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Troubled Project Turnarounds    Old Turkish Proverb…                         “He who fails has no friends.”     Presented ...
When YOU KNOW you have a problem…SOME BEHAVIOR CHANGES! , i.e.• Everything is becoming TOO QUIET…• COMMUNICATIONS are bein...
Some Troubled Projects Sources & Causes•     Introduction to Cost Engineering•     Estimate Accuracy•     Estimating Appro...
Troubled Projects – Assessment & FIXING!1.     Failure to … Learn, Anticipate, Adapt        Any one of the first two abov...
Overall Project                                     Gas Supply (Non E&C)Schedule OverviewPre- and Post-Financing Defined  ...
Normal Structured Project Finance Requirementsto Get to Financial ClosingProject Schedule Overview                        ...
Shareholder Agreement Completed                                                         Gas Supply (Non E&C)Gas Supply Agr...
Introduction to Turnarounds - ComparingCompany Turnaround                           Project TurnaroundCash Management     ...
Outcomes, Phases, Timelines Company Turnaround                              Project TurnaroundPossible Outcomes           ...
Rules of Engagement for Project Turnaround Managers1. Do NOT replace the project manager out of hand.2. REINFORCE the Proj...
Troubled Project Turnaround Management - OVERVIEWThe Importance of Stealth Assistance and Bedside Manner.Stealth Assistanc...
Turnaround Processes Groups & Timeline ExpectationsTRIAGE            1-3 Days       CRISIS PLAN                           ...
I. Triage PLUSDefinition of Triage - A Verb. Source: WikipediaTriage is the process of determining the priority of patient...
II. Crisis Plan ExecutionDefinition of Crisis - A Noun. Source: American Heritage Dictionary1. A crucial or decisive point...
Crisis Mgt SkillsDo YOU Understand Crisis ManagementCrisis management = Clear Your Calendar…we have a crisis!!        – A ...
III. Stabilizing Plan ExecutionDefinition of Stability – A Noun. Source: American Heritage DictionaryThe state or quality ...
IV. Stability MaintenanceDefinition of MaintenanceThe act of maintaining or the state of being maintained.The work of keep...
Troubled Project Turnaround Training• This program presents the skills necessary to professionally  troubled projects with...
Troubled Project Turnarounds    QUESTIONS?    IF you would like an electronic copy of    1. This Presentation    2. The An...
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Pmi Pifg Presentation Nov2011

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Troubled Project Turnarounds

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  1. 1. Troubled Project Turnarounds Old Turkish Proverb… “He who fails has no friends.” Presented by Paul Allen, OIM, PMPTroubled Project Turnaround PresentationPMI Process Industry Focus GroupPMI Houston Energy Corridor – Nov. 1, 2011
  2. 2. When YOU KNOW you have a problem…SOME BEHAVIOR CHANGES! , i.e.• Everything is becoming TOO QUIET…• COMMUNICATIONS are being reduced…• People don’t return e-mails or telephone calls…• Project Teams are quietly digging their FOXHOLES…• More time around the coffee pot and water fountain…• Folks are starting to throw, or a least leave, some grenades…• Folks not on the team are starting to avoid those that are…• Vendors and subcontractors are starting to complain…• Management is forgetting about the project…What project?• Evidence of CYA, SML and CLM concerns start or grow…• The BLAME GAME starts… no one can focus on fixing problems!Troubled Project Turnaround PresentationPMI Process Industry Focus Group 2PMI Houston Energy Corridor – Nov. 1, 2011
  3. 3. Some Troubled Projects Sources & Causes• Introduction to Cost Engineering• Estimate Accuracy• Estimating Approaches/Classes• Estimating Methods• Computerized Estimating• Labor Productivity• Indirect Costs• Data Collection and Management• Estimate Coding and Documentation• Predicting Future Escalation• Contingency - A Provision for Uncertainty• Estimating a Project• BUT…YOU came here to learn HOW TO FIX THEM, RIGHT?Troubled Project Turnaround PresentationPMI Process Industry Focus Group 3PMI Houston Energy Corridor – Nov. 1, 2011
