Informed by clear understanding of the benefits sought by Stakeholders.
Flexible Outcome Focused Organisation• Flexibility essential to delivering effective solutions and realising total benefits. Must be nimble enough to address Unknown Unknowns.• Recognition of role as Steward/Champion of the capability being developed.• Processes and procedures that support collaborations and the focus on benefits realisation instead of risk transfer.• Leaders that develop and project the shadow of the future and have cognitive flexibility to manage emergence.• Transparent and efficient governance regimes that support achievement of benefits not hinder it.
Portfolio of Interrelated Contracts• Systemic approach – look at the whole as well as the parts. Influencing the entire supply chain.• Manage as an integrated program rather than individual projects.• Active Identification and management of interrelationships to enhance overall benefits realisation.• Active promotion of cross portfolio knowledge sharing and collaboration.
“Benefits Driven” Contracting Strategies• Multiple Contracting strategies applied to different components of capability – Nuanced, targeted and informed by clear understanding of the benefits sought by stakeholders. – Targeted use of competition as one of a range of approaches underpinning value, not as a weapon.• Recognition that the owner organisation (gov. or private) cannot walk away from the program and risk is shared not transferred.• Mechanisms for collaboratively managing unknown unknowns as they emerge.• Iterative implementation – opportunities to pause, learn and adapt.
Implementing the Findings• Earlier industry involvement reduces risks increases likelihood of realising benefits.• Test commitment to collaborations through limited risk, Project incubator programs and ECI arrangements.• Develop and promote trust through being trusting.• Active management of conflict for best results.• Incentivise achievement of overall benefits over short term profit taking.• Secure appropriate rights upfront to minimise barriers to future collaborations.• Recognise that for some collaborations there is no such thing as an Off Ramp – manage for the long term.
Two Limbs of Effective Complex Project Agreements Clear Performance Baseline Collaborative Behaviours Clear Proactive and Supportive of understanding and Efficient Trust/Fluid of customer Conflict Human requirements Management InteractionAppropriatePerformance Flexible & Proactive EmpoweredManagement Cooperative Change Decision Measures Risk Management Management Making Integrated Systems of Delivery Team Systems role Incentives Cross for partner effective Teamwork Efficiency
Recognise Multiple Functionsand Aims of Complex Project Agreements Risk Management Managing Social Change Contract Complex Normalising Statement of Project Relationships Agreements Requirements
Realistic, Balanced and Cooperative Risk Management
Establish Pro Active Dispute 3rd party Management Process Litigation Dispute Resolution Proposed Dispute Managment Board Activities Provide Dispute management Provide non guidance and independent binding dispute and advice to senior resolution dispute management decisions avoidance advice Informal Formal DRB Conflict Avoidance Discussions & Negotiations Stage Negotiations Assessment Conflict Project Staff and Management Project 3rd Party Resolver Senior management &Courts Continual process Within 7 days 14 days 21 daysTime frame of dispute notice Issue referred back to project for CEO monitoring (Specific review period) Assessment Resolution or
Performance Management andIncentives linked to Partner Charter KPI BALANCED SCORE CARD Demonstrate Accountability Risk reward KPI’s + Non risk /reward KPI’s Compliance Did it happen? PARTNERING • Process metrics KPI Performance Scorecard • Audit CHARTER KPI Weight Targets Actual Identification & Type Score Assessment Did it work? • Business case Agreement on • Informal review of Long Term • Anecdotal data Benefits Sought Evaluation Did it really work? •Focus on proving • Control groups • Longitudinal •Capture what did happen Cost and profit transparency Outcomes How well is it working? Measurement • Focus on improving Risk/Reward Curves •Timely data analysis •Actionable reports Deliver impact •Capture what is actually happening
Contracts that Incubate ProjectCollaborations & Support integrated Team Work
• Flexible Outcome Focused PM/ Acquisition Organisation• Holistic System of Systems Approach• Nuanced Benefits Driven Acquisition Strategy• Effective Collaborations focused on return of long term Benefits.