  4. 4. Troubled Projects – Assessment & FIXING!1. Failure to … Learn, Anticipate, Adapt  Any one of the first two above (Single FAILURE – usually recoverable  Combination of first two (Aggregate FAILURE) – usually recoverable  Presence of all 3 (Catastrophic FAILURE) – usually NOT recoverable2. People, Process, Technology or Combination3. External Unpredictable, External Predictable, Internal Non-Technical, Technical, Legal4. Org: Corporate, Business Unit, Project Management, Project Team, etc.5. Decision: Corp Policy, Strategic, Tactical, Indecision, Bad Decision, etc.STOP & SHOW: Troubled Project Workshop Spreadsheet ResultsACTIONS – Range of FIX Possibilities• Adjust, Realign, Stopgap, Partial Salvage, Full Salvage, AbandonmentTroubled Project Turnaround PresentationPMI Process Industry Focus Group 4PMI Houston Energy Corridor – Nov. 1, 2011
  5. 5. Overall Project Gas Supply (Non E&C)Schedule OverviewPre- and Post-Financing Defined Gas Trains (E&C) E&C Contracts • Early Site Work • Site Work • Gas Trains • Utilities & Off-sites • Permanent Buildings for Owner • Tanks • Dredging & Breakwater • Jetty & Trestle SUC 6 mos Financing Activities Project Finance – PPMS – 54 Months Plus 4 Months for SUC and 2 Months Ramp Up AFTER 1 st Lift Business Systems (3) 1st Lift Financial Closing 1st Lift Mo Year Tankage (E&C) Mo Year Dredging–Breakwater– Jetty & Trestle (E&C) Financing IS the Critical Path post FEED completion Shipping (Non E&C) Critical Path INCLUDING KEY MILESTONES for FINANCIAL CLOSING Near Critical Path Troubled Project Turnaround Presentation Potential Critical Path PMI Process Industry Focus Group Other Critical Path/s PMI Houston Energy Corridor – Nov. 1, 2011
  6. 6. Normal Structured Project Finance Requirementsto Get to Financial ClosingProject Schedule Overview LSTK or Design-Build Contract for E&CPre- Financing Defined Environmental Approved E&C Subcontracts • Early Site Work Land Acquisition Completed • Gas Trains • Dredging & Breakwater Host Country Agreements in Place • Jetty & Trestle • Site Work • Utilities & Off-sites • Tanks for Storage • Permanent Buildings for Owner • SUC (within Contract) Project Finance Risks Neutralized Key Project Financing Agreements in Place PF Documentation Complete Financial ClosingBusiness Plan with Offering Memorandum Contracts & Structure Documentation & SecuritizationFinancial Pro-forma Community Agreements in Place Shareholder Agreement Completed Sustainable Development Plan Agreed Shipping Agreement Completed $$$ Technology Agreement Executed Gas Supply Agreements in Place Critical Path post FEED – Structured Project Financing Requirements Troubled Project Turnaround Presentation PMI Process Industry Focus Group PMI Houston Energy Corridor – Nov. 1, 2011
  7. 7. Shareholder Agreement Completed Gas Supply (Non E&C)Gas Supply Agreements in placeEnvironmental Approved It is all aboutLand Acquisition CompletedHost Country Agreements in Place Gas Trains (E&C) Schedule!Sustainable Development Plan Agreed EPC Contract with GCCommunity Agreements in Place Other E&C Contracts • Early Site Work • Site Work • Utilities & Off-sites • Permanent Buildings for Owner • Tanks • Dredging & Breakwater • Jetty & Trestle SUCFinancial Closing Project Finance – PPMS (Project Payment Milestone Schedule) Business Systems 1st Lift Cryogenic Tanks (E&C)PF Documentation Complete Dredging–Breakwater– Jetty & Trestle (E&C)Key Project Financing Agreements in PlaceTechnology Agreement ExecutedShipping Agreement Completed Shipping (Non E&C) Critical Path Project Schedule Overview Near Critical Path Post-Financing Defined Troubled Project Turnaround Presentation Potential Critical Path PMI Process Industry Focus Group Other Critical Path/s PMI Houston Energy Corridor – Nov. 1, 2011
  8. 8. Introduction to Turnarounds - ComparingCompany Turnaround Project TurnaroundCash Management Time Management• Rescuer OR Grave Dancer • Usurper OR PM Team Developer• CASH is usually the problem. • TIME is usually the problem.• Usually made PUBLIC! WHY? • Usually kept PRIVATE! WHY?Troubled Project Turnaround Presentation PMI Process Industry Focus GroupPMI Houston Energy Corridor – Nov. 1, 2011 8
  9. 9. Outcomes, Phases, Timelines Company Turnaround Project TurnaroundPossible Outcomes Possible Outcomes1. Bankruptcy: 11,etc., even 7 1. Adjustment to the project2. Turnaround, no bankruptcy, 2. Alignment to the project with management change 3. Stop-gap measures3. Turnaround, no bankruptcy, no management change 4. Partial salvage4. Disposal of the company 5. Complete salvagePhases 6. Abandonment1. Analyze the Situation – days Timeline (Overlap Phases)2. Triage – Immediate – days Triage – 24-72 hours - MAX3. Develop/Implement Plan - weeks Crisis Plan/Begin Execute < 2 weeks4. Restructuring – months Stabilization – 1-90 Days5. Stability – over time as needed Maintenance – as needed YOU have a 2-WEEK Honeymoon!Troubled Project Turnaround Presentation PMI Process Industry Focus GroupPMI Houston Energy Corridor – Nov. 1, 2011 9
  10. 10. Rules of Engagement for Project Turnaround Managers1. Do NOT replace the project manager out of hand.2. REINFORCE the Project with a Turnaround Team • Turnaround (Engagement) Project Manager & Assistant/s • Most the time, an engagement manager – NOT a camper • Larger, more complex, can require one to two project controls and possibly a documentation person3. The Turnaround Manager as Lead, Coach & Mentor to Team4. The Turnaround Manager DOES NOT get involved in daily project management activities, but focuses on the crisis at hand and managing the recovery or salvage of the project.5. Usually moves into PT support role after MAX 2-week Planning6. May leave one project controls “boots on the ground” for the “Stability” and possibly the “Maintain” phase of the turnaround.7. Very large projects may require extensions of time and the other personnel previously mentioned above for longer.Troubled Project Turnaround PresentationPMI Process Industry Focus Group 10PMI Houston Energy Corridor – Nov. 1, 2011
  11. 11. Troubled Project Turnaround Management - OVERVIEWThe Importance of Stealth Assistance and Bedside Manner.Stealth AssistancePhases of SILENT ASSISTANCE. Smoothing the Waters, Silently!I. Triage PLUSII. Crisis Plan ExecutionIII. Stabilizing Plan ExecutionIV. Stability MaintenanceBedside Manner Troubled Project Turnaround Presentation PMI Process Industry Focus Group 11 PMI Houston Energy Corridor – Nov. 1, 2011
  12. 12. Turnaround Processes Groups & Timeline ExpectationsTRIAGE 1-3 Days CRISIS PLAN 1-14 Days The Honeymoon is OVER. You must take ACTIONS. EXECUTION STABILIZING PLAN EXECUTION 1-90 Days Validate Turnaround. STABILITY MAINTENANCEOVERLAPPING, NON-Sequential, PhasesTroubled Project Turnaround PresentationPMI Process Industry Focus Group 12PMI Houston Energy Corridor – Nov. 1, 2011
  13. 13. I. Triage PLUSDefinition of Triage - A Verb. Source: WikipediaTriage is the process of determining the priority of patients treatments basedon the severity of their condition. At its most primitive, those responsible forthe removal of the wounded from a battlefield or their care afterwards havedivided victims into three categories:1. Those who are likely to live, regardless of what care they receive;2. Those who are likely to die, regardless of what care they receive;3. Those for whom immediate care might make a positive difference in outcome. THESE ARE THE ONES YOU SPEND TIME ON!Triage PLUS - Substitute “patient” with “Scope and Tasks”- Stop the hemorrhaging, determine vital signs, take action- Time: usually hours, within 24-72 hours maximum- Triage PLUS activities - immediate assessments and actions takenTroubled Project Turnaround PresentationPMI Process Industry Focus Group 13PMI Houston Energy Corridor – Nov. 1, 2011
  14. 14. II. Crisis Plan ExecutionDefinition of Crisis - A Noun. Source: American Heritage Dictionary1. A crucial or decisive point or situation; a turning point.2. An unstable condition, as in political, social, or economic affairs, involving an impending abrupt or decisive change.3. An emotionally stressful event or traumatic change in a persons life.4. A point when a conflict reaches its highest tension and must be resolved.Crisis Plan Execution- Surgery where necessary, decisive actions and plan- Time: days or within two weeks maximum- Crisis Plan Execution activities- Overall Project Viability Assessment - Recovery or Salvage?- Project Integrity Validation - Project, Technical, Business aspectsTroubled Project Turnaround PresentationPMI Process Industry Focus Group 14PMI Houston Energy Corridor – Nov. 1, 2011
  15. 15. Crisis Mgt SkillsDo YOU Understand Crisis ManagementCrisis management = Clear Your Calendar…we have a crisis!! – A crisis is a major, unpredictable event that threatens to harm an organization and its stakeholders. Although crisis events are unpredictable, they are not unexpected (Coombs, 1999). – Crises can affect all segments of society – businesses, churches, educational institutions, families, non-profits and the government and are caused by a wide range of reasons. – Although the definitions can vary greatly, three (3) elements are common to most definitions of crisis: 1. a threat to the organization 2. the element of surprise, and 3. a short decision time (Seeger, Sellnow & Ulmer, 1998).Troubled Project Turnaround PresentationPMI Process Industry Focus Group 15PMI Houston Energy Corridor – Nov. 1, 2011
  16. 16. III. Stabilizing Plan ExecutionDefinition of Stability – A Noun. Source: American Heritage DictionaryThe state or quality of being stable, especially: 1. Resistance to change, deterioration, or displacement. 2. Constancy of character or purpose; steadfastness. 3. Reliability; dependability.Stabilizing Plan Execution- Assist Project Team and Project Manager- Time: 30 to 90 days maximum- Stabilizing activities development and execution, aligned teamTroubled Project Turnaround PresentationPMI Process Industry Focus Group 16PMI Houston Energy Corridor – Nov. 1, 2011
  17. 17. IV. Stability MaintenanceDefinition of MaintenanceThe act of maintaining or the state of being maintained.The work of keeping something in proper condition; upkeep. • Provision of support or livelihood: took over the maintenance of … • Means of support or livelihood: was ordered to pay maintenance for …Stability Maintenance- Oversight Role (part-time validation of activities)- Time: duration of the project until completed and closed out- Determine and implement Stability Maintenance Management;Ensuring project remains stabilized and actions sustained for results- Delivering results with the new or adjusted project planTroubled Project Turnaround PresentationPMI Process Industry Focus Group 17PMI Houston Energy Corridor – Nov. 1, 2011
  18. 18. Troubled Project Turnaround Training• This program presents the skills necessary to professionally troubled projects with a business mindset and focus. There is heavy emphasis on when and how to use the tools and techniques of the professional troubled project turnaround specialist and provides a valuable set of tools and skills every project management professional should have before they need it! Participants will gain a comprehensive appreciation and understanding of the importance of quickly "assessing and fixing" troubled projects, whether they are capital projects or systems projects...they all need the professional skills to turn them around via recovery or salvage.• http://projectexecutive.com/Training33OutlineSyl.htmlTroubled Project Turnaround PresentationPMI Process Industry Focus Group 18PMI Houston Energy Corridor – Nov. 1, 2011
  19. 19. Troubled Project Turnarounds QUESTIONS? IF you would like an electronic copy of 1. This Presentation 2. The Annual Troubled Project Workshop 2009 Presentation 3. The Rice Troubled Project Workshop Spreadsheet Results … please drop your “business card” on the way outTroubled Project Turnaround PresentationPMI Process Industry Focus GroupPMI Houston Energy Corridor – Nov. 1, 2011
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